The board of Russia’s Nornickel on Monday rejected a proposal by its second-largest shareholder Rusal to replace the chairman, Nornickel said, the latest step in a feud surrounding two of Russia’s largest metals firms.
Rusal, founded by Oleg Deripaska, has been trying in vain to replace the chair of Nornickel’s board of directors since a shareholder agreement expired at the end of 2022. The board is not controlled by Nornickel’s CEO and largest shareholder, Vladimir Potanin, but last year appointed Potanin loyalist Andrei Bugrov as chairman.
Rusal had proposed replacing Bugrov, a former top manager at Nornickel and Potanin’s Interros holding company, with independent director Evgeny Shvarts, a source close to the board told Reuters.
But the source said eight out of 13 board members had instead confirmed the existing chairman’s mandate. Nornickel later confirmed the board’s decision.
“The board of directors at today’s meeting confirmed the mandate of the board chairman and committee heads,” Nornickel said.
Late last month, the board said it supported a proposal from Interros to enhance the role of independent directors.
A Rusal spokesperson said: “Unfortunately, the course towards increasing the role of independent directors outlined by one of the shareholders has not been continued in substance and in fact remains only a declaration.”
Bugrov’s appointment last summer followed the departure of Gareth Penny, a Briton who stepped down soon after Russia despatched troops to Ukraine last February, having served as an independent head of the company’s board for nine years.
The row between Nornickel’s main shareholders dates back to 2008, when Rusal bought its stake in Nornickel and Potanin opposed attempts by Deripaska to merge the two companies.
Deripaska gave up control of Rusal in 2018, but the dispute escalated last year as a decade-old shareholder agreement between Potanin and Rusal protecting Nornickel’s dividend payouts neared expiry at the end of 2022.
Rusal filed a lawsuit in London in October alleging that Potanin was in breach of the deal.
Potanin, whose Interros owns 37% of Nornickel, said the pact would not be extended.
Rusal, which holds 26.4% of Nornickel, has repeatedly accused management of inefficiency and said when filing the lawsuit that it wanted an “independent manager” at the helm.
Some analysts have said the lawsuit may be an attempt by Rusal to bolster its negotiating position in discussions about future Nornickel dividends.
Rusal, one of the world’s largest aluminum producers, uses dividends from Nornickel to help service its debt.
(By Anastasia Lyrchikova and Alexander Marrow; Editing by Mark Trevelyan and Kevin Liffey)