Russian Mining Giant Nornickel Fined $2 Billion for Huge Arctic Fuel Spill

Russian Mining Giant Nornickel Fined $2 Billion for Huge Arctic Fuel Spill

2021-02-05 14:49:46
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MOSCOW – Russian mining giant Norilsk Nickel was fined $ 2 billion on Friday for the damage caused last year by a massive fuel spill during the country's worst environmental disaster in the Arctic.

The May spill of 21,000 tons of diesel into the rivers and underground near Norilsk in Siberia infuriated Russian President Vladimir Putin and the magnitude of the fine sent a message to Russian companies to clear up their act.

"The most significant change after this decision should be the attitude of the owners of large, dangerous manufacturing facilities towards modernizing their production," Deputy Prime Minister Victoria Abramchenko said after a Russian court ruling on Friday.

"It is much cheaper to modernize production than to offset 146 billion rubles ($ 2 billion) in damage."

The $ 54 billion company, co-owned by billionaire Vladimir Potanin and aluminum producer Rusal, said it plans to carefully evaluate the court's ruling.

If no appeal is lodged, it will take effect one month after the full text is ready.

The largest palladium and nickel producer in the world, known as Nornickel, has long been criticized for sulfur dioxide emissions in the Siberian Arctic and the massive leak from a storage tank at a power plant angered Putin.

"People have to answer for what has been done," he said in December when asked about Nornickel and the spill.

Nornickel shares fell 3% in Moscow following the court decision in Russia's Krasnoyarsk region, underperforming the reference index, which rose 0.3%.

The lawsuit was initiated by the Russian environmental watchdog, who sought 148 billion rubles from Nornickel's energy company, NTEC. The fine is by far the highest fine for environmental damage in Russia.

"Today's court ruling is in many ways a precedent that can help to really address environmental issues at a systemic level," Greenpeace said in a statement.

The company's own estimate for environmental costs was much lower at 21.4 billion rubles.

"I am sure this money will be used to solve environmental problems," Svetlana Radionova, the head of Russia's environmental watchdog, said in a statement.

Nornickel had already set aside $ 2 billion to cover a possible fine, a move that hit his net profit in the first half of 2020.

"Overall, this is likely to be a positive event, as the beautiful story may settle down," said analysts at BCS.

($ 1 = 75.0620 rubles) (Reported by Polina Devitt and Anastasia Lyrchikova; edited by David Goodman, Pravin Char and David Clarke)

Photo: This Sunday, June 28, 2020, photo, released by Greenpeace, shows water from the Norilsk nickel enrichment plant flowing from a pipe and into a river that flows into the lake at Norilsk, 2,900 kilometers (1,800 miles) northeast of Moscow. Norilsk's nickel enrichment plant management said it had improperly pumped wastewater into the Arctic tundra and suspended responsible workers. Nornickel's statement is the second time in a month that the company has been linked to pollution in this ecologically sensitive region. Photo credit; Dmitry Sharomov, Greenpeace via AP.

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