By Leia Michele Toovey – Exclusive to Nickel Investing News

The biggest news in nickel this week was the battle between Russian mining superpowers Oleg Deripaska, of United Company RuSal, and Vladimir Potanin, of Norilsk Nickel. Potanin is the single largest shareholder in Norilsk with just under 30% stock. RuSal owns 25%, a purchase instigated by Deripaska himself.

Deripaska and Potanin have differing opinions on what the future of Norilsk Nickel should be. RuSal has been forward about its desires for a RuSal-Norilsk merger to create a “superpower” metals company. Potanin is not in favour of such a merger. On Monday, Potanin made major headway in seeing that the future of Norilsk is what he desires. The board of directors nominated him as chairman of the board, a powerful position that he rapidly capitalized on by electing Interros ally Sergei Batekhin as Chief Executive Officer. Batekhin replaces Denis Morozov, who has been in the role since April 2007. Vladimir Potanin’s strategic move likely cemented the future of Norilsk as a separate entity to RuSal, as Potanin and Batekin both oppose a merger.

RuSal has the support of the Norilsk Nickel labour union in being unsatisfied with the executive switches. RuSal wanted to keep Denis Morozov in the position as chief executive, and elect Guy de Selliers as board chairman. The labour union would like Mikhail Prokhorov to return to the position of Chief Executive that he gave up in March 2007 with Denis Morozov appointed successor. The labour union feels Prokhorov should return due to the success of the company when he was at the helm.

These strategic moves were soon met with Conspiracy theory. Heinz Schimmelbusch, an extremely successful CEO of Canadian company Timminco (TSX:TIM), found himself in the hot seat in regards to the RuSal Norilsk controversy. Mr. Schimmelbusch, and colleague Michael Levitt are accused of swinging the board in Mr. Potanin’s favour. RuSal points to prior affiliations between supposedly unbiased Mr. Schimmelbusch and Interros management as evidence of a conflict in rational decision making.

Along with his position as chief executive of Timminco, Mr. Schimmelbusch heads a company called Advanced Metallurgical Group NV (AMG). Andrei Bougrov, managing director of Interros, used to sit on AMG’s board. The battle for Norilsk is far from over, as RuSal may push to expand the Norilsk board from nine members to 13.

Norilsk Nickel saw shares dropped 3.46 percent on the Moscow stock exchange after this game of executive musical chairs. The drop in share prices does not necessary reflect shareholder disappointment in the ceasing of a Norilsk-RuSal merger. Most likely, the drop reflects the uneasiness that follows most executive switches.

Other Company News

In China, Steelmakers are reporting record output levels. This is causing many mining and processing companies to gear up for an increase in the demand of nickel, a key ingredient in stainless steel. Platinum Metals Group Corp. (PMGC) announced this past week their intention of shipping nickel ores to Australia to increase their year end production levels. In other news, the world’s fourth largest steel giant POSCO (NYSE:PKX) announced that it has received approval to develop five nickel mines in New Caledonia, and export the nickel ores to South Korea for use in steel manufacture. Such move will provide POSCO with a reliable nickel source, and increase its cost competitiveness on the steel market. Commercial production on the island will commence this September. Mirabela Nickel Ltd (MBN:ASE) is in talks with Norilsk mining and Jinchuan Group Co. to sell half of the concentrate from their Brazilian open pit nickel mine. The mine is currently under construction, and is set to become the third largest open pit nickel pit mine in Brazil. News of the sell hit Mirabela’s stock prices, driving their share up 3.4 percent.

Market News

Nickel ore processing costs are set to go through the roof as sulphur, an essential ingredient in sulphuric acid used to break down laterite nickel ores escalates. Surging Chinese demand for sulphur as an ingredient of fertilizer has caused the ingredient’s price to skyrocket. Two years ago, sulphur was priced at $100 per tonne, and currently it has broken the $800 per tonne range, doubling since the beginning of 2008. Analysts have no expectation of the price of sulphur dropping. Because of this, they are slashing the expected profit margins of nickel mines up to 30%.

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