The presence of copper-nickel ore deposits in the Taimyr Peninsula has been already known since the
17th century, but serious researches of their industrial potential began only in the 1920s. On June 23,
1935 the Council of Peoples’ Commissars of the USSR passed a resolution “On Building the Norilsk
Combine” and passed the project to execute over to the Commissariat of Home Affairs (NKVD), i.e.
the Soviet security services. That was the beginning of the country’s biggest mining and metallurgical
complex, nearly 2,000 kilometers to the north of Krasnoyarsk on the Taimyr Peninsula.
On March 10, 1939 the first copper-nickel matte was produced in Norilsk. By June 16, the plant
produced the first high grade matte. Until the great Patriotic War the Norilsk combine comprised a small
metallurgical works, an oxygen, and a coke production units, a mechanical repair workshop, a temporary
power station, three open-cast coal pits, three mines and others under construction, sandstone and
limestone quarries, a railway, an airport, and a port at Dudinka on the Yenisey river.
By 1953 the combine was producing 35% of the Soviet Union’s total nickel output, 12% of its copper,
30% of its cobalt and 90% of its platinum group metals.
On the Kola Peninsula there are two enterprises that produce copper and nickel: Pechenganickel and
Severonickel. The Pechenganickel mining and metallurgical combine is located to the northwest of the
Kola Peninsula on two industrial sites, in the town of Zapolyarny and the Nickel community. Inco built
it in 1940 on the part of the Finland's territory that went to the Soviet Union after the Second World
War. The Severonickel combine was built in 1935, and operates in the town of Monchegorsk of the
On November 4, 1989 the Council of Ministers of the USSR passed a resolution on creation of the State
Concern for Non-Ferrous Metals Production Norilsk Nickel. This was in line with the timely urgent need
to restructure the country’s industrial base. The State Concern brought together the Norilsk combine,
the Pechenganickel and Severonickel combines, the Olenegorsk mechanical works, the Krasnoyarsk
non-ferrous metal processing works, and the Gipronickel Institute (the city of St Petersburg). These
enterprises were united into the technologically unified concern for producing and processing sulphide
On June, 30 1993, the Russian State Concern for the Production of Non-Ferrous and Precious Metals
Norilsk Nickel was transformed by a decree of the President of the Russian Federation into the Russian
Joint Stock company (RAO) Norilsk Nickel for Production of Non-Ferrous and Precious Metals.
In 1994, shares in the company were distributed, in accordance with privatization plans, in part to
the workforce and in part for sale by voucher auctions. More than 250,000 people took shares in the
company. The control packet of shares (38% of the shares or 51% of the voting shares) was retained as
the state property, and in November 1995 was put forward at a mortgaging auction, as a result of which
Uneximbank became the nominal holder of the control packet of shares in the RAO Norilsk Nickel.
On August, 5 1997, a commercial investment competition was held for the controlling share (38%); it
was acquired by the investment company Swift (which represented the Uneximbank’s interests) for
over US$270 million, i.e. the payment was 80% higher than the starting price. Besides, under the terms
announced, Swift transferred to RAO Norilsk Nickel’s accounts US$300 million for the development
of Pelyatka condensed gas field near Norilsk, and RUR400 billion to maintain the social and civic
infrastructure in the Norilsk industrial region (which has 300,000 inhabitants) and to pay off debts
outstanding to the state Pension Fund from RAO Norilsk Nickel.
No company would remain unchanged for long. Business environment, market conditions, and
legislation undergo various changes; there are variations in companies going on: production potential
would be extended, new products would be developed, and companies would acquire new divisions and
affiliated firms. Outside changes would force companies to make changes inside. In the modern market,
corporations and companies do conduct structural transformations once in a 7- to 10-year period of
Re-structuring is typical for not only foreign firms, but for the national companies as well – such were,
for example, Yukos, Surgutneftegaz, Sibneft, and other.
In 2000, re-structuring affected Norilsk Nickel, too. It is aimed at improving the performance and
investment appeal of the Norilsk Nickel group that would answer the interests of all its shareholders,
and is designed:
To provide shareholders’ direct access to the capital of the company which is the center of the group’s
profit, possess all indispensable licenses, and is the owner of the market commodity
To essentially increase transparence of the corporate structure for the shareholders
To increase its economic efficiency
To integrate the foreign marketing network in the corporate structure
To increase effectiveness of control
The transfer of the capitalization center from the RAO Norilsk Nickel to the Norilsk Mining Company
(in February, 2001 it was named the Mining and Metallurgical Company Norilsk Nickel) was realized
through additional share issue by the Norilsk Mining Company. The shares were placed through closed
subscription among the shareholders of RAO and paid for by RAO shares.
By the end of 2001, 96.9% of RAO Norilsk Nickel shares were swapped for MMC Norilsk Nickel shares.
First Level ADR representing 15% of RAO Norilsk Nickel shares were issued and then re-registered
automatically in the course of restructuring on MMC Norilsk Nickel shares. In 2004 an authorization was
granted allowing circulation of up to 40% of MMC Norilsk Nickel shares abroad.
The next phase of restructuring involved elimination of so-called cross ownership. A fraction of MMC
Norilsk Nickel charter capital (17.62%) was controlled by RAO Norilsk Nickel, and the Board of Directors
of MMC Norilsk Nickel suggested that the shareholders vote for the decrease in MMC Norilsk Nickel
charter capital through the buy-back and retirement of 38,761,525 shares. At the EGM of MMC Norilsk
Nickel on December 24, 2001 the shareholders approved amendments to the Company’s Charter, which
made possible the launch of procedures aimed at the elimination of cross ownership. At the next EGM
on March 29, 2002, the decrease in MMC Norilsk Nickel charter capital through the buy-back of some
circulating stock was approved.
As at July 1, 2006 OJSC MMC Norilsk Nickel held more than 95% of total RAO Norilsk Nickel share stock.
Pursuant to the legislation in force, an entity owning more than 95% of total outstanding shares in
an open joint-stock company at July 1, 2006, is entitled to request other shareholders to tender their
securities. The relevant buy-back notice was duly sent to the shareholders of MMC Norilsk Nickel, and
the Company’s interest in OJSC RAO Norilsk Nickel after the buy-back reached 99.999%.