UK personal sanctions not affecting Nornickel operations, but could trigger early loan repayment - Potanin
MOSCOW. July 5 (Interfax) - The United Kingdom's sanctions against Nornickel principal shareholder Vladimir Potanin are not affecting the Russian mining giant's operations and the company's counterparties are meeting their obligations to it, Potanin said in an interview with TV channel RBC.
"The sanctions that have been imposed concern me personally and, according to the analysis that we currently have at Nornickel, they do not touch the company. And, accordingly, our partners, counterparties know this. Of course, this puts pressure on them, all this sanctions hoopla. But they are for the most part solid companies at which decent people work who are trying to preserve their business reputation. And therefore they are fulfilling all obligations to Nornickel. And therefore the company is operating under conditions of pressure, but in a manageable environment," Potanin said.
He said Nornickel is shipping virtually nothing to the UK, but this country's sanctions could trigger early repayment of a number of the company's loans.
"Nornickel has a fairly large amount of relations with British banks and British entities that arranged loans for us. Therefore, we are now analyzing to what extent this will affect the company. We certainly understand that this will not negatively affect its stability, but this will lead to some loans, perhaps, having to be paid off early," Potanin said.
Nornickel is not abandoning its development program due to sanctions, but it will have to push back the implementation of some projects due to restricted access to equipment and logistics problems.
So-called voluntary sanctions, where counterparties unilaterally repudiate obligations, have been painful for the company, Potanin said.
"Difficulties with banks, both in settlements and in receiving loans, and even regular trade financing, meaning we have lost many instruments that are not subject to sanctions...Refusal to deliver equipment hampers our investment activities as regards development programs and some environmental projects," he said.
"Some projects for growth and increasing efficiency, particularly where this revolves around automated control systems and software that we traditionally got from our, as it seemed then, western friends and partners, simply cannot be implemented until we find domestic analogs," Potanin said.
It will take 18 months to get the first usable results of import substitution in these areas, so the company needs to get set for a fairly lengthy and painful process of re-equipment, he said.
Potanin also said he believes the rush to urgently replace leading executives and businesspeople hit with sanctions is wrong. "We don't get anything except a respite, we're not solving this problem in general. We're washing out a layer of the most promising, strong businessmen and managers and creating a situation in which [less effective and qualified managers] will build a new economy less dependent on unfriendly pressure from without and ensure high competitiveness in it," he said.
"We will defend every management position, from the position of the company president to any other manager so as not to create the effect that taking an executive position at a Russian company is a sanctions hazard," Potanin said.