Who gets the deposit Norilsk-1

The largest “blue chip” of Russia – the “Norilsky Nikel” company – may find itself once again in the center of a conflict, this time – with the “Russkaya Platina” company of the Chechen entrepreneur Musa Bazhaev, which attempts to ensure that Norilsk-1, a large deposit of nickel and copper in Taimyr, be assigned to it. We remind that the tender on the southern part of the deposit was conducted last June and won by Amur Team of Prospectors. Immediately experts started to argue just how realistic the plans of developing the deposit, formulated by “Russkaya Platina” were. Besides having no required experience of nickel processing, Musa Bazhaev’s company has no infrastructure in the region, while “Norilsky Nikel” included in the project the construction of a new enrichment plant for the purposes of developing the deposit.

The Government of the Russian Federation heard those doubts and did not approve the results of the tender. And last December, the Government decided that distribution of such large subsoil reserves should be done by auction. The Ministry of Environment supported the idea. However, “Russkaya Platina” keeps trying to gain the control over the deposit by circumventing the Governmental decision. Kommersant and Vedomosti learned that the Administration of the President of Russia is currently dealing with the matter.

Meanwhile, “Norilsky Nikel” has its own ore, and that is one its main competition advantages. That is why the nickel giant will, in all probability, defend its right to develop the deposit on its own, even more so because the plans of construction of a new enrichment facility in Norilsk have already been elaborated specifically for that.

An expert’s commentary

Evgeny Zhilin, Associated Partner of the Law Firm "YUST"

The federal legislation on subsoil, which governs the procedure of granting of plots of subsoil of federal significance by the Government of the Russian Federation, was changed, and the changes entered into force in January of 2013. The southern part of Norilsk-1 is one of such plots. In my opinion, those changes level the significance of the court dispute between “Norilsky Nikel” and Rosnedra. No matter how the dispute will be resolved, the plot of subsoil of federal significance currently may be assigned to a subsoil user only on the results of an auction. This procedure (holding auctions) is applied to new subsoil plots as well as to those plots, tenders on which were declared or partly completed before January of 2013. Therefore, at this stage there is no legal mechanism, which would enable the Government of Russia to approve the results of the 2012 tender and issue the license to the winner of the tender. I believe that declaration of an auction on the sale of the license, where all interested parties would be able to participate, would be a logical continuation of the entire story.