BHP Billiton follows Rio in holding hands with Norilsk - room for three under the ice sheets?

BHP Billiton follows Rio in holding hands with Norilsk - room for three under the ice sheets?

15th June 2006

Following in the footsteps of its rival Rio Tinto (as scrutinised in a February London Calling), BHP Billiton has secured an alliance with Russia's largest mining company, Norilsk Nickel, to explore the northwest Russia and western Siberia. Of course it is being described as a win-win deal (when in business these days is a deal anything but?). However, with the ink barely evaporating in the Moscow summer sunshine, the same questions that were asked of the Rio deal seem to be true of the BHPB deal.

Given it's self-professed Corporate Social Responsibility credentials, one has to wonder whether BHPB feels comfortable linking up with such a notorious polluter as Norilsk, to operate in a country that has a poor record of dealing with affected 'minorities'. Will the off-spring of any partnership listen to the CSR chiding of one of its parent's (especially if it all just looks like hot-air melting so much of the taiga)?

BHPB has been very unspecific on which commodities the alliance would explore for (although we know they are of course searching for those ever-more elusive 'World class deposits'). Nor would the company be drawn on the initial expenditure BHP Billiton would bring to the partnership. John Helmer, of Mineweb, in an intriguing article suspects it may be more of a share-price holding sleight of hand trick. "With BHPB's shares falling more sharply than they have in five years, [CEO Chip] Goodyear may be bidding to convince his shareholders to hang on for a big break in Russia". I am sure the indigenous communities living in northwest Russia and western Siberia hope it remains only a pipe-dream, rather than any of the above actually laying pipe-lines.