DJ NORNICKEL ESTIMATES ENVIRONMENTAL DAMAGE FROM THE FUEL SPILL INCIDENT AT RUB 21.4bn
MMC Norilsk Nickel (MNOD)
NORNICKEL ESTIMATES ENVIRONMENTAL DAMAGE FROM THE FUEL SPILL INCIDENT AT RUB
21.4bn
05-Oct-2020 / 13:00 MSK
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
PRESS RELEASE
Public Joint Stock Company «Mining and Metallurgical Company «NORILSK
NICKEL» (PJSC "MMC "Norilsk Nickel", "Nornickel" or the "Company")
NORNICKEL ESTIMATES ENVIRONMENTAL DAMAGE FROM THE FUEL SPILL INCIDENT AT RUB
21.4bn
Moscow, October 5, 2020 - Nornickel, the world's largest producer of
palladium and high-grade nickel and a major producer of platinum and copper,
announces that JSC NTEC (Norilsk-Taimyr Energy Company, a subsidiary of
Norilsk Nickel Group) has submitted to the Arbitration Court of Krasnoyarsk
region a response to the claim filed by the Yenisei Interregional Department
of the Federal Environment Supervision Service (Rosprirodnadzor) against
NTEC for the compensation of RUB 147.8 billion environmental damages caused
by a spill of diesel fuel from storage facility No. 5 at HPP-3 in Norilsk.
Applying the existing methodology for the calculation of environmental
damages and taking into account the circumstances of the incident, NTEC
estimates the environmental damages at RUB 21.4 billion.
NTEC does not dispute the negative environmental impact of the incident and
reiterates its full commitment to do everything that is necessary to
completely eliminate all of its negative consequences, nonetheless it would
like to emphasize that it acted promptly and in good faith from the very
first minute of the incident and has done everything possible to reduce the
environmental impact.
NTEC believes that Rosprirodnadzor has materially deviated from the existing
methodology for the calculation of environmental damages and legal
precedents, when arriving at their estimate of the environmental damage to
water and soil.
According to NTEC's assessment, the most material deviations included the
application of an unreasonably high non-action multiple (duration of
negative impact coefficient, Cdl) to the impact of harmful substances on
water, applicable only when no actions have been taken to eliminate the
impact, as well as a material overstatement of the volume of diesel spilled
into water.
Rosprirodnadzor applied the maximum possible non-action multiple of 5x,
which is applied when no efforts to clean-up an incident have been
undertaken within 500 hours (more than 20 days) since the incident. The
regulator is justifying this by suggesting that the consequences of the
incident have not been fully eliminated within 500 hours since the incident.
However, according to the existing methodology (Waterbody Damage Calculation
Methodology) and legal precedents, the non-action multiple is unambiguously
defined to take into account the start of clean-up works following an
incident, not the time of their completion. This multiple has been designed
exactly to incentivize the launch of clean-up works as soon as possible and
works as a penalty solely when such clean-up has been long overdue.
NTEC launched clean-up works immediately after the incident, on the very
first day. Thus, it believes that the non-action multiple of 1.1x should be
applied.
According to NTEC's assessment, Rosprirodnadzor prepared its estimate of oil
products spilled into water too early (on June 29, 2020), before the
collection of spilled diesel was completed. As a result, the volume of fuel
that spilled into water was significantly overstated at 19.1kt. The
collection of diesel is still ongoing and has not been yet completed.
According to NTEC's estimates, based on the most up-to-date expert's
assessments, the amount of diesel fuel leaked into water was of
approximately 14.3kt.
NTEC also believes that the damage to soil of RUB 738.6 million was also
estimated incorrectly. According to NTEC, Rosprirodnadzor did not accurately
estimate three variables in the damage calculation formula: 1) The
contaminated soil area has been overstated by several folds; 2) The
contamination was assessed not just based on oil products, but also on other
pollutants; and 3) Some parts of the industrial land (that is subject to
special regulations) was wrongly classified as fertile land.
Clean-up works of the incident are still ongoing. Nornickel continues to
cover all necessary costs voluntarily and in good faith. The total clean-up
and rehabilitation costs are currently estimated at approximately RUB12
billion. However, when environmental damages are estimated, remediation
costs must be deducted.
In addition to the above, NTEC is also challenging a number of other
assumptions and estimates made by the regulator in its legal claim. NTEC
believes that Rosprirodnadzor's claims are not justified and hopes that all
factual circumstances will be fairly examined and taken into account by the
court.
For information: On May 29, 2020, an incident occurred whereby the
containment of the emergency fuel storage at Heat and Power Plant - 3
(HPP-3) in the Kayerkan neighborhood of Norilsk failed due to sudden sinking
of support posts, resulting in the fuel leakage. A total of 21 kt of diesel
fuel spilled into the environment. A lawsuit, which has been filed by the
Federal Environment Supervision Service against NTEC to recover RUB 147.8
billion in environmental damages, was admitted by the Krasnoyarsk region
Arbitration Court on 16 September 2020. For more information on clean-up and
remediation efforts taken to eliminate the consequences of the incident at
HPP-3, please see here [1].
ABOUT THE COMPANY
MMC Norilsk Nickel is a diversified mining and metallurgical company, the
world's largest producer of palladium and high-grade nickel and a major
producer of platinum and copper. The company also produces cobalt, rhodium,
silver, gold, iridium, ruthenium, selenium, tellurium, sulphur and other
products.
The production units of Norilsk Nickel Group are located at the Norilsk
Industrial District, on the Kola Peninsula and Zabaykalsky Krai in Russia as
well as in Finland and South Africa.
MMC Norilsk Nickel shares are listed on the Moscow and on the
Saint-Petersburg Stock Exchanges, ADRs are traded over the counter in the US
and on the London, Berlin and Frankfurt Stock Exchanges.
Media Relations: Investor Relations:
Phone: +7 (495) 785 58 00 Phone: +7 (495) 786 83 20
Email: pr@nornik.ru Email: ir@nornik.ru
ISIN: US55315J1025
Category Code: MSCH
TIDM: MNOD
LEI Code: 253400JPTEEW143W3E47
Sequence No.: 85432
EQS News ID: 1138864
End of Announcement EQS News Service
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(END) Dow Jones Newswires
October 05, 2020 06:00 ET (10:00 GMT)
