Norilsk Nickel wants tax deductions on its environmental investments

A view of the industrial city of Nikel, one of the three that host the Kola Mining and Metallurgy Plant. The other two are Monchegorks and Zapolyarny.

Publish date: March 30, 2017

Siberian industrial giant Norilsk Nickel, one of Russia’s most polluting, has since 2014 been investing significant funds in unspecified environmental improvements, and this week request tax relief for those investments.

The announcement by company Vice President Yelena Bezdenezhnikh came at the high-level Arctic: Territory of Dialogue conference gathered in Arkhangelsk attended by President Vladimir Putin and Deputy Prime Minister Dmitry Rogozin.

The conference offered an opportunity to get specific about how to cure decades-old pollution issues that have angered Russia’s neighbors, how to curb heavy metals in the atmosphere, and address the lifespans Norilsk Nickel is shortening below Russia’s already dour demographic postings – an opportunity Bezdenezhnikh largely skipped.

She failed in her speech to specify exactly what upgrades the company will implement to achieve a long-promised 70 percent cut the sulfur dioxide emissions that have fouled Arctic Siberia, Northwestern Russian and Scandinavia.

Some 90 percent of those cuts have been vowed at the Kola Mining and Metallurgy Company, a division of Norilsk Nickel near Murmansk.

Instead, she concentrated on the company’s still vague commitment to ecological responsibility and highlighted the environmental award it received early this month from the Russian Union of Industrialists and Entrepreneurs.

“We are really spending a lot of money on this,” she told the conference. “From 2014 to 2016 we spent about a billion dollars on improving the ecological conditions in the regions where we operate.

She was reprising the speech she gave when she received the Industrialist’s Union award, repeating that Norilsk Nickel was now “an information bureau for best available technologies” and said that the new environmental program was based on implementing them – again, without describing them.

She said a company-wide $4.5 billion modernization, which will include environmental upgrades, was planned by 2023, and as she has done in several public appearances this year, touted the closure of a Norilsk-based nickel smelting facility that has been polluting the region since 1942.

“Aside from the fact that we reduced sulfur dioxide in the atmosphere by 35 percent, the modernization we are implementing along with the plant in Nickel, gave us the push to modernize new enterprises in an ecological direction,” she said.

As part of the billions the plant is spending, she said the company would benefit from government assistance in the form of tax relief.

She noted that several countries – like Belgium, Brazil and Britain – apply a system of abnormal depreciation, and that Canada allows tax deductions on funds spent on environmental modernization.


“We would like, as in other countries, that Russia worked to meet private businesses and presented tax relief and guarantees,” Bezdenezhnikh said. “This would enable us not only to invest funds not paid out to shareholders, but are invested in ecology, and would also stimulate business to invest in environmental projects.”

The smoothed-over tale of Norilsk Nickel as Russia’s cleanest company was interrupted by the mayor of the Norwegian town of Kirkenes, which since the fall of the Soviet Union has been pounded by sulfur dioxide emissions from the Kola Mining and Metallurgy Company.

In the last year alone, Norilsk Nickels’ sulfur dioxide emissions hit 90,000 tons, or three times more than put out by the entire country of Norway, the mayor, Rune Rafaelsen, noted.

“This is a huge problem that’s been going on for years,” he said, and pressed further. “We would like to get an answer ­– when will you stop polluting your neighbors?”

He went on to say that he “couldn’t agree to circumstances” where Norilsk Nickel’s owner, Vladimir Potanin, was “making billions” while fouling the air of two countries.

“The territory around the plants and neighboring territories must be cleaned,” Rafaelsen said. “We hope the company’s owner will do this.” Rafaelsen last year made a splash by suggesting the West levy sanctions personally against Potanin.

Bezdenezhnikh answered that there was no such thing as “green metallurgy.”

Mining ore and producing metal, she said, unfortunately can’t be done without pollution. According to her, in trying to rein in sulfur dioxide emissions, the company wasn’t looking for the cheapest, but rather, the most environmentally friendly and immediately effective option.

“Such developments are taking place at all world companies, not just Russian ones,” se said. “All are trying to find technology that will get rid of sulfur dioxide at maximum levels.”

Then she indicated Norilsk Nickel had yet to decide what methods it would employ to reduce sulfur dioxide levels, and that would come after international consultations.

But she said that shutting down facilities, like the facility in Norilsk, to cut sulfur dioxide was an extreme step decided by shareholders.

“No one forced us to close that facility, but we did,” she said. “We are closing facilities, shops, decommissioning saline waste – we are doing everything possible now from the point of view of science to make metallurgy green and clean.”

But such promises fly in the face of reality. It’s predictable that at a gathering like this one would hear emissions figures, and, of course, no mention was made of last year’s scandal in which an official from Russia’s natural resources watch dog was accused of taking bribes from Norilsk Nickel officials.

Bezdenezhnikh was also silent on the matter of a leak from the company’s Norilsk facilities that polluted a river in the Krasnoyarsk Region with red sludge, nor the laughable $530 fine levied on the company for the accident.

And Bellona would have liked to remind Norilsk Nickel that the experience of many other countries would suggest the argument of environmental fines inspires more environmental responsibility than to tax deductions.

Environmental wrongs can only be righted when its more profitable for companies to invest in modernization than it is to pay fines, and not when a fine is the equivalent of a few seconds of work at the richest and most polluting company in the Arctic.


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