MOSCOW (Reuters) - Metals giant Norilsk Nickel (GMKN.MM) will merge its offices in Asia, including one in Hong Kong and several in China, into one operation in Singapore as low taxes draw commodities firms there at a time of growing regulation in Europe.
“It will become an Asia-Pacific hub... It will give us a certain tax optimization. In that respect Singapore is more attractive than Hong Kong,” Vladimir Strzhalkovsky, chief executive of Norilsk, told the Reuters Russia Investment Summit.
He added that Norilsk, the world’s largest nickel and palladium miner, will keep its trading offices in London and Geneva but reduce the number of staff and transfer some operations - such as India-focused sales - to Singapore.
London and Geneva have long been hubs of commodities trade with Switzerland gradually winning the upper hand over the British capital by offering preferential tax deals to big clients.
Tightening financial and disclosure regulations in Britain have also prompted more firms to migrate their operations to Geneva.
As Asian economic growth led by China has caused a shift in global commodities demand centre from West to East, many commodities houses started to shift large parts of their operations to Singapore, also attracted by the southeast Asian city-state’s low tax environment and soft disclosure rules.
Strzhalkovsky said the trend will only accelerate.
“The Swiss legislation is moving closer and closer to Europe’s and as a result big companies, which want to keep their tax and other preferential arrangements, are thinking about moving to Singapore,” he said.
The trend is a blow to the Swiss government at a time when authorities are seeking to promote trading as a source of alternative income to crisis-hit banking.
Commodities trader Trafigura became the latest example earlier this year when it moved its main trading centre to Singapore from Geneva.
Trafigura is a shareholder in Norilsk, and several years ago controlled as much as 8 percent in the miner.
Strzhalkovsky declined to comment on the size of the current stake and said that cooperation between the two on the trading side was relatively small.
“There are some small sales (to Trafigura) but they are not strategic,” he said.
Strzhalkovsky said the structure of sales by Norilsk to its main clients in the Asia-Pacific, Europe and the United States would not change significantly after the departure of the firm’s chief trader.
Deputy general director and head of sales Viktor Sprogis quit in July after an 11-year stint to “focus on his own project”. He was replaced by Oleg Pivovarchuk, first deputy general director for external economic activities.
“You can’t do the same job for 10 years,” said Strzhalkovsky without giving more details on the reasons behind Sprogis’ departure.
($1 = 30.9502 Russian roubles)
(For other news from Reuters Russia Investment Summit, click here)
Reporting by Dmitry Zhdannikov, Polina Devitt and Melissa Akin, editing by William Hardy