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. Last Updated: 07/27/2016

Smelter May Help Pay Cuba's Debts

Vladimir Potanin, head of the Interros holding, said this week that his company’s plans to complete a nickel plant in Cuba could help Russia recover Soviet-era debt from Cuba.

"The project gives Russia an opportunity to expand nickel production at enterprises on the Kola Peninsula, increase tax revenues and recover Cuba’s debts," Itar-Tass quoted Potanin as saying Thursday after a meeting with President Vladimir Putin, where the two discussed the Norilsk Mining Co.’s plans to invest in Cuba’s Las Camariocas nickel smelter.

Soviet specialists assisted with construction of the smelter when work began in 1983, but the plant was incomplete when work halted in 1991 after the Soviet Union collapsed.

Russia has estimated Cuba’s debt at $27 billion.

Potanin said Norilsk Mining Co., which is a subsidiary of Interros’ flagship, Norilsk Nickel, would invest $300 million to finish the plant.

Potanin did not elaborate on the link between the debt and his company’s investment, but the newspaper Kommersant laid out a framework it said Norilsk Nickel had proposed.

The newspaper said that under the scheme, Norilsk Nickel would form a joint venture with the Cuban state-owned General Nickel Co. to build the plant. General Nickel’s share of the profits would go directly to the Russian government to pay Cuba’s debt.

Norilsk Nickel spokesman Anatoly Komrakov could not confirm Friday that such an investment-for-debt scheme was in the works, or that Putin planned to lobby the Cubans on behalf of Norilsk Nickel.

Kommersant said Cuba has the world’s third-largest reserves of nickel with 5.5 million metric tons of confirmed reserves. Canada has 7.4 million tons and Russia 6.6 million tons of reserves, the newspaper reported.

But an unidentified source at Norilsk Nickel was quoted by Interfax as saying "the fate of the project evidently will be decided at the highest political level by the leadership of Russia and Cuba."

Putin is to visit Cuba on Wednesday.

Alexander Andreyev, a metals analyst at Brunswick UBS Warburg, said there was nothing unusual about Putin’s involvement.

"As far as I know, in Cuba, issues of foreign investment are decided at the government level," he said.