The town of Nikel

International news

There are not many examples of a total shift in the economic structure of areas in Russia, where all vital processes were centred around a large enterprise. Moreover, in this case, that existence of the enterprise was considered as environmentally controversial, and was the source of deep concerns for the neighbouring countries. Then the enterprise was shut down by the owners free will, and the town became the first example of economic restructuring and began living a completely new life.

This is the story of the small town of Nikel, in the Murmansk region of the Russian Arctic.

"History tells of only few examples where a new vector was chosen for the development or redevelopment of an area. In the case of the Pechenga District, which includes the town of Nickel, the circumstances and the context are also special and important: When a large-scale tourism development program using the cluster approach began in the Murmansk region in 2014, the Pechenga district was identified as one of the four historically established and promising local tourist clusters.  The directions for tourism development in this border area were determined as early as 2015. Therefore, after Nornickel company shut down the smelting plant, there was already a base for development and the work with the town of Nikel did not need to start from scratch. However, since the enterprise was already closed, the town of Nikel could not wait long for a new beginning,” says Anna Popova, head of the project office of Murmansk Arctic State University and former head of tourism development department of the Ministry of Industry and Entrepreneurship Development of the Murmansk region.

We will use Nikel as an example to see how taking care for the environment can be combined with economic development in northern Russian.

Vladimir Potanin, the head of Nornickel, Russia's largest producer of nickel, copper, and other metals, first announced that the environmentally damaging production would be shut down in 2016. In mid-November, at a meeting with investors in London, he announced the closure of the hazardous operations in the town of Nikel as  finalised decision. 

The industrial workshops in the town of Nikel were in operation since 1946. The enterprise could not be modernised, just because it was originally designed and build for the equipment that is now considered obsolete. When the production was shut down, the emissions in the Nickel area decreased by 7 times.  The areas of Norway and Finland, which are located just 300 kilometres away highly appreciated this development. Environmentalists noted a positive trend not only in the improvement of air quality, but also of water and land surface quality. 

The program to transform the economy of the area is implemented jointly with the government of the Murmansk region. Earlier, Nornickel signed an agreement with the local authorities under which it will invest about 2 billion dollars in regional development. The regional authorities participate by helping Nikel residents, who would like to move to other regions of the country or to other parts of the Murmansk region to resettle in their new homes. Those who decide to stay in the town, could count on all-round support. "We observe and analyse the development of the town of Nikel, which has great potential for both industrial, and tourism development. These are absolutely feasible concepts and there are plenty of respective ideas eligible for grants,” said the governor of Murmansk region Andrey Chibis. “I visited the town myself and witnessed abundance of initiative and creative people with cool projects being implemented using financial grants.”

Nornickel is going to set up a special organization with a large financial base in the town to support local businesses with grants and interest-free loans. The field of activity of new small and medium sized enterprises can be related to tourism, service economy and creation of abrasive materials from slags of the now closed metallurgical production.

Six years ago, experts determined that the Pechenga District has a great potential for the development of active nature tourism, ecological tourism, military-patriotic and historical-cultural tourism, religious pilgrimage and event tourism, as well as "lifestyle" tourism (tourism related to everyday services: visiting beauty salons, stores, etc.). This forecast was made taking into account the proximity of the district to the Norwegian border and the Sredny and Rybachy peninsula, where the Pasvik Nature Park is located. 

The presence of a "Pasvik" (Øvre Pasvik nasjonalpark) Natural Park nearby is also an important element for the development of the area. This unique area is located in the valley of the Pasvik River, which originates in Lake Inari in Finland, and in its middle course passes between Russia and Norway, separating the two states by the fairway.

Here, along the border 30 years ago, nature reserves of the two bordering countries were created with the common name "Pasvik". In 2011. The Ministry of Natural Resources and Environment of the Russian Federation purchased an empty building of 840 m2 in Nickel town to turn into a park visitors’ centre. The project development and part of the construction were financed by Nornickel.

"The Pasvik Nature Reserve is a gem of the region. It is a unique example of trilateral cross-border cooperation,” said Anastasia Ruzaeva, Attaché of the Consulate General of Russia in Kirkenes. “Creation of such visitors’ centre, in our opinion, makes a huge contribution to the development of further cross-border cooperation and tourism". 

Stakeholders, Russian regional authorities, business representatives, and residents believe that this experience in forming a new economic model in the Pechenga District of Russia could be utilised to solve similar problems in other Russian single-industry towns.