20-years without pollution solution

Last time Dmitri Medvedev visited Norway, he agreed with Prime Minister Jens Stoltenberg that measures will be taken to reduce the emissi


Last time Dmitri Medvedev visited Norway, he agreed with Prime Minister Jens Stoltenberg that measures will be taken to reduce the emission from Russia’s mega-polluter in Nikel. That was two years ago. Since then, nothing has happened and the pollution continues to destroy the fragile environment in the Norwegian, Russian borderland. 

When Dimitri Medvedev now meets with Jens Stoltenberg and other state leaders at the Barents Summit in Kirkenes, an hour drive from Nikel, he should be embarrassing aware that the clouds of sulphur dioxide and heavy metals is likely the largest unsolved problem framing the Barents Cooperation.

KIRKENES JANUARY 11th, 1993: At the public press conference held by the Foreign Ministers following the signing of the Kirkenes Declaration, more than half of the hall was occupied by members of the environmental ad-hoc group ‘Stop the Death Clouds’ who showered the ministers with probing questions. At the same time, people with banners outside the Foreign Ministers’ hotel in Kirkenes town square were protesting against the large-scale sulphur-dioxide emissions from the smelter in Nikel on Russia’s Kola Peninsula. The smelter was then, and still is, one of the worst hot spots of environmental problems in the entire Barents Region. Although this ad-hoc environmental group had thousands of supporters and managed to put the Nikel problem on the national agendas of both the Nordic countries and Russia, sadly they didn’t manage to solve the pollution problem itself.

Since 1993, the Nikel pollution has been at the top of the environmental agenda of the Barents Cooperation. Norway granted NOK 300 million (€40 million) to assist with reducing the emissions. At the year of the 10-years anniversary of the Barents Cooperation in 2003, a list of environmental hot spots in the Russian part of the region was defined by the Nordic Environmental Finance Corporation (NEFCO) and the Arctic Monitoring and Assessment Program (AMAP). Nikel is one of the most severe spots on the list and can still get financial loans and support from Nordic financial mechanisms to solve the problem there. 

However, after hundreds of technical and political meetings concerning Nikel since the early 90ies, Norway withdraws the grant in 2009. The receiver simply didn’t want to modernize the smelter in Nikel.

The jackpot question is then: Why hasn’t the Norilsk-Nickel company, after 20 years of negotiations with its Barents neighbors, improved its environmental image by stopping the emissions from Nikel?

Unlike in the early 1990s when Norilsk Nickel was a Soviet state-owned company, the key to clean technology in the production of metals is not financial grants from friendly Barents neighbors. Today, Norilsk-Nickel is one of the most profitable non-petroleum companies in Russia. Its net profit in 2012 was $2,1 billion, or 41 times more than the total Norwegian offer.

In October 2011, the company presented a strategy development program that aims to boost net revenue to $30 billion; net income to $10 billion; and market value to a range of $140 billion to $250 billion by 2025.

To put this into some kind of perspective, the Board of Directors in Norilsk Nickel can meet in downtown Moscow tomorrow morning and decide to invest in clean smelting techonology at its plant in Nikel. For the shareholders, such investment is pocket money – the profits from a few weeks’ production should more than cover the costs.

It is interesting to note that Norilsk Nickel’s skyrocketing profits are partly driven by the world’s increasing demand for environmental friendly technology. The company is a world-leading producer of metals needed for the development of clean energy technologies. Nickel is a key metal in batteries for non-emission vehicles while platinum, palladium and copper are widely used in catalytic converters. If Norilsk Nickel plays its cards right, the company can easily change its image from being the worst-on-dirt to becoming a world leading supplier of metals for environmental technology produced with best available smelting processes.

Disagreements on environmental investments have impacted Norilsk Nickel’s shares before. In 2009, the Norwegian Government’s pension fund evicted Norilsk Nickel after the fund’s ethics council said the company’s factories were afflicting environmental damages which clashes with the fund’s guidelines. The year before, in 2008, Russian billionaire Mikail Prokhorov sold his 25 percent stake in Norilsk Nickel and invested the proceeds in the development of nanotechnology, LED lamps and electric cars. Hopefully, today’s shareholders in the company will see the market trends and modernize its smelters in Nikel and Monchegorsk on the Kola Peninsula. In doing so, they will grow into a leading environmental friendly mining and metallurgical lighthouse for the up-coming natural resources investment boom in the Barents Region.

Facilitating for the natural resource boom is one key element in the new Kirkenes Declaration Dmitry Medvedev will sign together with the other Barents state leaders on June 4th. His home match will be to impose a non-tolerance for further evasion by Norilsk Nickel to cut Nikel pollution to a near zero level.