The story
History
Mining began in the Norilsk area in the 1920s. The Soviet government established the Norilsk Combine in 1935 and passed control to the NKVD. In 1943, Norilsk produced 4,000 tonnes of refined nickel, and by 1945, it had reached the target figure of 10,000 tonnes. The mining and metal production originally used forced labour from the Gulag system.
In 1993, after the fall of the Soviet Union, a joint-stock company called RAO Norilsk Nickel was created. Two years later, control over the deeply indebted company, which was bleeding cash at a rate of about $2 million a day against the background of falling nickel prices, was sold to a private company, Interros. By the end of privatization in 1997, the company had turned a profit, and workers were being paid. The current average pay exceeds $1,000 per month with an annual paid leave of two to three months. Nevertheless, the working and living conditions in Norilsk remain harsh, although they are improving as the company shuts down old factories that are the source of excessive pollution.
In July 2000, Norilsk Nickel joined forces with the St. Petersburg Research Institute of the Arctic and Antarctic (Russian: Арктический и антарктический научно-исследовательский институт), to investigate the potential use of decommissioned nuclear powered submarines, both from the United States and Russia, to transport materials along the Northern Sea Route (Russian: Северный морской путь (Севморпуть)). Overhaul and refit costs came to $72–80 million per submarine, which included modifying its ice-breaking bow to cut through ice up to 215 cm (85 in) thick in seawater and up to 150 cm (59 in) in the freshwater mouth of the Yenisei. Decommissioned Typhoon submarines were expected to transport up to 12,000 tonnes of supplies and nickel between Dudinka and either Murmansk or Arkhangelsk. In 2000, the Murmansk Shipping Company (MMP or MSCO) (Russian: Мурманское морское пароходство) provided icebreaker services at a charge of $11.35 per tonne of cargo. Three submarines - the project feasibility threshold - were scheduled for refit and overhaul between 2000 and 2003.
However, the stakeholders failed to reach an agreement as to who would conduct and cover the refit and overhaul of the submarines. Furthermore, money was not the only issue. Under existing international agreements, decommissioned nuclear-powered submarines from the navies of the two countries had to be dismantled. Should this obstacle be addressed, subsequent ownership of the refitted submarines also remained unclear: whether they would remain the assets of the Ministry of Defense or would be transferred to another governmental agency. One of the options suggested by Nornickel was to establish a joint transportation company that would lease the vessels.
In 2002, Nornickel accounted for most of MMP's shipping along the Northern Sea Route. In 2008, Aker Yards signed a contract with Norilsk Nickel for the delivery of four container/cargo ships for Arctic operations, with an option for a fifth.
In 2002, MMC Norilsk Nickel began purchasing gold mining assets, which were spun off in 2005 as Polyus Gold.
In 2003, the company took control of Stillwater Mining Company, the only palladium producer in the U.S. Stillwater operates a platinum group metals (PGM) facility in Stillwater, Montana. In November 2010, Norilsk Nickel announced the sale of Stillwater.
Throughout 2007, Norilsk acquired a host of mining and metallurgical assets abroad, transforming into a multinational company with operations in Australia, Botswana, Finland, Russia, South Africa, and the United States. Norilsk Nickel signed its key deal on 28 June 2007, acquiring approximately 90 percent of Canada's LionOre Mining International Ltd., the world's tenth-largest nickel producer at the time. This takeover, valued at $6.4 billion, was the biggest foreign acquisition by a Russian company at the time, making Norilsk Nickel the world's largest nickel producer.
