Russia: Nornickel set a record in terms of spending on social projects

The Russian mining giant Norilsk Nickel’s spending on social projects doubled in 2021 and reached $1 billion, the company mentioned in its consolidated financial statement.

«Social spending doubled to just over USD 1 billion mostly as result of provisions related to the agreements on social and economic development of Norilsk city and the Krasnoyarsk region,” Nornickel informed in the statement.

Social spendings were planned for the reconstruction of housing and infrastructure in Norilsk.

According to the statement, total budget of city renovation planned till 2035 raised up to 120 billion rubles.

Among other major social projects, Norilsk Nickel has a program to support the indigenous peoples of the North, for that program 17 million dollars will be allocated until 2025. In addition, the company continues the construction and development of industrial, social and other infrastructural projects, which are part of the agreement between the company and the government of the Zabaykalsky Krai and 23 million dollars has been allocated for this purpose.

The agreement with the Murmansk Regional Government on socio-economic development and construction of social infrastructure facilities, as well as the agreement with the Krasnoyarsk Krai Government on investment support for a number of social and infrastructure projects until 2028 also allocated 26 and 67 million dollars respectively.

Nornickel expects that social spendings for 2022 will remain at the same level as in the previous year. However, one-off contributions to the reconstruction of Norilsk are not taken into account.

Previously, Sergei Dubovitsky, Senior Vice President of Nornickel, stated that the company planned to invest 600 billion rubles in the development of infrastructure in the north of the Krasnoyarsk region until 2030.

Early Nornickel presented plans for investment in programs for monitoring permafrost, improving air quality, modernizing production sites, follows from the speeches of the company’s top officials.

“We have started to roll-out a permafrost monitoring system in Norilsk and have committed to a major renovation of our energy infrastructure and upgrade of equipment. In addition to a better management of climate change related risks, we anticipate to get significant carbon dioxide emission cuts as the energy losses will reduce and the efficiency of our power generating equipment should improve.

On the social front, we have committed to a number of major programs, which aim to transform the city of Norilsk into a modern city with high quality living standards.

Over business cycles, our metals basket has shown its natural resilience to changes in underlying demand for commodities. Our course forward is towards integration into the new green economy. Higher focus on the global climate agenda drives up demand for our key metals and reconfirms our strategy to grow production. I believe that transformational investments will result in higher value for Nornickel and its shareholders combining industry-leading profitability and top-notch ESG standards,” Nornicвkel’s President Vladimir Potanin said.

Nornickel cutting emissions in Russia

Nornickel a Russian metals producer is a major global palladium and nickel producer and plans to spend $5.5-billion on environment projects within the next 10 years, according to investment plans updated in December.

Nornickel said it has shut down a metallurgical processing facility in Russia’s border region with Norway and Finland which had been the area’s main source of sulphur dioxide emissions. The shutdown, along with the recent closure of a nearby Nornickel smelting unit, will cut sulphur dioxide emissions in the area by 85% from 2015 levels to less than 30 000 t this year, the company said.

In 2022 emissions will fall further, to 22 000 t/y, 8 000 t to 9 000 t of which currently come from a local power plant providing heat to homes in Monchegorsk in Russia’s Murmansk region.

Nornickel plans to upgrade the plant and build a modern copper refining facility in the town with double the annual capacity – up to 150,000 tonnes – and higher environmental standards.

The facility that has been closed was processing metals concentrate, which other Nornickel assets in the Siberian Norilsk will now process into finished metals products. The closure of the unit affected about 700 of Nornickel’s employees, it said. Two-thirds of them will be reassigned within Nornickel and one third will leave the company with one-off payments.

The company has been hit by series of accidents since a major fuel leak at its power plant near the Arctic city of Norilsk in May. It paid $2-billion, the biggest environmental fine in Russian history, after the spill.



Russian mining company Norilsk had a second environmental issue

The first spill of Norilsk Nickel happened on May 29, and was so extensive that the Russian President Putin declared it a national emergency. The massive oil spill was spreading online via social media before local authorities in Russia were informed. Less than two months after this massive oil spill in the Arctic, Russian company Norilsk Nickel has once again caused environmental devastation with an oil leak.

This time, the mining company leaked approximately 45 tons of fuel into the ground as well as a nearby lake and stream. The short time between these two spills is reflective of the rising temperatures around the globe, the impacts of which are being felt most strongly in the Arctic. According to the Wall Street Journal, Nornickel claims that the thawing permafrost, previously frozen for millennia, is to blame for these accidents. Still, the company will work with public and private partners to rebalance the ecosystem. Actions to clean up these spills, while necessary, are not enough. More must be done to prevent these accidents that will otherwise become more common amid an increasingly unpredictable climate.

While the local authorities have reported oil leakage into a lake and stream, Nornickel has announced “no threats to life and health of people in the territory,” and promised that the spill has been contained and will be cleaned up as soon as possible. While 45 tons is far less than the 20 000 tons that spilled in the May 29 fuel leak, there is a concern that such accidents are becoming more common. A project director at Greenpeace in Russia, Vladimir Chuprov, expressed this fear: “We are worried that these accidents have begun to occur too often.” According to the CBC, small leaks like this most recent one are ‘a chronic issue’ in Russia’s Arctic and typically are covered up before they receive international attention.

The massive oil spill on May 29 was spreading online via social media before local authorities in Russia were informed, reports the CBC, and prompted President Putin to publicly chastise the company: “If you had changed [the fuel tank] on time, there would not have been this ecological damage.” Additionally, Putin requested $2 billion in damages from Nornickel and signed new legislation that would require companies like Nornickel to put sufficient financial resources towards preventing and eliminating any future spills. Nornickel, while vowing to clean up the accident, has contested the $2 billion fine. According to Russia’s Ecology Minister, “it’s very likely this huge amount will not be paid,” however, “if Nornickel refuses to pay big money, they will get an even worse image, not only in Russia but on a global scale.”

The reaction from the Russian government was appropriate, but whether it was an empty gesture to save its public image ahead of the 2021 Arctic Council or will result in greater accountability remains to be seen. Public outcry over oil spills is an incentive for oil companies to take more precaution; however, it may also increase the number of cover-ups that occur. Nornickel should pay the full $2 billion fine, both to show that the company understands the gravity of the spill and to serve as a reminder that accidents like these will not be easily forgiven.

This most recent oil spill of 45 tons only received international coverage for its proximity to the May 29 accident. Otherwise, it may have been covered up and taken care of quickly, given its relatively low amount of fuel spilled. However, this should not be allowed to continue to happen. If international attention and significant damages are needed to make large mining companies adopt more stringent maintenance practices, then any spills, large or small, should be reported. As climate change continues to alter the structure of the land, these practices will become even more critical.




Nornickel Arctic project – Russia considering $1 billion loan

The Russian government is considering spending $1 billion from its sovereign wealth fund on a loan to mining giant Norilsk Nickel for its Arctic Palladium project, the Interfax news agency cited a source as saying.

The Arctic Palladium project is Nornickel’s joint venture with Russian businessman Musa Bazhaev.