Russia’s Nornickel disputes $2 billion Arctic spill damages claim

The company disputed both the size of the claim and the way it was calculated.

By Reuters - July 8, 2020
The logo of Russia’s miner Norilsk Nickel (Nornickel) is seen on a board at the St. Petersburg International Economic Forum 2017 in St. Petersburg, Russia on June 1, 2017. (Sergei Karpukhin / Reuters File Photo)

MOSCOW — Russian mining giant Norilsk Nickel (Nornickel) is disputing more than $2 billion in damages after a fuel spill which Russia’s environmental watchdog has said threatens unprecedented damage to the Arctic.

Watchdog Rosprirodnadzor sent a request for “voluntary compensation” of almost 148 billion roubles ($2.1 billion) to Nornickel power subsidiary NTEK this week.

Nornickel disagrees with both the size of the claim and the methodology used for its calculation, it said in a statement, but added: “The company confirms its commitment to eliminate the consequences of the accident at its own expense.”

Nornickel said the volume of the diesel spill was incorrectly defined as it was calculated before recovery efforts were completed.

Russia’s natural resources and environment minister, Dmitry Kobylkin said the perpetrators of environmental damage were obliged to repay in full.

“Environmental damage and dealing with the consequences of a disaster are two incompatible concepts,” he said. “And if a company is willing to prove its innocence in court, it has that right.”

The spill occurred on May 29 after a fuel tank lost pressure and released 21,000 tonnes of diesel into rivers and subsoil near the city of Norilsk in Siberia.

Environmental group Greenpeace has compared the incident to the 1989 Exxon Valdez oil spill off Alaska, as has Kobylkin. He has backed Rosprirodnadzor’s damages claim saying the sum corresponds to the unprecedented amount of damage posed to Arctic water resources.

The size of the damages claim is unprecedented in Russia, analysts at Aton said in a note on Wednesday.

They said in addition to helping the state budget amid the coronavirus crisis the damages would send a message to other companies that underinvestment in maintenance is unacceptable.

Pursuing the damages claim would also improve the “public image of a strong and fair government that also champions environmental interests,” they said.

Reporting by Anastasia Lyrchikova and Polina Devitt, writing by Polina Devitt and Alexander Marrow.