Nornickel fined $2 billion for massive Arctic fuel spill

Norilsk Nickel’s clean-up work after a fuel spill at an Arctic power plant in May 2020. (Image courtesy of Norilsk Nickel.)

Norilsk Nickel (MCX: GMKN), the world’s largest palladium miner and a significant nickel producer, will have to pay a record fine of 146 billion rubles ($1.94 billion) in compensation for a huge fuel spill in the Arctic last May, a Russian court ruled on Friday.

The amount, while in line with a demand by the nation’s environmental watchdog Rosprirodnadzor, more than doubles what Russia is seeking to get in mineral extraction tax from mining companies this year. 

“We won!!!” Rosprirodnadzor head Svetlana Rodionova, who was in the courtroom on Friday, said in an Instagram post. “Ecology is everyone’s business!!!”

Record fine more than doubles what Russia is seeking to get in mineral extraction tax this year

Nornickel had rejected the watchdog’s damage estimate, which according to the company assumes it did nothing to mitigate the impact of the spill. The objection was based on an extensive clean-up the miner carried out in the seven months following the accident.

The miner’s attempts to reduce the original 148-billion-rubles fine were based on technicalities in the way the original sum had been calculated, rather than denying culpability. It claimed the damages amounted just 21 billion rubles ($280 million).

The spill occurred on May 29, when an aging reservoir at one of the company’s facilities collapsed and leaked 21,000 tonnes of diesel in the surrounding area, most of which seeped into the soil and nearby rivers for several days before local authorities responded to the accident.

Arctic’s worst ecological disaster

Local green groups said the miner initially attempted to cover up the fuel leak, but the extent of it was quickly visible via satellite images, prompting neighbouring water streams to change colours.

Both environmentalists and authorities called the spill the worst ecological disaster to ever occur in the Arctic.

Nornickel first blamed melting permafrost for the collapse of the fuel tank, but an investigation by the regulator found faults in its construction and maintenance. 

Since then, a number of criminal cases have been launched over the spill, including against employees at the plant and the mayor of the city of Norilsk, which lies inside the Arctic circle in Russia’s Krasnoyarsk region.

“The scale of the damage to Arctic waterways is unprecedented. The fine will be proportional to it,” Russia’s Ecology Minister Dmitry Kobylkin told RBK TV last year.

He cited as an example one of the worst oil disasters in US history – the 1989 Exxon Valdez oil spill off Alaska which, he pointed out, cost Exxon Mobil more than $5 billion in punitive damages.

Nornickel said it would study the verdict in detail once it gets the full text. The company has a month to file an appeal.

Watch The Moscow Times’ video footage of the spill: