Russian metals giant set for overhaul

The sale of the Russian government's controlling stake in RAO Norilsk Nickel last week clears the way for the reorganisation of one of the world's largest metals producers.

Uneximbank, the Russian bank, won the shares at a controversial auction on Tuesday by offering to pay the equivalent of $617m (pounds 400m) for the 38 per cent stake - well below the market value.

Now it has the difficult task of overhauling the behemoth enterprise, which supports about 300,000 people from its base above the Arctic Circle. Analysts expect Uneximbank to succeed. "We'll see Uneximbank try to consolidate its majority share, then it's to the moon for the stock," said James Fenkner, head of research at Moscow brokerage CentreInvest Securities, which has recommended Norilsk shares.

Norilsk shareholders will get the chance to vote next month on a proposal to sell more shares to themselves, part of a plan to raise more capital. The shares closed the week at $15.46, up from $15.00.

The company's fate is of interest to more than just the bankers sitting in Uneximbank's offices on Masha Poryvaevaya Street in central Moscow. In the metals market, traders are constantly looking north because Norilsk is the world's largest producer of palladium and the second-largest producer of nickel. "It's a vital element in large and major areas of the non-ferrous metals market," said Christopher Granville, head of research at UCB, the Russian unit of MC Securities. "It's evident that when some news that has an impact on production at Norilsk comes on the wires, you have an immediate reaction in the London metals market."

Norilsk is a giant company town, which has traditionally provided everything from salaries to kindergartens and pensions for its people in Siberia's Krasnoyarsk region. If Norilsk can adapt to the realities of a market economy, other such giant Russian enterprises may also succeed.

"It's a clear symbol of transition from the old Russia to the new Russia," said Philip Manduca at London-based Eldon Capital Management.

"It has huge social bills, huge infrastructure, huge costs," he said. "It's a flagbearer of restructuring. If it goes as it should, so goes Russia."

Uneximbank is no stranger to Norilsk. It became custodian for the shares it purchased last week by lending the government $170m under the loans- for-shares programme in November 1995, when big Russian banks lent the government money and received shares as collateral. If the government failed to repay, the banks were supposed to sell the shares to recover their money.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Graduate Recruitment Resourcer

£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

Recruitment Genius: Telesales Executive - OTE £32,000+

£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Day In a Page

General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

Steve Bunce: Inside Boxing

Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat