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Russian mining giant fined record £1.4 billion for role in May 2020 oil spill

12 February 2021

A court in Russia has upheld a fine of 146 billion rubles (£1.4bn/$2bn) for mining giant Norilsk Nickel (Nornickel) as a result of its role in one of the country’s worst oil spills in history. The leak on May 29 involved around 21,000 tonnes of diesel fuel leaking from a power plant belonging to a subsidiary of Nornickel, the world's leading nickel and palladium producer.

The Krasnoyarsk Arbitration Court – Image: Shutterstock
The Krasnoyarsk Arbitration Court – Image: Shutterstock

The fine is a record amount of compensation to be paid for environmental damage in the history of Russia.

The accident took place at the Nadezhdinski Metallurgical Plant near the Siberian city of Norilsk where a large amount of the spilled petrochemicals seeped into the Ambarnaya River. The leak occurred after a fuel tank, which was built on permafrost, became depressurised due to the subsidence of its support pillars.

On February 5, the Krasnoyarsk Arbitration Court said it agreed with the Russian government’s claim that the cost of damage caused by the leak amounted to 146.2 billion rubles and not the 21 billion rubles (£205m/$280m) that Nornickel had calculated itself.

Russian authorities blamed the company for failing to prevent one of the Arctic region’s worst ever ecological disasters. The Moscow Times says that a report commissioned by Nornickel and published in November 2020 by consulting group Environmental Resources Management (ERM) supported the view of the Russian government. The report said a “cocktail” of the tank’s design flaws, management failures, and rising temperatures had made it a simple matter of time before a disaster occurred at the plant.

Following the February 5 court decision, Nornickel said it would carefully study the court decision after receiving its full text. If the mining giant does not appeal the court decision, it will have one month until it must pay the record fine.

Satellite image showing the spill into nearby rivers – Image: ESA
Satellite image showing the spill into nearby rivers – Image: ESA

In a statement on social media, the head of Russia’s state environment agency Rosprirodnadzor, Svetlana Radionova, said: “We won! Thank you to everyone who cares about the environment. For the first time in the history of Russia, we loudly declare: ecology is everyone's business! And the polluter will pay!”.

Nornickel has contested the 148 billion ruble fine since Rosprirodnadzor’s calculation of the damage was first announced. Rather than denying responsibility, Nornickel disputed the calculations used to determine the cost of damage. It said the damage caused to water bodies and soil were based on assumptions, leading to a distortion of the true damage estimates.

Shares in Nornickel dropped by 1.5% following the court’s decision. The company is owned by Russia’s richest man, Vladimir Potanin, a close associate of President Vladimir Putin. President Putin held a televised government meeting following the incident in May and heavily criticised both the local government and Nornickel for its response to the spill. Shortly after the leak, it emerged that officials first heard about the leak on social media, two days after it had occurred. Putin declared a state of emergency on June 3 while several employees of the Nornnickel subsidiary were detained.

In October 2020, a court convicted the former Mayor of Norilsk for his role in the spill. Rinat Akhmetchin was convicted of criminal negligence after the failure to report the spill immediately. The conviction of Akhmetchin, the Mayor at the time of the spill, was expedited after he confessed to all charges. Akhmetchin was sentenced to six months of community service and lost 15% of his wages. According to local media, Akhmetchin was charged with criminal negligence after police found evidence on his phone. Police said that his failure to declare an emergency situation in a timely manner led to a significant increase in the damage caused by the spill.

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