MAC: Mines and Communities

It just ain't football! Russian watchdog imposes massive fines on Norilsk and Evraz

Published by MAC on 2008-02-27

It just ain't football! Russian watchdog imposes massive fines on Norilsk and Evraz

27th February 2008

The world's biggest nickel mining conglomerate, Norilsk Nickel, has for some years been indicted as one of the worst mining and metallurgical companies on the planet. See:

Some of its operations in Russia were also named by the Blacksmith Institute in 2006 as one of the ten most polluted sites in the world. See:

Yet, it has its defenders - including Paul Mitchell who heads up the mining industry's leading advocacy body, the International Council on Mining and Metals (ICMM).

Also, as noted on this site in June 2006 , both Rio Tinto and BHPBilliton have joint venture agreements with the company. See:

Now a charge has made against Norilsk by Russia's environment agency (until recently not reputed for its diligence) that it is guilty of massive water pollution. This should pose a considerable embarassment, not only to the company's western defenders, but also to two Russian oligarchs waiting in the wings to buy out Norilsk's current owners.

One of these prospective owners is iron and steel baron Alisher Usmanov, who also has western interests. As of February this year, he is the biggest single shareholder in the renowned UK Football club, Arsenal.

In addition, the Russian environment agency is suing the Evraz iron-steel group for similar, if less damaging, river pollution.

Ironically, Evraz is 41%-owned by yet another Russian oligarch who loves British football - Roman Abramovich, who purchased outright London's Chelsea team in 2003. See:

Norilsk Nickel hit with $178 mln pollution charge

RIA Novosti

27th February 2008

MOSCOW) - Russia's environmental watchdog is demanding that Norilsk Nickel pay $178 million in compensation after it was accused of polluting Siberian rivers, the agency said on Wednesday.

"Oleg Mitvol, deputy head of Rosprirodnadzor, has filed compensation claims against the Euro-Asian energy company and Norilsk Nickel for causing damage to water resources to the amount of $5.7 million and $178 million, respectively," the agency said in a statement.

After an inspection of the Russian nickel giant's West Siberian branch last summer, Rosprirodnadzor documented significant levels of untreated substances in a number of local rivers and other water basins, and gave the plant a warning over the pollution.

Norilsk Nickel said last fall that it would contest Rosprirodnadzor's claims and drafted a defense statement.

Natural Resources Minister Yury Trutnev pledged at the time that no claims would be made against the nickel giant.

As of last fall, the watchdog estimated environmental damage caused by Norilsk Nickel at about 2.7 billion rubles ($110.4 million).

In the lawsuit against the Euro-Asian energy company, a subsidiary of Evraz Group, one of Russia's largest steel and mining businesses, Rosprirodnadzor asked the company to repay over 141 million rubles ($5.7 million) for polluting two rivers in the Kemerovo Region, West Siberia.

The company was prescribed to stop the dumping of untreated waste into the rivers by December 30, 2007, but an inspection in early February 2008 revealed that Russian metal's giant was continuing to pollute rivers.

Norilsk hit with $178 mln Russia pollution suit

By Robin Paxton and Anastasia Teterevleva

MOSCOW, (Reuters)

27th February 2008

Mining firm Norilsk Nickel was named in a 4.35billion rouble ($178 million) pollution suit filed by Russia's environment agency on Wednesday in its largest ever claim against a metals company.

The subject of rival merger proposals by Kremlin-linked billionaires, Norilsk denied the charges and said it would appeal.

Stemming from the alleged pollution of rivers in Siberia, Rosprirodnadzor agency said its deputy head, Oleg Mitvol, had lodged the claim with the Krasnoyarsk regional arbitration court.

Mitvol's previous comments have raised concern about growing state involvement in Russia's natural resources sector and his role in enforcing Kremlin policy.

The outspoken official led a 2006 campaign against Royal Dutch Shell's Sakhalin-2 oil and gas group. Pressure subsided after the group agreed to sell control to Russian state gas export monopoly Gazprom for $7.45 billion.

"I hope the court will make a balanced decision based on detailed studies of the material with which they are presented and oblige companies to uphold environmental law and stop the escape of untreated waste into rivers," he said in a statement.

Mitvol told Reuters the government wanted to raise fines for environmental violations to international standards.

"We are continuing to take samples and the sum of the fine will be recalculated," he told Reuters by telephone.

Norilsk, 320 km (200 miles) inside the Arctic Circle, is ranked among the world's 10 most polluted places by the New York-based Blacksmith Institute.

Norilsk Nickel, a $57.3 billion company which mines a fifth of the world's nickel, has pledged a large portion of its $1 billion annual investment to 2011 will be invested in reducing sulphur dioxide emissions and other ecological improvements.

The company disputed the agency's findings. "We are going to appeal," a company spokeswoman said.


Norilsk is currently the subject of two possible merger proposals as its two billionaire owners, Mikhail Prokhorov and Vladimir Potanin, split their assets in a public divorce.

Aluminium giant United Company RUSAL, majority owned by Oleg Deripaska, has agreed to buy Prokhorov's stake. Norilsk is also studying a proposal to merge with the assets of iron and steel baron Alisher Usmanov.

Analysts said the environmental case was probably not connected with these events, and that Norilsk would be able to pay any fine should the court uphold the charges.

"The total effect will be immaterial compared with Norilsk's current market capitalisation of more than $50 billion," said Dmitry Smolin, mining analyst at UralSib Financial Corp.

Mitvol said the recommended fine applied to tests undertaken to December 2007 at Norilsk's Taimyr division, where most of its production takes place.

He said the Baikal Pulp and Paper Mill had paid a fine of similar size.

Rosprirodnadzor proposed that Coca-Cola Co convert the pulp mill into a bottling plant.

Norilsk's Moscow-traded shares fell 1.3 percent to trade at 7,207 roubles at 1442 GMT, broadly in line with a 1.2 percent drop in the MICEX metals and mining index .MCXMM.

Rosprirodnadzor also filed a 141 million rouble ($5.8 million) river pollution claim against the Eurasian Energy Company, a subsidiary of steel maker Evraz Group.

Evraz declined to comment.

(Additional reporting by Aleksandras Budrys)


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