Rusal Calls for Overhaul of Nornickel Management Citing Repeated Ecological Crises

Written by Sayari

July 15, 2020

Russian aluminum titan Rusal issued a statement on Tuesday calling for the complete overhaul of the Nornickel mining company’s management following a recent series of ecological disasters caused by the company.

Rusal (United Company Rusal PLC), a major shareholder of Nornickel (MMC Norilsk Nickel), approached the company’s board with a proposal that Chairman of the Board Vladimir Potanin reshuffle the management team, relocate it from Moscow to the arctic city of Norilsk, and to reevaluate environmental and safety policies. Rusal also criticized the management board’s alleged incompetence and repeated failure to address the crises.

A Nornickel pipeline near the northern Tukhard settlement of Russia’s Krasnoyarsk region depressurized on Sunday resulting in the spillage of 44.5 tons of aviation fuel, according to a release issued by the company. The damage has yet to be assessed and emergency crews are presently working to contain the spill.

This is only the latest in a growing series of ecological disasters surrounding Nornickel.

On May 29, a diesel fuel tank supplying a Nornickel power plant burst, spilling more than 21,000 tons of fuel into the rivers and subsoil around Norilsk. Russia’s Federal Service for Supervision of Natural Resources Management (Rosprirodnadzor) is claiming damages to the tune of 147.8 billion rubles (~$2.1 billion).

The situation escalated further on Jun. 19, when the Investigative Committee of the Russian Federation announced an investigation into Nornickel’s alleged dumping of hazardous waste into the Tomuli River in the suburbs of Norilsk between 2017 and 2019. Rosprirodnadzor in this instance calculated damages totaling approximately 154 million rubles (~$2.2 million).

Nornickel is the world’s largest producer of palladium and also produces nickel, platinum, and copper. Russian billionaire oligarch Vladimir Potanin heads the company as chairman of the board and controls a 34.54 percent stake in the company through his Cyprus offshore Olderfrey Holdings Limited. The company is headquartered in Moscow, but a large portion of its operations are located in Norilsk.

Rusal, one of the world’s largest producers of aluminum, controls a 27.82 percent stake in Nornickel, making it the second-largest single shareholder. The U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Rusal and its then-majority stakeholder Russian oligarch Oleg Deripaska in 2018 citing Deripaska’s connections to the Russian government as well as his alleged criminal activity. OFAC lifted the sanctions on Rusal in January 2019 after Deripaska reduced his stake in Rusal’s parent company En+ to approximately 45 percent, down from 70. The sanctions on Deripaska remain in place.

Deripaska and Potanin have been embroiled in a decade-long feud for control of Nornickel following the latter’s failed 2012 attempt to buy back Rusal’s stake for $12 billion.

 

Photo: Rosprirodnadzor (CC BY 4.0)

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