November 20, 2019 / 1:35 PM / 17 days ago

UPDATE 1-Russian businessman Potanin says he may raise stake in Nornickel

* Potanin expects decision on possible Bystrinsky’s IPO in Q3

* Says Nornickel’s div formula may face discussion in future

* UAE, Saudi Arabia investors interested in Arctic Palladium -RDIF (Adds comment on dividends, potential IPO of Bystrinsky project)

MOSCOW, Nov 20 (Reuters) - Russian businessman Vladimir Potanin, the biggest shareholder in Norilsk Nickel, said on Wednesday he may raise his stake in the Russian mining giant if the opportunity arises.

Potanin currently owns 34.6% of Nornickel, the world’s largest palladium producer with a market value of $43.6 billion which also vies with Brazil’s Vale to be the world’s top nickel producer.

“I have always said that Norilsk Nickel shares are an attractive investment for me...,” Potanin said in an interview with RBC TV on Wednesday.

“Of course, I use situations to increase my shareholding on a case-by-case basis. And if such a situation arises within the next few months, of course, I will allocate some part of my earned capital to increase my stake.”

Speaking in an interview with another TV - Rossiya 24 - on the sidelines of a conference in Moscow, Potanin said that Nornickel could decide on possible initial public offering (IPO) of the firm running its Bystrinsky project in the third quarter of 2020.

The project in Russia’s far east near the Chinese border launched production at its copper, iron and gold mine in 2017.

The mine will reach its full capacity in mid-2020, and its IPO is possible not earlier than in late 2020, Potanin said.

Nornickel said on Monday it would cut dividends in 2023-2025 as its annual capital expenditure peaks at $3.5-$4 billion in 2022-2025.

Potanin has been a proponent of this reduction while EN+ group, which owns nearly 28% of Nornickel via aluminium giant Rusal, has said the plan requires scrutiny as dependable payouts are critical for shareholders.

Nornickel’s dividend formula may come under discussion in future, Potanin told RBC TV: “Some shareholders believe that the dividend formula should be tied up with EBITDA, some believe that it should be linked with free cash flow ... Our corporate procedures are quite well-developed to resolve this issue without entering the conflict zone.”

Nornickel’s current investment plan does not take into account the Arctic Palladium project, its joint venture with Russian businessman Musa Bazhaev. The project will require $2.8-3.2 billion by 2024.

Russia’s RDIF sovereign wealth fund, Bazhaev and VTB Bank are seeking partners for the project from the Middle East, Bazhaev told President Vladimir Putin on Monday.

Investors from the United Arab Emirates and Saudi Arabia are particularly interested in the project, Kirill Dmitriev, the head of RDIF, told Rossiya 24 TV on the sidelines of the same conference. (Reporting by Gleb Stolyarov and Anastasia Lyrchikova; Writing by Polina Devitt; Editing by Mark Potter and David Evans)

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