Richest Russian says sanctions impact waning

May 19, 2015 09:01
Vladimir Potanin says Russia has reached a stable level in terms of tensions with the West. Photo: Bloomberg

International investors are coming back to Russia, with the peak of western sanctions waning, according to the country's richest man.

“Now it’s getting clear that the situation is more politically stable or predictable,” Vladimir Potanin, who heads Russia’s biggest miner, OAO GMK Norilsk Nickel, told Bloomberg Television.

“Nobody wants more sanctions. I think we reached a stable level in terms of tensions.”

Europe and the United States imposed sanctions on Russia’s energy and finance industries and several prominent individuals last year after Moscow annexed Crimea from Ukraine.

The ruble lost almost half its value as the central bank burned through currency reserves in an attempt to slow the collapse.

So far this year there are signs the situation may be stabilizing. The ruble has rallied to become the world’s best-performing currency in 2015.

President Vladimir Putin last week met US Secretary of State John Kerry for the first time in more than a year.

Investors were expecting more sanctions and more problems for the Russian economy, Potanin said.

It’s now the “right time” for investors to come back to Russia, he said.

Most of Potanin’s wealth, estimated at US$16.7 billion by the Bloomberg Billionaire Index, comes from his 30 percent holding in Norilsk Nickel, which is not subject to sanctions.

Norilsk shares have advanced 82 percent in Moscow over the past 12 months, giving the company a market capitalization of 1.62 trillion rubles (US$33 billion).

The company benefited last year from increases in the price of nickel and palladium. It has also gained from the the depreciation of the ruble, which despite this year’s rally is still down 30 percent against the dollar over the last year.

Norilsk pays its local costs in rubles while selling its metal production for dollars.

Potanin, 54, was regarded as one of the Russian oligarchs who wielded power behind the scenes during the administration of Boris Yeltsin, the first post-Soviet president.

Still, Potanin denies he ever considered himself an oligarch. While he had influence, he said he never had the power to compel politicians.

Potanin characterizes his relationship with Putin today as that of a businessman discussing issues important to the mining industry.

The billionaire shares with the president a common passion for ice hockey. In May, he played against Putin’s team in Sochi in a gala match.

Off the rink, one of Putin’s main challenges is to find a younger leader to succeed him, Potanin said.

“People love him,” Potanin said, referring to Putin. “Russia loves strong leaders.”

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