Vladimir Potanin, one of the 50 richest people on the planet, stood awkwardly on the Siberian tundra near the remote mining city of Norilsk. It had been less than a week since a spill that threatened to become one of Russia’s worst disasters in the Arctic, caused entirely by an aging fuel tank owned by his mining operations. The billionaire was about to receive a verbal lashing from Russian President Vladimir Putin in front of a national audience.

The live broadcast was supposed to be a celebration of Ecologist’s Day, which meant the timing couldn’t have been worse. Nornickel, the company run by Potanin, made global headlines on May 29 by leaking 150 000 barrels of diesel into a damaged Arctic ecosystem. The accident set off a summer of dismal news from across Siberia that would within weeks include record-breaking heat, startling wildfires, and melting permafrost. The Russian leader was not pleased.

“Vladimir Olegovich,” Putin said in the videoconference, using his patronymic in an official flourish, “we have known each other for a long time.” Wasn’t it true, he demanded, that the cost of the cleanup will far exceed the value of the diesel tank that collapsed? “Of course,” the billionaire conceded. If the company had only replaced the tank that leaked, Putin continued, then “there would be no environmental damage, and the company would not have to bear such costs.”

The discussion moved to other issues, leaving the 59-year-old Potanin on the vast Siberian plain facing a problem with no easy fix. It wasn’t just the environmental damage that had provoked Putin’s display of public anger, nor the implied risk for any businessman on the wrong side of the Kremlin. An environmental watchdog eventually assessed a 148 billion-ruble ($2 billion) levy against Nornickel for polluting the area.

This summer laid bare the unlikely role Potanin finds himself playing in the face of climate change. The Arctic is warming with such rapid speed—more than twice as fast as the global average—that it serves as a leading indicator. The Arctic also happens to be where Nornickel’s mines produce enormous quantities of the minerals essential for rechargeable batteries. It’s the source of nickel and cobalt found in millions of electric vehicles, as well as much of the palladium inside the catalytic converters that reduce tailpipe emissions.

That pushes Potanin into a paradoxical position: He manages a sprawling mining complex that produces raw materials needed for the transition away from fossil fuels, and his operations disgorge dangerous pollution into the fragile Arctic. The chief asset of Russia’s richest citizen—a chunk of the world’s ice cap—is melting before his eyes.

It’s August when Potanin arranges to meet with a Bloomberg Green reporter, two months after his scolding in Siberia. His office near Moscow is located inside Luzhki Club, a resort he built and where he now lives and works. The facility is closed to outsiders because of the pandemic. A doctor checks the temperatures and examines the throats of Potanin’s visitors.

He readily concedes that the Russian president was quite right, of course, but quickly explains that he miscalculated rather than ignored the risks. “The accident,” Potanin says, “showed that the consequences of the thawing permafrost are generally underestimated.”

Permafrost that’s been frozen for thousands of years is thawing as Arctic temperatures rise. While all companies and cities built on frozen soil are affected, Nornickel is particularly vulnerable. Eighty-five percent of the company’s infrastructure, from roads and pipelines to processing plants, sits atop thawing permafrost, according to Morgan Stanley. The process gives what was once solid land the characteristics of a slow-motion earthquake. For Putin’s part, the climate cause has been only lightly taken up. After more than three years of foot-dragging, the Russian leader ratified the 2015 Paris Agreement. His reasons had less to do with atmospheric science than geopolitics and gross domestic product. “For our country, participating in this process is important,” Putin said after touring an Arctic military base last year.

Potanin sees his company’s climate-driven risks as a Russian problem because 60% of the nation’s territory is permafrost. Russians are by now familiar with news about potholes as deep as 280 feet that engulf houses. People used to consider these issues a normal part of life, Potanin says, the sort of damage that just needed small repairs before moving on. “Turned out, it’s not enough,” he says, referring to the old diesel tank that’s caused him so much trouble. “Such a routine attitude toward permafrost has become obsolete.”

Temperatures in some parts of Siberia were 8 ºC above the historical average for the first six months of 2020. One town, Verkhoyansk, registered 38 ºC in June, a month when maximum average temperatures are normally around 20 ºC. At current warming rates, the Russian Academy of Sciences expects the country’s permafrost zone to shrink 25% by 2080, threatening $250-billion in infrastructure.

The danger is not just to the Arctic and its corporate owners. The frozen ground acts as long-term storage for greenhouse gases such as carbon dioxide and methane. In fact, the amount of CO₂ trapped in frozen ground is about twice what’s already in the atmosphere. When permafrost thaws, these gases further accelerate the warming of the planet. Long-frozen animal corpses—even woolly mammoths—have been thawed out, too, which can release deadly bacteria and viruses. There have already been anthrax outbreaks in Siberia caused by reindeer grazing on thawed permafrost and passing the pathogen to locals.

Scientists are not sure whether thawing has reached a so-called tipping point, beyond which parts of the Arctic would keep emitting stored gases even if global warming stopped. “One [bit of] infrastructure damage doesn’t tell us anything about the effects of climate change, but the trend is very important,” says Jan Hjort, a permafrost expert at the University of Oulu in Finland. “There have been a lot changes already, and maybe we have gone beyond this tipping point.”

