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If investors had a nickel every time Russia's largest miner traded up they would be feeling poor. Shares in Norilsk Nickel have fallen 35 per cent over the past three years. The long spat between Vladimir Potanin's Interros and Oleg Deripaska's Rusal over control of the company has now been followed by poor 2012 operating performance at the nickel miner.

A 23 per cent fall in the price of nickel in Russia last year dented Norilsk's revenues by 15 per cent to $12-billion (U.S.), it said last week. Meanwhile, earnings before interest, tax, depreciation and amortization fell by a third to $4.9-billion, as margins were diluted by higher costs and new sideline businesses such as Nordavia airline. Still, most damage came from $976-million in writedowns on the group's assets in Australia and Botswana as well as impairments on shares in its power business. The bad news has caused shares to fall 6 per cent this week.

Relations have improved between Mr. Potanin and Mr. Deripaska thanks to a settlement in December in which Roman Abramovich agreed to buy 6 per cent of Norilsk. Part of the agreement was the provision for "stability" in dividends. Rusal now says it expects Norilsk to pay $9-billion in dividends within the next three years, with $2-billion to come this year. After all, aluminium group Rusal needs the cash – it is still nursing $11-billion in net debt.

That a $2-billion dividend equates to 93 per cent of Norilsk's 2012 net income should not concern investors. Sure, Norilsk needs about $2-billion annually for capital expenditure just to keep metal production flat. But recent writedowns will have done a lot to clean up its poor investments. The rest will depend on metal prices. For 2013 the payout ratio should fall to nearer 60 per cent. A peace treaty and a stable dividend stream should help investors recover some nickels.

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