Warring Russian oligarchs pick up pace of boardroom tussle

UC Rusal hits back against Interros dominance of Norilsk board

London (Platts)--8Jul2008
Russian mining major UC Rusal has hit back against Interros chief
Vladimir Potanin's election to the chair of Norilsk Nickel's board, voicing
"deep concern" over the independence of the nickel giant's board and
threatening legal action.

In a statement released Tuesday, UC Rusal, the world's largest aluminium
and alumina producer, said that the appointment of Potanin as chair showed
poor corporate governance and was responsible for Norilsk's share price
dipping 2.5% over the course of the day.

US Rusal said: "As a major investor in Norilsk we prefer to reach our
goal of a transparent and properly governed Norilsk via shareholder dialogue,
but in view of our large investment in Norilsk we reserve our rights to pursue
all legal remedies against the company and its board of directors."

Potanin was voted chairman of the company's board of directors at the
meeting on Monday, firming his hold over the world's largest nickel miner at
the new board's first meeting, which Rusal claims was held at too short notice
for shareholders to be present.

The board also appointed Interros' deputy general director, Sergey
Batekhin, as chief executive, replacing current incumbent Denis Morozov.
Batekhin will take up his new role on July 21.

Morozov said in a statement that he had achieved the primary goals set
when he became general director a year ago: "I requested the new board to
confirm my authority as chief executive of Norilsk since my continued ability
to lead the company at the time of competing interests of major shareholders
required the full support and cooperation of the entire board of directors."

Morozov, who joined Norilsk 10 years ago, said in an interview with a
Russian newspaper in June that the battle for control over the company had
distracted attention from production at Norilsk.

A spokeswoman for Norilsk told Platts that Morozov would step down on
July 18, but could not comment on his next move.

Potanin's appointment as chair of the company's new board on Monday comes
a week after Norilsk's shareholders voted four Interros members to the
company's board, alongside three independent directors and three
representatives from UC Rusal, which bought a 25% stake from former Norilsk
owner Mikhail Prokhorov in April.

UC Rusal, owned by oligarch Oleg Deripaska, has expressed an interest in
a full merger with Norilsk which would see the two companies combine to form a
diversified mining giant worth an estimated $100 billion.

Potanin has resisted any tie-up with Rusal by pursuing a merger with iron
ore and steel group Metalloinvest.

Rusal said that it planned to consult with Norilsk's minority
shareholders over the coming days and push for the election of independent
directors to an enlarged board of thirteen, adding that Interros' boardroom
conduct was "unsuitable."
--Michelle Madsen, michelle_madsen@platts.com