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On February 27, 2008, Norilsk Nickel diversified into the coal mining industry through North Star LLC by obtaining mining rights to the amount of 33.6 million rubles for the estimated 5.7 billion tonnes of coal at the Syradasai Field near the port of Dikson (Russian: Диксон) in the Taymyrsky Dolgano-Nenetsky District (Russian: Таймыр). In the coal mining industry, it competed with Rio Tinto and BHP Billiton. By the estimates of North Star LLC (Russian: ООО «Северная звезда»), a firm affiliated with Nornickel, developing the field would require an investment of $1.5 billion, which including the necessary expansion of the port of Dikson, another Nornickel asset. The only competitor for the rights to the Syradasai Field was Golevskaya Mining Company LLC (Russian: ООО «Голевская горнорудная компания»). The Syradasai Field is 105 to 120 km southeast of Dikson in the Taimyr-Turukhansk support zone (Russian: Таймыро-Туруханской опорной зоны). A 120-kilometer road and railway was expected to connect the deep-sea port on Cape Chaika to the massive coal deposit by 2019. CC VostokUgol (Russian: УК «ВостокУголь») or Vostok Coal planned to export up to 10 million tonnes of coal annually from the open-pit mine to Western Europe and the Asia-Pacific regions.
In 2016, Nornickel ranked below 65 other oil, gas, and mining companies in a list of 92 involved in onshore resource extraction above the Arctic Circle, in terms of handling indigenous rights.
In 2018, North Star LLC was acquired by businessman Roman Trotsenko's AEON Group, changing its ownership. Neither Nornickel nor AEON disclosed the terms of the ownership transfer.
In the Arctic Environmental Responsibility Index (AERI), Norilsk Nickel is ranked No. 38 out of 120 oil, gas, and mining companies involved in resource extraction north of the Arctic Circle.
In April 2024, the United States and the United Kingdom announced a ban on imports of Russian aluminum, copper, and nickel. Due to sanctions, Norilsk Nickel planned to move some of its copper smelting to China and establish a joint venture with a Chinese company. Finished copper products would be sold as Chinese products to avoid Western sanctions. China is Norilsk Nickel's largest export market since 2023. Nickel is a critical metal in electric vehicle batteries, and palladium is critical element in catalytic converters, a component in natural gas vehicles. This plan was motivated not only by circumventing Western sanctions, but also China's significantly less stringent environmental standards than those in Russia.
2020 fuel spill
On 29 May 2020, a Soviet-era fuel storage tank owned by Nornickel subsidiary Norilsk-Taimyr Energy (NTEK) collapsed, flooding the nearby Daldykan River with some 20,000 tonnes of diesel. Russian President Vladimir Putin declared a state of emergency. The diesel oil was intended for the NTEK coal-fired combined heat and power plant as backup fuel. The fuel storage tank failed when the underlying permafrost began to soften. An area of up to 350 square kilometers (135 square miles) was contaminated. The cleanup efforts were complicated by a lack of roads and the river's shallow depth, which prevented boats or barges from passing. Former deputy head of Rosprirodnadzor Oleg Mitvol estimated the cleanup cost at about 100 billion rubles ($1.5 billion) and set a timeline of five to 10 years. In September 2020, the company reported having collected more than 90% of the leaked fuel.
Environmental Resources Management, the international company which provides Norilsk Nickel with consulting services on environmental issues, identified the cause of the accident as subsidence resulting from the gradual melting of the permafrost on which the piles supporting the fuel storage tank stood. According to the results of the official investigation, some of the piles were shorter than the designed length. They rested on the permafrost rather than being sunk into the bedrock. According to specialists, the average annual temperature in Russia is increasing at a rate more than 2.5–2.8 times faster than the global average. Russia's Far North, including the Taymyr Peninsula, is heating up faster than anywhere else in the country, melting the permafrost on which many structures stand.
However, Zhanna Petukhova, director of the Arctic Permafrost Research Center, states that the tanks indeed stand on piles driven into the bedrock, rather than the permafrost. She believes the accident is more likely to have been due to the poor condition of equipment dating back to the Soviet era.
In February 2021, the Krasnoyarsk Arbitration Court ordered Nornickel to pay 146 billion rubles ($2 billion) in compensation for the spill damage to support environmental projects in the Krasnoyarsk Territory. Nornickel had claimed the damages should be calculated at 21 billion rubles ($280 million).
From Wikipedia’s article on Norilsk Nickel, shared under CC BY-SA 4.0.4