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UPDATE 2-Russia's Nornickel halts water inflow at two major mines

* Mines account for 36% of ore mined in Russia by Nornickel

* Nornickel has faced environmental, production safety issues

* Company shares up 4% in Moscow (Adds details, quotes, context)

MOSCOW, March 29 (Reuters) - Russian metals producer Nornickel said on Monday it had stopped water flowing into its two major mines in the Siberian Arctic and both were on track to fully resume production in coming months.

Nornickel, the world’s largest palladium producer and a leading nickel producer, partly suspended operations at the two mines on Feb. 24 after detecting subterranean water flowing into one of them. This reduced its 2021 output forecast by 15%-20%.

The Oktyabrsky mine would fully resume production in the first 10 days of May and the Taimyrsky mine was scheduled to resume in early June, Nornickel said in a statement. The mines account for 36% of ore mined by Nornickel in Russia.

Nornickel’s shares were up 4% in Moscow on Monday, outperforming a 0.8% gain for the broader index.

Nornickel has faced environmental and production safety issues after a major fuel leak at its power plant near the Arctic city of Norilsk and a series of smaller incidents over the past year. It paid $2 billion in environmental damages after the spill.

The water was stopped at the two mines after Nornickel installed barriers and poured 32,000 tonnes of concrete into the mines. It is a traditional way of dealing with the sudden inflow of water to underground mines, although Nornickel’s case has been complicated by the intensity of the inflow.

“Thanks to the professional performance of the miners, we have managed to stop the water inflow. We are already working on restoring the operations; this will be done in phases,” Nikolay Utkin, Nornickel senior vice president, said in a statement.

“Along with the recovery operations, the company is also taking measures to eliminate the risk of water inflow in the future,” he added. (Reporting by Polina Devitt; Editing by Edmund Blair)

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