Russian billionaires are feuding over control of a giant natural-resource business that dates back to the Soviet era. So far, so Russia. What makes the battle for MMC Norilsk Nickel PJSC more important than typical business maneuvering is that it will affect development of one of the largest deposits of nickel and cobalt, which are used in batteries for goods including iPads and Tesla cars.

1. Who is feuding?

Vladimir Potanin and Oleg Deripaska, the two billionaires battling for control of Nornickel (as the company is known), have opposing strategies for its future. Potanin, the company’s chief executive officer and the second-richest Russian, wants to expand the business and develop new deposits to maintain its position in the industry. Deripaska, the outgoing president of aluminum maker United Co. Rusal and No. 16 among Russia’s richest, is interested in using profits to maximize dividends to shareholders. That would help him pay down debts at Rusal. Potanin owns about 30.5 percent of Nornickel, and Rusal 27.8 percent.

2. Why does this matter?

The outcome of the feud could mean the difference between a rising or falling supply of much-in-demand metals. Nornickel is the second-biggest producer of nickel worldwide and the fifth-largest producer of cobalt. Prices for both metals have jumped in the past two years, partly as a result of rising demand for use in batteries for electric cars, electronic gadgets and units to store power generated from wind and solar. Cobalt prices have more than tripled on the view that demand for electric vehicles will grow exponentially. More than 40 percent of high-grade nickel, so far largely a raw material for stainless steel, may be used in batteries by 2025, according to Nornickel.

3. How did this all start?

The feud dates back about a decade when Deripaska’s Rusal bought a stake in Nornickel. A collapse in aluminum prices left Rusal unable to service debt it took out to buy the shares. Then, as it fought to survive with a $17 billion debt restructuring in 2009 -- the biggest in Russian corporate history -- Potanin pushed share buybacks at Nornickel, depriving Rusal of much-needed dividend income. The two sides also fought over corporate governance. A truce was reached in 2012 with the intervention of Russian President Vladimir Putin and the sale of a stake in Nornickel to another billionaire, Roman Abramovich, who now holds about 6 percent. That meant neither Deripaska nor Potanin would be able to dominate the company.

4. Why has the feud blown up now?

A lockup period -- which was part of the peace deal -- ended in December, and Abramovich now plans to sell part of his stake. Potanin’s Interros Holding Co. wants to buy and Deripaska’s Rusal has also formally accepted the offer as both sides seek to maintain their influence. However, Rusal opposes the proposed sale by Abramovich, saying it will upset a balance of interests that’s steadied relations for five years. 

5. What happens next?

Rusal is seeking an injunction to block the transaction that will be heard in the London High Court. Another possible way to resolve the dispute is a so-called shoot out auction, in which Deripaska and Potanin would offer to buy out the other at a premium to the market, with the loser obliged to sell. Such a move -- set out in the 2012 peace deal -- would be a high-risk strategy that would financially stretch either side. More feasible is a new shareholder accord that raises dividends and sets terms for Rusal’s exit that could win Deripaska’s approval.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at

To contact the editors responsible for this story: Lynn Thomasson at, Tony Barrett, Laurence Arnold

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