Potanin is twisted round palladium

As The Moscow Post correspondent reports, the structures Russian Platinum of Musa Bazhaev and MMC NorNickel of Vladimir Potanin - signed an agreement on one of the major projects for the mining of platinum group metals. Businessmen, including Oleg Deripaska as one of the major shareholders of NorNickel, have been fighting for the site for the development of the deposit for six years, and taking into account the number of tenderers, this truce can be interpreted in different ways. It is possible that Kazakh businessman Kenes Rakishev, known as a successful investor in Russian gold mining, will also interfere in this game.

Russian Platinum and NorNickel had been "butting heads" for the site for 6 years, and in different ways. Russian Platinum of Bazhaev won the competition for the development of the Norilsk-1 deposit. But the company did not operate in the Norilsk region, and did not have infrastructure, and this was the reason for NorNickel to challenge the results of the competition for several years. Russian Platinum complained that the Potanin structure actually hindered the development of the deposit.

In February 2020, the companies somehow agreed, and the result was the signing of a shareholder agreement within the framework of the Arctic Palladium joint venture, where the parties had equal shares. Russian Platinum's contribution to the joint venture was licenses for the development of the Chernogorskoe deposit and the southern part of the Norilsk-1 deposit. A license for the Maslovskoye deposit had to become NorNickel's contribution. The future joint venture with Bazhaev provides parity participation.

However, in March, the joint venture collapsed, as the project was blocked by Oleg Deripaska's RUSAL, that is NorNickel's shareholder. It seemed that the oligarch planned to beat his "frenemy" Vladimir Potanin. But this did not happen.

In general, RUSAL justified its position by saying that, in its opinion, NorNickel's share in the joint venture should be bigger. At the same time, Russian Platinum was not ready to reduce its share in the joint venture below 50%, as RUSAL wanted, since its licenses were the main part of the integrated project.

Recently it became known that the companies decided to make an evasive action and on July 16, Russian Platinum and NorNickel signed an agreement on operational partnership. According to the document, MMC will provide Russian Platinum with access to its infrastructure on market terms.

In addition, they agreed that NorNickel would take over the sale of products produced at the Chernogorskoe deposit, for which a long-term off-take agreement will be signed. At the same time, the statement from Russian Platinum and NorNickel indicates that binding contracts are planned to be concluded before the end of the first quarter of 2021 "after receiving all necessary corporate approvals".

Will Bazhaev move over?

But it is possible that this agreement is just the beginning of the game where Vladimir Potanin is not given the best role. The fact is that the asset of Musa Bazhaev can go to aggressive Kenes Rakishev.

Recently it became known that the businessman is returning to the gold mining market of the Russian Federation. Allegedly, Kenes Rakishev is studying the possibility of acquiring assets. According to some information, negotiations concerning Zapadnaya Gold Mining with assets in the Transbaikal region, Buryatia and Yakutia (Sakha) are at the most advanced stage. Mr. Rakishev is also studying the Nordgold Berezitovy mine, owned by Alexey Mordashov's sons. Another interesting asset for the businessman is Bamskoye deposit of Said Kerimov's Polyus. Rakishev has quite wide range of asset search.

It is possible that he will turn his attention to the "Amur Zoloto" company of Musa Bazhaev. After all, back in 2016, the media wrote that Rakishev, as a shareholder of Petropavlovsk, considered this idea. Then it was said about the merger of the companies: Petropavlovsk would consolidate the net debt of Amur Zoloto in the amount of $16 million, pay for the purchase with its own shares, as a result, Bazhaev's structures would receive 30.3% of Petropavlovsk. However, the deal still did not take place. Could Rakishev act as a "tool of blackmail" in the market? However, several publications have repeatedly stressed that the idea of purhase is not completely rejected.

Moreover, when Russian Platinum got involved in the project, Musa Bazhaev did not seem to have calculated his own financial strength very well. The loss of Russian Platinum, which is owned by two offshore companies, Russian Platinum PLC and Amur Platinum limited, amounted to 4.2 billion rubles in 2018.

And Rakishev has a successful experience of investing in Russian gold mining: having bought 22.4% in one of the largest Russian gold mining companies Petropavlovsk in 2017 ($77.6 million by market), in 2019 he sold the asset when its market price amounted $90.4 million.

Deripaska is not far behind

If we assume that aggressive Rakishev will come instead of Bazhaev, Vladimir Potanin will have another problem. And he has enough of them already. From all sides, he is "propped up" by Deripaska and in this regard, a major accident with a diesel fuel spill in Norilsk only plays into his hands.

Oleg Deripaska's RUSAL has already demanded that NorNickel's management be dismissed due to a number of environmental accidents, and the MMC's Board of Directors has said that it is ready to consider the issue. In addition, Vladimir Potanin must resolve the issue of paying environmental damage which is 148 billion rubles. At the same time, Deripaska, who demands payment of dividends, is "hanging over" him.

In general, the main part of the disputes between Deripaska and Potanin is based on the dividend policy. The latter insisted on the increase of capital investments of NorNickel by reducing dividends. But RUSAL opposed it, because it really needed dividends to pay its debt.

At one time, he bought a share in MMC with credit funds and payments allow him to fulfill his obligations. It is worth noting that despite the controversy, in 2019, RUSAL still received $1.1 billion in dividends, with loan repayments amounting to about $600 million. Nickel and information wars between two billionaires Potanin and Deripaska have been waged since 2008.

The situation with the palladium project may be a continuation of the ongoing conflict between Potanin and Deripaska. However, this time the latter is lucky and he "strikes" successfully. At the same time, Musa Bazhaev may be left out of the project, and thanks to a possible player Rakishev, Deripaska will have a noticeable advantage over his partner.