MAC: Mines and Communities

Norilsk's Nickel Nightmare

Published by MAC on 2006-02-06

Norilsk’s Nickel Nightmare

The Norilsk complex is Russia’s worst ambient air polluter and the biggest single source of sulphur dioxide (SO2) poisoning anywhere in the world. Surely the time is ripe for a campaign to clean up its act?

‘When foreign companies consume Norilsk Nickel products for environmentally friendly products like catalytic converters, they clean the air in the USA, Europe and Japan thanks to the existence of this horrible source of pollution in Russia.’ Thus declared the Russian Socio-Ecological Union in 1994.

Nearly a decade later the situation has hardly changed. Every day, according to local authorities, Norilsk plants send 5000 tonnes of SO2 and heavy metals into the sky; some falling as far as Norway and Canada. Near Norilsk’s operations in the Kola Peninsula, the sulphur has turned the snow yellow for 30 miles around; copper makes it black.

More than 8000 km2 of larch forest and lichen, essential sustenance for reindeer herds maintained by Nenets and Sámi, have been wiped out by acid rain since 1980 alone. Hundreds of km2 of tundra have been rendered sterile.

Official statistics say that Norilsk is responsible for ‘only’ one-seventh of the total factory pollution in Russia: 2 million tonnes of waste gas, and 85 million m3 of dirty water every year. But such figures must be regarded with scepticism. Throughout the post-communist period, data on toxic emissions have been at best unreliable and at worst fabricated. In 1991, management at Norilsk’s Severonickel smelter said it was responsible for 200,000 tonnes of SO2 a year, but the Finnish government claimed it was actually three times that amount.

Norilsk is Russia’s largest mining conglomerate. Nickel mining and smelting are concentrated on the Kola Peninsula, while platinum group metals (PGM) are hewn and processed in Krasnoyarskii Krai. Norilsk supplies most of Russia’s copper and cobalt, is the world’s biggest vendor of nickel and palladium, and second among global platinum producers. It is also now aggressively venturing into gold mining in Magadan and Irkutsk. But that is not all: earlier this year Norilsk bought up Stillwater, the only producer of PGM in the USA. This was a stunning coup for a company whose lack of transparency is legendary. Russian law continues to protect Norilsk from independent scrutiny, and production figures for PGM are a state secret.

Western Europe is the main buyer of Norilsk products; investors in the company include Britain’s Mercury Asset Management, the Dutch ABN Amro bank, and Swiss-based Glencore, the world’s most profitable metals trader. Britain’s Barclays Capital was central to Norilsk’s purchase of Stillwater in early 2003.

If the Nenets and Sámi have unforgivably suffered (and without recompense) from forced resettlement and the blighting of their pastures within the Norilsk domains, workers’ lives have, over several decades, also been remorselessly put upon the sacrificial block. Soon after glasnost, Russians for the first time openly challenged the Stalinist assumption that domestic mineral resources were limitless, to be exploited at almost any human and environmental cost. It was Norilsk’s operations that, for many, represented the worst case example of the Soviet state’s inhumanity to its citizens.

Following the collapse of Soviet communism, there has been only cosmetic change. Numerous serious accidents, fires and explosions have been recorded over the past 15 years, while domestic heating for the mining settlements often fails. Residents’ life expectancy is 10 years below the Russian average (which, as has recently been pointed out, is itself now lower than it was under Soviet rule). Alcoholism is rife and there is a massive incidence of respiratory disease and skin complaints.

Largely because of this continuing attrition, the Norilsk workers have finally broken with the tradition of filing into polling booths, to vote company nominees into local and regional administrative posts. In 2002, former Norilsk director general Alexander Khloponin was elected governor of Krasnoyarsk, but dismally failed to keep his promises on income and health. This May, the unions put up one of their own as an ecological candidate for mayor of Norilsk. Viktor Melnikov accused the company of chalking up huge profits while continuing to operate an unsafe plant, depress wages and withhold crucial internal financial data. In a surprise victory in October 2003, Melnikov walked away with a huge majority and, as the new Mayor of Norilsk, has vowed to force Norilsk Nickel to spend a larger percentage of its revenues on the social welfare of its workers.

Norilsk is underpinned by a shady Russian industrial conglomerate called Interros, although its board includes, among others, an ex-senior official of the European Bank for Reconstruction and Development (EBRD); its auditors are Deloitte and Touche and a key adviser is the Robert Fleming Investment Bank, both London-based.

Central to the enterprise is Vladimir Potanin, the fifth wealthiest man in Russia with a personal fortune of around US$1.8 billion. A former Soviet international trade official, Potanin set up Oneximbank in the early 1990s. This soon became the country’s largest private bank and the vehicle by which Potanin acquired 51% control of Norilsk Nickel in 1996, under the infamous ‘loans for shares’ auctions, engineered by Boris Yeltsin and Boris Berezovsky. For this largesse, Potanin bankrolled Yeltsin’s 1996 presidential re-election campaign. (In return, Potanin was rewarded with the Russian vice presidency.) Although Oneximbank crashed in 1998, Potanin had by then transferred his interests out of the bank, while holding onto the reins of Norilsk. Despite his seedy history, Potanin has so far escaped indictment in Vladimir Putin’s scourge of allegedly corrupt oligarchs. The most likely reason for this is the importance of Norilsk as a honey-pot of vital foreign exchange.

Clearly murkiness is not just confined to the air around Norilsk. The crucial process of unearthing the truth, about what one worker dubs ‘the quasi-police state’ of Norilsk, has not even begun.

Sources: The Norilsk-Rio Tinto deal: "Rio Tinto Breaks the mould", by John Helmer on Mineweb, 20/1/26; Alrosa and Rio Tinto: Dryblower on 30/1/]06; Putin spars with Shtirov: Helmer on Mineweb, 30/1/2006; Evenks confronted with oil in Sakhalin: Sahkalin Times, 30/1/05; general situation of Evenks: Taiga Rescue News 3/6/02; RFE/RL, 7/3/02; Diavik defence: Diavik Diamonds corporate website, June 2003

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