Bloomberg News

Norilsk Chief Says Nickel Has No Merger Synergies With Steel

February 12, 2009

OAO GMK Norilsk Nickel (GMKN) Chief Executive Officer Vladimir Strzhalkovsky said he sees no synergies in merging industrial metal and steel assets as Russia’s biggest commodity companies consider combining.

“Steel and base metals work in the same cycle,” Strzhalkovsky told the Kommersant newspaper. His statements were confirmed today by a Norilsk spokesman who declined to be identified. “A price rise in steel inevitably leads to a hike in nickel prices and the reverse is also true.”

Billionaire Oleg Deripaska and Norilsk’s main investor, Vladimir Potanin, last month said the government should oversee a merger of six Russian metals and mining companies including steelmakers Evraz Group SA and OAO Mechel (MTLR) to help them repay debt. The proposal is opposed by Alisher Usmanov, another Norilsk shareholder, who aims to limit any transaction to a merger of the nickel company and his iron-ore producer OAO Metalloinvest.

“With us and the steelmakers in the same cycle, a consolidation will have no synergies,” Strzhalkovsky said. A better option may be to combine Norilsk with a potash producer, he said.

Dmitry Rybolovlev, owner of potash producer OAO Uralkali, has agreed “in principle” to join Deripaska and Potanin’s plan for a merger, while owners of Evraz and Mechel turned down the offer, Moscow-based Kommersant said Feb. 2.

To contact the reporter on this story: Yuriy Humber in Moscow at;

To contact the editor responsible for this story: Simon Casey at

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