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Changes at Norilsk Nickel

A Norilsk nickel
project in Russia
Moscow, Russia — MININGREVIEW.COM — 02 February 2009 – Latest developments are pointing towards significant changes in the shareholding of Norilsk Nickel – the world’s leading producer of nickel and palladium, and one of the largest global producers of platinum and copper.

Reuters – quoting Russian newspaper Vedomosti – reports from here that Russian tycoon Alisher Usmanov is proposing a tie-up between his Metalloinvest iron ore group and Norilsk Nickel that would make him the largest shareholder in a merged giant.

The newspaper report is the latest in a series on proposals for a metals and mining mega-merger that could help the two companies clear debt and possibly bring in the state as a shareholder. Norilsk and Metalloinvest were not immediately available for comment.

Usmanov is proposing to combine his Metalloinvest holding with Norilsk Nickel, valuing Metalloinvest at half of Norilsk’s value. Usmanov would also contribute Metalloinvest’s 75% share of the giant Udokan copper deposit.

Usmanov would be left with 37% in the new giant, under his plan. Norilsk’s largest shareholder – Vladimir Potanin’s Interros group – would receive 16.6%, as would Oleg Deripaska’s RUSAL, which owns 25% of Norilsk. The combined company would then issue shares to the government, giving the state a stake of at least 25% plus one share, and would use the proceeds to clear debt inherited from Metalloinvest and Norilsk Nickel.

Deripaska says that RUSAL itself – which put up its one-quarter stake in Norilsk as collateral on a loan from state bank VEB – would not participate in a merger. The aluminium giant could issue a convertible bond to the government to help it clear his debts, Deripaska told reporters in Davos, Switzerland, on the sidelines of the World Economic Forum.