The Strategist

World's largest palladium producer to launch platform for digital metal tokens exchange

12/10/2019 - 09:02

Russian Norilsk Nickel (Nornickel) is testing a platform for trading digital metal tokens. According to co-owner of the company Vladimir Potanin, the official launch of the project can take place in the Western countries or in the Middle East, because the law on digital financial assets has not yet been adopted in Russia, the company’s homeland.

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Norilsk Nickel, the world's largest producer of palladium and refined nickel, has begun testing a digital platform for trading digital metal tokens. This was announced by the president of the company, billionaire Vladimir Potanin in an interview with Bloomberg. According to him, clients of Norilsk Nickel - Trafigura Group, Traxys and Umicore – were invited to participate in the testing. Trafigura and Traxys have confirmed this.

Digitalization allows simplifying the trading process and reduce costs, the agency notes: on a digital platform, customers can purchase tokens secured by real assets - in this case, metals - and then exchange them for physical reserves. If the client suddenly realizes that he does not need the entire volume provided for by the contract, he will be able to easily sell the excess to someone else with the help of tokens, and not enter into potentially difficult negotiations with the supplier.

Nornickel first announced plans to issue tokens a year ago. Potanin later invested in developing a blockchain platform based on Hyperledger Fabric and supported by IBM, Bloomberg writes. According to the agency, Potanin wants Norilsk Nickel to become the first major mining company using tokens in the metal trade. According to the billionaire, the digital platform will make it possible to buy tokens not only for palladium, but for all metals produced by Norilsk Nickel. The company expects that in a few years tokens will account for up to 20% of all sales. Potanin estimated his investments in digitalization at about $ 100 million.

Norilsk Nickel plans to announce details about the official launch of the digital platform in the spring of 2020. According to Potanin, the launch may take place in the United States, the United Arab Emirates, Switzerland or Singapore, since Russia has not yet adopted a law on digital financial assets.