By Aleksandras Budrys
MOSCOW, Nov 21 (Reuters) - Russia's Norilsk Nickel will boost its presence in the key U.S. platinum group metals market after buying a majority stake in Stillwater Mining in a deal seen helping stabilise the palladium market, analysts said on Thursday.
"Norilsk has acquired a marketing vehicle, which may facilitate its access to end-users on the American market, the largest platinum group metals market," said Vasily Nikolayev, an analyst with Troika Dialog investment bank.
The deal to buy the stake in the U.S. palladium and platinum producer was also seen reassuring consumers there would be a reliable flow of palladium, wich is mainly used to make catalytic converters in automobiles, said another analyst.
"I believe the deal will positively influence the palladium market in general, restoring the confidence of end-users in consistent supply of the metal to the market," added Slava Smolyaninov of Nikoil investment bank.
The two companies said on Wednesday Norilsk, the world's largest producer of nickel and palladium, was buying a 51 percent stake in Stillwater Mining Company for $341 million in the Moscow-based company's first investment in North America.
Of this $100 million will be paid in cash and $241 million by 876,000 ounces of palladium. Norilsk also has the right to buy an extra 10 percent of shares, which would raise Norilsk's stake in the company to around 56 percent.
Both firms have also agreed to an arrangement by which Stillwater will buy at least one million ounces of palladium annually from Norilsk to be resold to Stillwater customers.
"The structure of the deal... will permit Norilsk to unload the metal it has been stockpiling," Smolyaninov said.
Norilsk stopped selling palladium on the spot market in 2001 and has pledged not to resume spot palladium sales in 2002 and 2003 in a bid to sell all the palladium it produces through long-term contracts to end users.
So far Norilsk has announced a deal with General Motors , the world's largest automobile maker, and with Japan's Mitsubishi . It has also said it had contracts with other consumers of palladium it would not name.
Russian palladium shipments have been extremely erratic in recent years due to the country's red tape. Prices rose to all-time highs near $1,100 an ounce in January 2001 as auto makers competed to procure the metal and build inventories.
But prices have since fallen sharply due to a slowdown in industrial demand in a weak economy. Palladium was fixed at $275 per ounce in London on Thursday morning.