* Battery sector seen using 500,000 T nickel/year by 2025
* Nornickel fixes quality issue that hit cobalt sales
* Russian firm still eyes new projects amid shareholder row
* Company seeks to reduce palladium stockpile in first half (Adds battery industry demand, cobalt sales, palladium stockpiles)
MOSCOW, March 6 (Reuters) - Russian mining firm Norilsk Nickel said on Tuesday rising use of batteries in electric vehicles would create strong demand for nickel from the 2020s.
Nornickel, which vies with Brazil's Vale SA to be the world's biggest nickel producer, said the battery industry would use more than 500,000 tonnes a year of the metal by 2025.
It said this "equals almost half of the current consumption of Class 1 nickel", referring to the highest quality nickel that is now mainly used as an ingredient to produce stainless steel.
Nornickel, which is well positioned to benefit from the rise in electric vehicles as it mines cobalt which is also used in battery production, sold 215,000 tonnes of nickel in 2017.
It sold 3,000 tonnes of cobalt in 2017, down from 5,000 tonnes in 2016, citing "a problem with its quality" that Nornickel said had been fixed. It said it would work to reduce its cobalt stockpile soon.
"The forthcoming shift in favour of more nickel-intensive technologies in battery cathode material alongside the growing share of electric vehicles ... should drive up strongly the demand for Class 1 nickel products towards 2025," it said.
It made the comments in its financial statement for 2017, in which the firm reported 2 percent growth in its core earnings in 2017 thanks to higher prices for its metals.
Its shares dipped 0.3 percent in line with the broader MICEX index, as investors remained focussed on conflict between Nornickel's biggest shareholders, Russian businessman Vladimir Potanin and aluminium producer Rusal.
The dispute partly revolves around whether the firm should deliver a big dividend or focus on robust capital spending.
The company said on Tuesday its board would issue a recommendation for its final dividend for 2017 in April or May
The firm's 2018 capital expenditure is set at $2 billion and it continues to consider several projects in Russia.
Nornickel is also the world's top producer of palladium, which is chiefly used in emission-curbing auto catalysts. The metal was Nornickel's largest revenue generator in 2017 as prices soared on fears of shortages.
The company said it did not see any immediate threat to palladium from electric vehicles, forecasting the market deficit to widen to 1.2 million troy ounces this year.
Nornickel said its 2017 earnings before interest, taxation, depreciation and amortisation (EBITDA) of $4.0 billion were held back by several factors, including the accumulation of palladium stock to deliver under 2018 contracts.
Nornickel accumulated the stockpile of more than 500,000 ounces of palladium at the end of 2017, it said, adding that it planned to sell the bulk of that by the end of June to meet the rising demand from its customers. (Reporting by Polina Devitt Editing by Mark Potter and Edmund Blair)