RUSAL convenes extraordinary general meeting of Norilsk Nickel’s shareholders to elect new board

Moscow, 6 August 2010 – UC RUSAL (SEHK: 486, EuroNext: RUSAL/RUAL), the world’s largest aluminium producer and owner of a 25% stake in MMC Norilsk Nickel, announces that it has requested an Extraordinary General Meeting of shareholders (EGM) of MMC Norilsk Nickel in order to elect a new board.

The results of the Annual General Meeting of Shareholders (AGM) of MMC Norilsk Nickel (“Norilsk Nickel”) on 28 June, in particular the outcome of the election to the Board of Directors, clearly violated the fundamental corporate governance norms, principles of transparency and the agreed-upon commitment by RUSAL and Interros to establish a balanced Board of Directors of Norilsk Nickel. Despite repeated requests, so far there has been no response from Norilsk Nickel’s management to the legal and corporate governance issues which arose after the AGM relating to questions concerning the changed quorum, election procedures and the outcome. Moreover, Norilsk Nickel’s management, acting in breach of the current legislation, continues to prevent RUSAL from obtaining access to the voting papers.

In its notice sent today to the Chairman of the Board of Directors of Norilsk Nickel, RUSAL has requested an EGM for the purpose of ending the terms of office of the current members of the Board of Directors and holding fair and transparent new elections. It is RUSAL’s hope that such elections will restore the rights of all shareholders, and that the new board will prevent any further ‘backstage’ transactions and manipulations.

We are very concerned that the history of interested transactions undertaken by Norilsk Nickel’s management, which clearly favour one large shareholder – Interros – to the detriment of all other owners, will continue absent new elections. RUSAL believes that the highly suspect voting results at the AGM on 28 June 2010 occurred sorely to give greater control of the Board of Directors to Interros, in order to continue the self-dealing transactions between Norilsk Nickel and Interros. Recent unopposed appointment of Mr Andrey Klishas, who until then had been one of key senior executives and had held a position of Chairman of Board of Directors of Interros Group, is another good example.

Today, the Board of Directors is controlled by unhealthy alliance of Interros and Norilsk Nickel management. Fundamental to our call for a new meeting is the need to increase the number of independent directors on the Norilsk Nickel Board. We will nominate individuals of the highest integrity, superior business experience and with solid corporate governance values. Increasing the number of independent directors will significantly strengthen Norilsk Nickel’s corporate governance standards, protect the rights of all shareholders and facilitate the unlocking of Norilsk Nickel’s rich potential by instilling a culture of professional attitude, skills, knowledge and expertise. With this objective in mind, RUSAL has already begun to reach out to the minority shareholders to seek their advice and their approval of new independent candidates. RUSAL calls upon the minority shareholders not only to support the convening of an EGM, but also to vote in favour of the election of a new and reconstituted Board of Directors.

To be clear, RUSAL states, unequivocally, that RUSAL has no plans to merge with Norilsk Nickel.

Going forward, we hope that this new Board of Directors will support the value-maximizing initiatives that are needed to develop Norilsk Nickel to its fullest potential for the benefit of all shareholders. Key elements of this strategy proposed by RUSAL include:
- Implement of world-class corporate governance standards, including appointment of internationally prominent independent directors to the Board to remove inadequate representation of minorities on BoD: more than 40% shareholding in Norilsk Nickel but only 2 our of 13 seats on BoD;
- Appointment of a professional management team that has a solid experience in metals and mining industry and international expertise;
- Impose of tight financial controls throughout the Norilsk Nickel group, which will be closely supervised by an independent audit committee to eliminate corporate waste and self-dealing;
- Dispose of / monetize energy and non-core assets such as Stillwater Company as well as of quasi-treasury shares that are not included in the capitalization of Norilsk Nickel;
- Sales and marketing reorganization to concentrate on direct customer relationship: focus on selling products at premium to relevant benchmarks to the end customers;
- Cost reduction through substantial revision of cost items such as equipment and raw material supplier contracts;
- Direct capex into efficiency improvements and organic development within Russia;
- Minimization of cash commitments to non-core activities such as leasing of jets and sponsorship of national soccer team.

These initiatives aiming to improve the system of business planning, financial control, assets structure and corporate governance, can help increase substantially Norilsk Nickel’s capitalization from its current level, which is in the interest of its all shareholders.