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Norilsk Nickel Rated New `Sell' at ING Amid Shareholder Dispute

September 29, 2008

Investors should sell OAO GMK Norilsk Nickel (GMKN) shares because the fight between billionaires for ownership of Russia's biggest mining company won't be resolved soon, raising risks for minority shareholders, ING Groep NV said.

``Lack of consensus between the key shareholders on the future development of Norilsk Nickel increases risks for minority shareholders,'' ING analyst Maxim Matveev said in a note to investors today. Rising costs and falling nickel prices will also hurt profitability, Matveev said.

Norilsk Chairman Vladimir Potanin, who owns 30 percent of the miner, is competing with Oleg Deripaska's United Co. Rusal, which owns 25 percent, for control of the company.

Moscow-based Norilsk said yesterday that Potanin's OAO Rosbank (ROSB) arranged the purchase of 16.5 million Norilsk shares, almost 9 percent of the company, by three Norilsk subsidiaries. Rusal said the acquisitions violated shareholder rights.

The transactions give Potanin more control of the company because as chairman he can exercise the voting rights for shares held by Norilsk divisions.

``Norilsk Nickel trades at a 35 percent premium to the average for the peer group of emerging-market mining companies, which we find difficult to justify given the company's risks,'' ING said.

ING has a $120 price estimate on the stock, which rose 2.8 percent in Moscow on Sept. 26 to 3,674.91 rubles ($145.79).

To contact the reporter on this story: Bradley Cook in Moscow at

To contact the editor responsible for this story: David Merritt in London at

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