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Meeting with Vladimir Potanin

March 23, 2015, The Kremlin, Moscow

Vladimir Putin met with President of Interros Holding and CEO of MMC Norilsk Nickel Vladimir Potanin to discuss Norilsk Nickel’s current activities, in particular a number of social programmes the company is carrying out and development prospects for the Rosa Khutor ski resort in Sochi.

President of Russia Vladimir Putin: Good afternoon, Mr Potanin,

Let’s begin with Norilsk Nickel.

President of Interros Holding and CEO of MMC Norilsk Nickel Vladimir Potanin: Yes, this is the main focus of my attention at present. Over these last two years, Norilsk Nickel has been implementing a new strategy, which has proven exceptionally effective. The strategy is very simple in essence: we are concentrating on our first-class Russian assets and developing them on the Kola Peninsula, the Norilsk industrial district, and our new site in Trans-Baikal Territory.

This simple strategy has worked so well that we have succeeded in maintaining the highest modernisation rate in the sector. We modernise more than 20 percent of our basic stock each year. This is a higher percentage than our competitors.

What is interesting is that in 2015, for example, many companies have slowed down somewhat compared to 2014, which is understandable given the complicated situation on the global markets. The situation at our industrial sites is very clear though, and so we can continue building up our investment and are putting an average of around 2 billion a year into modernisation.

This in turn enables us to carry out our mining activities more effectively. Norilsk Nickel works only under licence and so we try to treat all mineral resources as our national wealth and use them rationally and mine them efficiently. This is something we try to keep in mind at all times.

Recently, we have been able to shift the focus of our attention somewhat toward environmental problems. It is widely known that Norilsk is not a successful city in this respect, and we are now investing serious money to modernise production to ensure full utilisation of sulphur emissions. We expect to collect up to 95% of harmful emissions in the next five to seven years, and to finally clear the Norilsk air of impurities, which have a negative health effect.

Vladimir Putin: And social facilities? As you remember, we visited stadiums and other sites.

Vladimir Potanin: Yes, we still maintain the level of our investment in social facilities, continue to build sports facilities, renovate and reconstruct them, and encourage Norilsk residents to go on vacation, subsidising their plane fare.

Right now, given that the regional budget has certain difficulties with financing of various programmes, we are even making advance payments to them on account of income taxes in order to stabilise the situation in the region overall, and work in close contact with the governor.

We have now taken on some projects that were supposed to be implemented directly by government organisations, such as construction of fibre-optic lines within the framework of the programme to bridge the digital divide, with the understanding that this is something our company can handle, we can do it ourselves.

Last time, I reported to you about how we will build our own electrical line to the Bystrinsky mining and processing plant. In accordance with your instructions, this line should then be purchased by the Federal Grid Company, but for now, we are building it.

Thus, we are trying to do what we can ourselves rather than asking for regional or federal resources.

Vladimir Putin: What is currently the average salary?

Vladimir Potanin: The average right now is about 70,000.

Vladimir Putin: What are your plans for this year?

Vladimir Potanin: This year we plan to index salaries. And while in previous years, we usually did this once a year, this year we indexed salaries in January and now have plans within our company budget to have the option of several indexations over the course of the year, if inflation continues to grow rapidly…

Vladimir Putin: “Eating up” incomes.

Vladimir Potanin: …Yes, it’s possible that sometime this spring, we may do another indexation so that people do not feel quite so acutely that their income is being “eaten up.”

Plus, we are also maintaining various types of programmes, for example, we are maintaining lower prices for 30 essential food products at supermarket chains belonging to our company, and this creates a certain pressure, in the good sense, on the sellers – they don’t push it and maintain the prices.

Vladimir Putin: They are forced to use those benchmarks.

Vladimir Putin: On the one hand, we maintain those prices, but on the other hand, we provide transportation services to sellers that bring products to Norilsk at a reduced rate. So they do not really have the moral right to raise prices that much.

Vladimir Putin: I see.

You mentioned modernisation. How much do you plan to invest this year in modernisation?

Vladimir Potanin: This year, we plan to invest around $2 billion. Right now, we are working to specify our plans, because given the changes in the ruble to dollar exchange rate, the previously planned investment volumes have become a little cheaper for us. So this amount may decrease. But in general, we are looking at $2 billion a year.

Vladimir Putin: I see.

Earlier, you had made a noticeable, significant input into preparing our Olympic bid, and later, preparing the facilities. The Rosa Khutor Alpine Ski Resort is a project you started even before the Olympic project was born. What is the situation there now, following the Olympic Games?

Vladimir Potanin: You know, the sceptics who doubted the 2014 Olympics would have a fitting legacy have simply been put to shame. You must come to Rosa Khutor and see what is happening there. It has 5,000 to 10,000 visitors each day. The slopes are crowded, the hotels are operating at near-full capacity. And this year, we have even had the problem that we cannot serve everyone who wants to come: there were lines at the chairlifts, and the slopes were crowded. So we are now thinking that we may need to expand the resort.

Vladimir Putin: You need to go up.

Vladimir Potanin: With your permission, I would like to show you a map.

Vladimir Putin: You could build a road straight through the gorge, a little upwards. The government or the region could do this, and then, private investors could begin works a little higher to get the slopes and chairlifts ready for use; you don’t really need to do too much there. But everything would need to follow a common plan.

Vladimir Potanin: Yes, I agree with you, because the infrastructure is already in place, we just need to expand. And we are already in talks with those who are investing with us. Gazprom and Sberbank also have certain plans; we are discussing them together in order to then create a single ski pass, so that people can ski throughout the entire resort zone.

Vladimir Putin: You should certainly create a single ski pass, regardless of how difficult it is for various entrepreneurs, particularly private ones, to reach an agreement; nevertheless, the result must be such that our tourists coming on vacation there can use a single pass to enjoy all the ski resorts.

Moreover, it would be very important to ensure there are good communications in the gorge.

Vladimir Putin: We are considering this now. Mr President, I would like to draw particular attention to this: here on the map, this is the UNESCO-protected nature reserve, and here is our development zone; here are the Gazprom and Sberbank complexes, and this is our complex. We are planning to expand in the direction of the National Park, exclusively within the framework of existing legislation, without violating any environmental norms.

We believe this will be possible. We made Rosa Khutor an ecological resort and we want the expansion to also be limited exclusively to the recreational areas of the National Park, which is fully legal and even expedient in terms of developing the National Park: after all, it stipulates recreation zones, but they are specifically provided for people to be able to ski there in the winter, and bike or hike there in the summer.

Vladimir Putin: Of course. If you need any support, let me know.


March 23, 2015, The Kremlin, Moscow