Potanin concedes that his company underestimated its permafrost exposure. He doesn’t rule out the human factor of inadequate maintenance work; an investigation is ongoing. He’s now pledging to have his company, officially called MMC Norilsk Nickel PJSC, shore itself up.

Nornickel has spent about $150-million to collect 90% of what was spilled in May, according to its own estimates, but Potanin says this is just the start. All aging infrastructure, even those facilities under what he terms theoretical risks, will now be replaced, and a system of permafrost monitoring and safety barriers will be introduced at the company’s fuel facilities. He puts the total cost at more than $170-million in additional spending over the next two years. More will be spent on the restoration of the affected area.

One of Russia’s original oligarchs, Potanin is among the few who remain active. He has an estimated fortune of $27.8-billion, according to the Bloomberg Billionaires Index, and is often referred to as the mastermind behind the Russian loans-for-shares program that resulted in the privatization of natural resource companies after the Soviet Union’s collapse. The father of seven sometimes plays hockey with Putin and other notable Russian personalities. He became the co-owner of Nornickel in 1995 and has been CEO since 2012.

Mining around Norilsk, the city of 180 000 people that’s home to Nornickel’s sprawling Arctic operations, dates to Josef Stalin, who used gulag prisoners to build the plants to source metals for the Soviet arms industry before World War II. The mines and refining facilities in the region have long been a target of environmentalists. Nornickel’s smelters around the city emit more sulfur dioxide than any other company in the world, with an output of the gas equal to two-thirds of all of Western Europe combined. Sulfur dioxide causes acid rain and has been linked with other power pollutants to the deaths of more than 4 million people around the world each year through heart disease, strokes, and cancer, according to the World Health Organization.

“Nornickel never upgraded its plants to capture sulfur dioxide since they were built,” says Igor Shkradyuk of the Biodiversity Conservation Center in Moscow. “For years, Nornickel’s profits were used for other projects, like building Olympic Games sites and resorts. Ecology projects were hardly invested into.”

The company closed its oldest Norilsk smelter in 2016, removing the single biggest source of sulfur dioxide. Before the spill, Nornickel had started work on a nearly $4-billion project to capture almost all gas emitted from its local operations starting in 2023, turning dangerous fumes into harmless gypsum.

The giant miner’s role in climate change is a complicated question. Its activities are polluting the Arctic and could accelerate the pace of warming in the region. But sulphur dioxide, though harmful to human health, acts as a global coolant by blocking a portion of sunlight that would otherwise warm the planet. And Nornickel produces relatively little planet-warming CO₂, especially compared with other miners.

Plus, the Siberian mines are an unmistakably vital part of the supply chain for electric vehicles, accounting for a quarter of the world’s refined nickel. While the silvery metal is abundant, high-quality material sought-after for EV batteries is rare—and the world’s cheapest and highest-purity source is Nornickel’s Arctic mines. The company “is without a doubt the lowest-cost nickel producer in the world,” says George Heppel, a battery-metals analyst at CRU Group.

Demand for minerals has been soaring, even before the global electric-car boom really takes off. By 2030 rising EV production will mean car batteries consume half of all the nickel produced, up from just 7% in 2019, according to BloombergNEF. Electric vehicles are essential to cutting emissions from road transportation, which accounts for 17% of the global total, based on estimates from the United Nations’ Intergovernmental Panel on Climate Change.

Nickel is what allows EVs made by Tesla and others to run longer on a single charge. That perhaps explains why Elon Musk issued a plea to miners this summer, in the weeks after Norilsk’s diesel spill: “Please mine more nickel,” he begged on Twitter. “Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way.”

Potanin’s remarks in the interview reflect a new measure of concern for how his company is perceived. “We do not yet see direct pressure from customers that they will not buy our metal due to environmental problems,” he says. “But there is a tendency to trace the origin of the metal, and in the future the pressure will grow.”

Potanin’s presence in the days after the spill is another sign of his personal involvement. He left his resort on the outskirts of Moscow and flew almost 3 000 km on his private jet to see the damage himself. Awaiting him was the tank with a rusty-looking concrete foundation that had cracked. The diesel was spreading fast through the porous soil and water systems, and his workers were trying to contain the spill with orange plastic barriers.

The leak was visible from space, with satellites capturing a red stain moving north along the nearby Ambarnaya River. Images of the catastrophe went viral on social media. Putin declared a state of emergency in the area on June 3, sending Nornickel’s shares tumbling 10%.

“I will probably speak now not as a businessman, but as a person who is worried,” Potanin told Putin during the video exchange. “However much is needed, that much will be spent. This, of course, will be billions and billions.”

The company may have no alternative. The Kremlin thinks it’s time to start upgrading old Arctic infrastructure, and Nornickel will be the one to start that shift, according to a top government official who declined to be identified because they weren’t authorized to speak on the record.

“If you look at the situation through Putin’s eyes, then I probably created problems for him,” Potanin says. “And I was told off for it. But I’ve built up trust with him, so he asked me: ‘Clean up after yourself, but properly.’ This is what we are doing now.”