On July 5, 2022, Vladimir Potanin, the largest shareholder of Russia's Norilsk Nickel, said in an interview with the media outlet, He wants to merge Nornickel, his mining group, with UC Rusal, an aluminium giant, in a move that would strengthen their defences against any western sanctions. He added that the initial proposal, which would have created a company with a total value of about $60bn, similar to Glencore, had come from Rusal's management.
A combination of the two companies would create a global base metals giant with revenues of $30bn. Norilsk Nickel is a diversified mining and metallurgy company, the world's largest producer of nickel and palladium, and a major producer of platinum, cobalt, copper and rhodium. Nornickel produces 40% of the world's palladium and 7% of its nickel ore. Rusal is one of the leaders in the global aluminium industry, accounting for 5.6 per cent of global aluminium production and 6.3 per cent of alumina production in 2021.
Rusal was hit by US sanctions between April 2018 and early 2019, which caused global aluminium prices to soar. The US removed Rusal from its sanctions list after its founder, Oleg Deripaska, agreed to relinquish control of the company. Mr. Deripaska remains on the U.S. sanctions list, and his relationship with Mr. Potanin has been frosty because of a long-running dispute over management. Mr Potanin's Interros holding company owns about 35.95 per cent of Norilsk nickel, while Rusal owns 26.25 per cent.
The two companies share a "green" agenda, with Rusal making environmentally friendly aluminium and Norilsk producing products that are widely used in the green economy, such as nickel and palladium in electric car batteries. Second, mergers can diversify ownership and shareholder structures and improve stability in the face of Western sanctions. Third, it is easier for the combined company to gain support from Russian state development projects.
Rusal's Hong Kong-listed shares rose 11.35 per cent on the news, while Noel, the world's largest producer of palladium and refined nickel, fell 3.8 per cent in Moscow. While Mr Potanin himself was sanctioned by the UK last week, neither company has been directly targeted by western sanctions imposed on Russia over the conflict with Ukraine.
