When the mining-and-metallurgical company Norilsk Nickel acquired a controlling stake in the Stillwater Mining Company, an American producer of palladium, Russians called it "the deal of the year". Eurasian Metals asked Leonid Rozhetskin, the deputy chairman of the Norilsk Nickel managerial board, to share his views on the deal.

Leonid Rozhetskin, deputy chairman of the Norilsk Nickel managerial board

EM: The arrangement provides for a number of conditions and, in particular, for the necessity of getting an approval of the purchase by shareholders of Stillwater. Also, anti-monopoly agencies of the U.S. and the Russian Central Bank should give their permission for the deal. How are these conditions being met?
LR: In December 2002 we submitted a request to the U.S. anti-monopoly agency as well as to the Central Bank of the Russian Federation. In January 2003 the U.S. Trade Commission requested an additional information. Both Norilsk Nickel and Stillwater prepared the required information. As for shareholders of Stillwater, under existing American rules they are to consider this matter after the U.S. Commission on Securities registers the notification about this deal.

EM: The U.S. Secretary of Commerce said at the Davos Economic Forum that the deal was approved by the Advisory Investment Council. What does it mean?
LR: There is a law in the United States, which requires the approval of a deal that has to do with the country’s national interests, its defense capability. We submitted needed documents to the Advisory Investment Council and received its approval concerning these aspects.

EM: What is the reason for such a close attention to the deal on the part of the U.S. state agencies?
LR: As far as the anti-monopoly agency is concerned, all is clear: one producer of platinoids buys up a controlling stake in another producer and it is obliged to go through the procedure of the anti-monopoly coordination. The rules of submitting documents are established by the law and the attention of state bodies to the deal both in America and Russia is quite understandable.
The purchase of the Stillwater Mining Company is the first example of significant direct investments by Russian companies in the U.S. economy. In the last 10 years we got used to acquisitions of Russian enterprises by Americans. But now the Russian business has grown stronger and has become firmly established. Norilsk Nickel may become a pioneer of direct investments in America.

N  O  W  :
	An anonymous investment bank, which earlier proposed a $100M rights offering to buy the U.S. company Stillwater Mining, thus, becoming a competitor of Norilsk Nickel for this deal, has withdrawn the proposal. Francis R. McAllister, the Company’s Chairman and Chief Executive Officer, urged all stockholders to vote in favor of the transaction with Norilsk Nickel at their upcoming special meeting to be held on June 16. The deal calls for acquiring by the Russian company a 51% stake in the American company. Stillwater is to issue 45.5 million new shares to Norilsk Nickel. In its turn Norilsk Nickel will pay $100M for the stake plus 877,000 ounces of palladium.

EM: Why to buy company that produces palladium, if prices for this metal are falling down?
LR: Under the theory of strategic acquisitions the most wrongful thing to do is to buy a company, if prices for its products are high. When an ounce of palladium cost almost $900, the capitalization of Stillwater exceeded $1B. We offered $100M in cash for a controlling stake and 876,000 ounces of palladium at the minimal price. That was the most convenient moment for the purchase.

EM: Last year Norilsk Nickel signed several agreements with automotive companies on supplying palladium. Now your company intends to use the sales capabilities of Stillwater. What is the difference?
LR: The difference is in volumes. Stillwater has contracts for the whole volume of the platinoid production and we don’t. We are seeking to ensure that all our palladium is sold under long-term contracts. That is what Stillwater is needed for. Besides, Norilsk Nickel has accumulated reserves of this metal. The deal allows us to sell a part of our stock.

EM: You said before that, after the deal was done, Norilsk Nickel and Stillwater would be able to get engaged in scientific research so as to popularize palladium. Are these plans still in force?
LR: It is very important to Norilsk Nickel as the largest palladium producer to spend efforts and money on scientific research dealing with the use of this metal in technologies of tomorrow. In the U.S. efforts are being made to develop special fuel cells for the nuclear power industry and the technologies to make such cells are based on the use of platinum. We have no doubt whatsoever that palladium-based fuel cells will be not worse. They could be even better. But so far nobody began working on it. In case the deal is successfully completed, the alliance with Stillwater will strengthen the scientific engineering research base.