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Oligarch's vision of a Russian giant: Prokhorov backs merger of nickel and aluminium miners to form a $100bn rival to a united BHP Billiton and Rio Tinto

06.07.2008

Russian billionaire Mikhail Prokhorov has called for the creation of a $100bn Russian mining champion, ahead of an intense boardroom battle with former friend and business partner Vladimir Potanin tomorrow.

Mr Prokhorov, Russia's sixth- richest man with a $19.5bn (£9.8bn) fortune, told The Independent on Sunday in a rare interview that nickel miner Norilsk must combine with aluminium giant Rusal. He is a shareholder in Rusal and a board member of Norilsk; the struggle for control of the companies involves leading London mining bankers from the likes of Morgan Stanley, UBS and Merrill Lynch.

The oligarch also revealed: w plans to build an elite resort in Asia that would rival the south coast of France;

w that his company, Onexim, will be looking out for property companies up for sale as a result of the market downturn;

w his belief that the rouble must be slowly devalued to improve Russian competitiveness;

w that his relationship with Mr Potanin is now "neutral" and that they have not gone on holiday together since 2000.

Mr Potanin has called a board meeting of Norilsk for tomorrow to elect a chairman. Interros, his company, holds 30 per cent of Norilsk's shares and is fending off Rusal's ambition to merge the companies. Interros and Rusal have hired City bankers to plot their strategies.

Mr Prokhorov is understood to favour independent director Guy de Selliers for chairman. Mr Potanin supports Interros representative Andrei Klishas, who is thought the more likely to win tomorrow's vote.

Mr Prokhorov is one of three directors who represent Rusal, to which he sold his 25 per cent stake in Norilsk earlier this year. Despite this allegiance, Mr Prokhorov has not publicly backed Rusal's plans for a combined group until now. He said: "I believe that the merger of these two companies is important. A powerful company is being created. I am sure its capitalisation will exceed $100bn."

A Russian mining champion is considered by some market observers to be an important counterbalance to the proposed merger of BHP Billiton and Rio Tinto, the London- and Sydney- listed giants. On Friday, the EU extended its anti-trust investigation into BHP's hostile offer.

Mr Prokhorov said that On-exim is scouting nine locations to develop a resort for the world's wealthiest people. "There should be a resort that would equal the South of France. I do not see any potential for this in Europe anymore," he said. "One of the targets will be South-east Asia."

He hinted that his property business could be expanded as "many developer companies will crash due to increased project costs and less access to the funding market". Mr Prokhorov has retained some capital for firms that will have to be sold off.

Mr Prokhorov, 43, warned that the strengthening rouble has been raising industry costs in Russia and that "a smooth decrease" of the exchange rate would increase the competitiveness of Russian producers.


Source: The Independent on Sunday

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More Resources

Commentary and opinions: a selection of excerpts from speeches and presentations by Mikhail Prokhorov