Norilsk-Rusal merger put on hold

The battle between two of Russia's most powerful business barons over the control of Norilsk Nickel, the world's biggest nickel miner, appeared to have ended in a truce on Tuesday.

Vladimir Potanin, chairman and majority owner of Norilsk, and Oleg Deripaska, who controls a quarter of Norilsk through his company UC Rusal, both agreed to step down from the board.

Instead, each side will have four seats on a new board of directors, to be chosen next month, while a government representative will replace Mr Potanin as chairman.

Mr Deripaska's Rusal has also agreed to push back a proposed merger with Norilsk for three years.

Mr Potanin, who controls around 30 per cent of the company, had fiercely objected to the merger, offering a tie-up with Metalloinvest, the iron ore and steep group controlled by Alisher Usmanov, another Russian billionaire, as an alternative.

All decisions at Norilsk would be made on the basis of consensus, Mr Potanin said.

In a sign of their new determination to manage Norilsk together, Mr Deripaska said on Tuesday that he was not opposed to Norilsk working with Metalloinvest.

When Rusal bought the stake in Norilsk seven months ago, it had seemed to be the first step towards joining two of Russia's biggest metals companies to forge a rival to BHP Billiton. But the clash for control between Mr Deripaska and Mr Potanin has helped destroy over two-thirds of Norilsk's market value.

It has also been a disappointment to the Russian government, which has put the creation of a Russian metals giant on its list of priorities.

"The state didn't interfere, but it was obvious that it was irritated by our feud," Mr Potanin told reporters on Tuesday.

The news sent Norilsk shares almost 10 per cent higher at Rs2,208.

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