Rusal urges Nornickel to fire management over Russian fuel spills

London — Aluminum producer Rusal said July 14 it has asked Vladimir Potanin, the CEO of nickel and platinum group metals producer Nornickel, to replace the management team to boost its environmental, social and governance performance.

Rusal, which holds a 27.8% stake in Nornickel, said it was seriously concerned about a series of recent environmental incidents in Norilsk involving Nornickel.

Nornickel subsidiaries reported two fuel spills in the space of one and a half months.

On May 29, Nornickel said the sudden subsidence of supports damaged the diesel fuel storage tank at Norilsk's No. 3 combined heat and power plant (owned by Nornickel) resulting in 21,163 mt of diesel being leaked into the environment, polluting both waterways and soil.

Russia's environmental regulator Rosprirodnadzor ordered Nornickel to pay Rb148 billion ($2.1 billion) in compensation.

Nornickel said it disputes the size of the compensation calculated by Rosprirodnadzor, but reiterated its commitment to cover the cost of dealing with the environmental damage caused by the incident.

Then on July 12 about 44.5 mt of aviation fuel was spilled from a Nornickel-owned pipeline in the vicinity of Tukhard in the Arctic, the second environmental incident in six weeks.

Rusal said what had happened in Norilsk made it question the competence of Nornickel's management and forwarded to Nornickel's board a proposal to request Potanin, who controls 34.54% of Nornickel through his Interros group, to change the management team, move the company's head office to Norilsk from Moscow and tackle the environmental and safety issues.

Nornickel's spokeswoman declined to comment on the criticism.

"The main shareholders in Nornickel have had a number of disagreements over the company's strategic development for years," metals and mining analyst Andrey Lobazov at Moscow investment company Aton said. "The recent incidents give Rusal a pretext to send a reminder about this, but its public appeal gives the impression of being more like a PR campaign," he said adding that Nornickel can, for instance, only replace its CEO with the approval of the majority of its shareholders.