MOSCOW: Norilsk Nickel named longtime co-owner Vladimir Potanin as its chief executive yesterday under a Kremlin-inspired deal to end a boardroom war at the world’s top nickel and palladium producer.
Oligarch Roman Abramovich will take control of a 20 percent voting stake and act as a buffer between Potanin and rival Oleg Deripaska, who owns a share in Norilsk through UC RUSAL, the world’s largest aluminium producer.
“When the new lineup of shareholders gets used to each other, confidence will grow that we now feel is now lacking,” Potanin said, paying tribute to the mediating role to be played by Abramovich, an ally of President Vladimir Putin.
Speaking after his unanimous election by the Norilsk board, Potanin said he planned to stay in the job for between 18 months and two years. The peace deal will last for 10 years, with the core shareholders agreeing to keep their stakes for five.
Abramovich, the billionaire owner of Chelsea soccer club, could act as a conduit for the Kremlin at the cash-rich company that mines the vast mineral deposits of Russia’s far north.
Having brought an end to the four-year feud between Potanin and Deripaska, he could potentially end up sidelining them as Putin seeks to restore order at the $30bn miner that was privatised in the mid-1990s.
Deripaska and Potanin now lose their blocking voting stakes and Abramovich steps in with the ability to serve the president’s interests early in his new six-year term. “Roman Abramovich is a businessman who wants to make money,” a well-connected industry insider said of the deal. “Norilsk Nickel is a cash machine that doesn’t need to fear a crisis.”
Alexander Abramov, Abramovich’s partner in Evraz, Russia’s largest steelmaker, is to become board chairman at Norilsk Nickel, a source said. Norilsk’s shareholders will elect a new board on March 11.
Vladimir Strzhalkovsky, who like Putin served in the Soviet KGB security force, steps down as CEO — a demand by Deripaska that Potanin had resisted.
Sources close to the company’s shareholders said last week that Strzhalkovsky, who sided with Potanin and launched a series of buybacks during the dispute over Norilsk Nickel’s cash flows, would have a $100m severance deal.
The appointment by the Norilsk board of Potanin, a survivor of the battles between the businessmen who struck it rich after the collapse of the Soviet Union in 1991, had appeared unlikely until the deal was reached this month.
Potanin left the Soviet trade ministry and created a banking empire in the early 1990s — securing control over Norilsk at a bargain-basement price in the loans-for-shares privatisations that he masterminded.
His stake at Norilsk Nickel was one of the biggest prizes handed to insiders in the post-Soviet carve-up of Russian industry in 1995, a process that spawned a new oligarch elite.
Putin reined in the tycoons after he rose to power in 2000, and signalled last week he was intent on tackling some of the problems that continue to blight Russia’s business scene after 13 years as the country’s dominant leader.
Sorting out problems at Norilsk Nickel would help enhance Russia’s image among foreign investors.
Potanin, 51, is ranked the 46th-richest man in the world, with a fortune estimated at $14.5bn by Forbes magazine.
He had long rejected a direct role in managing the company, saying he preferred to leave the day-to-day running of the company to professional managers.
Despite the deal, it is not clear whether a balance of power has been reached at the management level. Analysts expressed concerns that paying out dividends could take precedence over capital investment now running at about $2.5bn per year.
Reuters
