Daily analyst comments

On August 7, on the eve of a board meeting, NorNickel's majority shareholders exchanged views as regards the company's prospects. At first, Rusal said it would vote against Vladimir Strzhalkovsky's election as general director. In his interview with journalists, Rusal board member, Oleg Deripaska specified that he did not see any reasons for Strzhalkovsky's election as general director, since the ex-head of the Federal Tourism Agency did not have any work experience in the nonferrous metals industry or in similar positions, in spite of his high achievements in politics. In its second statement, Rusal said that Interros could control more than 30% in NorNickel and called the Federal Financial Markets Service to inspect the structure of NorNickel's share capital in order to find out any liabilities as regards the presentation of a voluntary buyout offer to the company's minority shareholders. On the same evening, Deripaska told journalists that Rusal would not join the alliance of NorNickel and Metalloinvest, since it did not see any prospects in the steel industry. The decision on Rusal's merger with NorNickel is by all appearances postponed until Rusal's IPO scheduled for late 2009.

In return, Interros accused Onexim and Rusal of market manipulation and pointed to the fact that in April-May 2008, Onexim president, Mikhail Prokhorov did not fulfill his obligations to Vladimir Potanin as regards the conclusion of several transactions with NorNickel and Polyus Gold securities. Therefore, Potanin and Interros do not plan to enter into any transactions with Prokhorov for the time being.

In our opinion, the NorNickel's BoD meeting scheduled for today will end in Strzhalkovsky's appointment as the company's general director due to Potanin having more allies on the board. The ongoing corporate conflict has a negative impact on NorNickel's investment attractiveness and boosts the volatility of the holding's shares. However, the recession in the economy of NorNickel's business, which suffers from the ongoing unfavorable conditions on the nickel market and a downturn in copper, platinum and palladium prices, remains the main downside driver for NorNickel's market cap. We currently do not have a recommendation for NorNickel shares.