Russia's richest man fights off Western sanctions

Russia's richest man fights off Western sanctions
Potanin is Former First Deputy Prime Minister of Russia and close ally and friend of Vladimir Putin.

Western sanctions have targeted wealthy individuals, banks, businesses and state-owned enterprises as a response to Russia's invasion of Ukraine.

But one man has a plan to shield himself from the brunt of the financial punishments. Russian oligarch Vladimir Potanin discussed a potential merger between two of Russia's largest metal and mining companies on Tuesday, reported De Standaard.

The merger would cover mining giant Nornickel and aluminium titan Rusal.  As the largest shareholder of Nornickel, Potanin has until now opposed a merger with Rusal, which ha 26% of shares in Nornickel, making it the second-largest shareholder.

Greater stability

In an interview with Russian TV channel RBC, Potanin announced he is now willing to discuss a merger with Rusal as Western sanctions are starting to impact both Russian companies.

According to Potanin, the merger would give the two companies added stability and increase potential state support for large projects in Russia.

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Yet not all analysts are convinced. "While a merger between two companies of this scale may ward off sanctions to a degree, it cannot protect from everything," said analyst Kyrill Chuyko of investment company BCS Global Markets in De Standaard.

"Moreover, both parties have a long history of strained relations, while the merger also lacks business logic."

Politically-motivated

The Russian mining giant Nornickel hasn't yet been sanctioned, but the noose around Potanin's neck was tightened after both Canada and the UK targeted the oligarch himself with personal sanctions.

Until recently, oligarchs of Potanin's calibre have been able to skirt around sanctions due to their key role in the production of important raw materials. Long-standing US sanctions that had disrupted the production of aluminium were lifted against Rusal and its major shareholder Oleg Deripaska a few years ago.

But since Russia's war in Ukraine, this scenario looks unlikely. Potanin is known to have a close relationship with the Kremlin and could buy up assets of Western companies as well as oligarchs that have fallen out of the Kremlin's favour.

In order to aid the Russian economy, the Kremlin may have 'asked' Potanin to drop his resistance to a merger with Rusal.


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