The decision to purchase the assets worth more than USD 600 mln from the shareholder controlling the company was taken without discussions with other shareholders or Board of Directors. This decision as well as buyback of Norilsk Nickel’s shares by the subsidiaries including OGK-3 is a serious violation of corporate governance principles. 

Vladimir Potanin and Interros having control over Norilsk Nickel and OGK-3 are using the balance sheet of Norilsk Nickel in its interests without taking into account the difficult situation on the global financial markets, as well as the importance of maintaining the company’s liquidity.  In the case of OGK-3 such acquisitions threaten the implementation of the investment programme of the generating company and are misuse of funds received from the additional emission in 2007.

Neither RUSIA Petroleum, nor Plug Power, or, moreover, OOO T-Invest are core assets for OGK-3 and their purchase is explained only by the desire of Interros to get access to the cash of the company.  In the RUSIA Petroleum case, Interros sold even not a blocking stake, leaving less than 1%, which is a qualitative change to the cost of the stake. 
 
These deals are made in the overall unfavorable situation at Norilsk Nickel related to the fall of price on nickel, copper, and other metals, on the one hand, and with the considerable increase of production costs, on the other hand. As a result, the company’s profitability declines significantly.  

The purchase of the unprofitable assets, such as LionOre, buybacks of the company’s shares using the subsidiaries’ balance sheets at prices higher than the market, purchase of non-core assets are depriving Norilsk Nickel of its substantial cash reserves. This may lead to partial or complete termination of the planned investments in the environmental programmes, production and modernisation.  This may also cause the reduction of tax payments to the Norilsk city budget, which are core to the city, and severe social consequences for both Norilsk city and the whole Krasnoyarsk region, where the company is one of the key taxpayers. 

About UC RUSAL

United Company RUSAL (www.rusal.com) is the global leader in the aluminium industry, accounting for approximately 12% and 15% of global production of aluminium and alumina respectively. The company was founded in March 2007 through the merger of RUSAL, SUAL, and the alumina assets of Glencore. UC RUSAL sells its products in 70 countries worldwide and employs 100,000 people in 19 countries, across 5 continents.