Nornickel 2020 profit sinks 39% as $2bn set aside to cover fuel spill fine

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

Russia’s Norilsk Nickel said on Tuesday its net profit sank by 39% in 2020 after it set aside $2 billion to cover an environmental damage claim after a major fuel spill in the Arctic.

Nornickel, the world’s largest producer of palladium and a leading producer of nickel, has been fined $2 billion for the damage caused by the spill last year in the country’s worst environmental disaster in the Arctic. The court’s ruling is yet to come into force.

The company said its 2020 net profit fell to $3.6 billion from $6 billion in 2019. Its core earnings, known as EBITDA, were down 3% year-on-year to $7.7 billion.

The $57 billion company, co-owned by billionaire Vladimir Potanin and aluminium producer Rusal, “has drawn an important lesson from this incident”, it said in a statement, adding it had dramatically reviewed its approach to environmental risk management.

Nornickel’s management believes that it would not be in its best interests to appeal the court’s ruling, but the final decision is yet to be made, the company said.

The leakage in May of 21,000 tonnes of diesel into the rivers and subsoil near Norilsk in Siberia infuriated Russian President Vladimir Putin. “Well, one has to answer for what has been done,” he said in December, referring to the case.

Nornickel added in the statement that its 2021 capital expenditure was expected between $3.0 billion and $3.4 billion, and that the final dividend for 2020 would be announced in May.

(By Polina Devitt, Anastasia Lyrchikova and Alexander Marrow; Editing by Bernadette Baum and Emelia Sithole-Matarise)

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