This week Norilsk Nickel’s CEO Vladimir Potanin opened up publicly to discuss the companies strategy of limiting their foreign assets to those most profitable and about his goals for the near and distant future.
It is clear that the company is aggressively implementing their strategy discussed with investors in 2013 of focusing on core assets, limiting the assets on the periphery that were eating up some of their funds, and increasing the efficiency of their management.
Most important for me in this interview though, is the confirmation of the companies confidence in the face of sanctions and the formal reiteration of a ‘Plan B’ in case sanctions happen to affect the company.
Regarding sanctions, Potanin says, “The political tensions we are experiencing should not affect the company’s activity, since the company is deeply integrated in international economic processes…However, we do have a plan B, which foresees the diversification of currencies in which we keep our resources, as well as the reorientation of our company towards Asian markets in case of problems in other markets.”
Potanin also elaborated on the increasing investor base in Europe and the United States. These investors, he says, are those that look less at which country the company they are investing in is from, and more on the sector, the amount of risk and the potential yield. It is investors like these that will help to stymie the affect of sanctions on companies so ingrained in the international economic process. These will also be the companies that help to carry the Russian economy through this bout of sanctions and help it remain open and transparent.
It is a great time to invest in Norilsk Nickel. “According to the EBITDA indicator, we demonstrated a profitability of 44%, which means that only BHP Billiton (48%) came in ahead of us,” says Potanin. While this profit is still mostly based at home in Russia and throughout western markets, the company is starting to look east (including a change of some of their assets into Hong Kong dollars and Yuan) to help diversify their funding base and find their place in the growing economies of Asia. This, as Potanin notes, is not a departure from a western-centric funding base, but rather an expansion for investors and a potential area of growth should sanctions from the west reach the mining sector in Russia – although that still seems unlikely.
Most of all, I love the way he ends off the interview. When asked if Norilsk Nickel plans to attempt to surpass BHP Billiton to become the leader in the industry, Potanin responded, “Now we have set a target to keep our profitability at 40% for first-rate assets. Business is not a sport, but earning money, and BHP Billiton should not be relaxing.”
Source: Russia Beyond the Headlines – http://rbth.co.uk/business/2014/09/26/