Nov. 5 (Bloomberg) -- Russia will get a seat on the board of OAO GMK Norilsk Nickel, the country's biggest mining company, for the first time in a decade after approving a $4.5 billion loan to help refinance the debt of its second-largest shareholder.

Two government representatives will also join Norilsk's management team by the year-end, Moscow-based United Co. Rusal, which owns 25 percent of the nickel producer, said today in a statement. Russia helped Rusal pay off foreign lenders who held the Norilsk shareholding as collateral.

``Norilsk is a key enterprise for the country and the state wants some oversight during today's critical times,'' said Alexander Pukhayev, an analyst at VTB Capital in Moscow. ``The metal markets are at super-lows, Norilsk has large debts, and of late some problems with corporate governance.''

Norilsk has slumped 51 percent in Moscow trading this year as metals prices declined, while Rusal and billionaire Vladimir Potanin battled for control of the nickel producer. Russia has pledged to spend more than $200 billion to help the country out of its worst financial crisis since 1998, including $7.8 billion on companies that need to refinance debt.

``We're seeing something extraordinary,'' said Max Khudalov, a metals analyst with Metropol brokerage in Moscow. ``I don't remember the state being a shareholder or a board member at a top Russian metals company for a long, long time.''

Rival Plans

Rusal has sought to merge with Norilsk to create a diversified mining company that can compete with BHP Billiton, the world's biggest miner. Potanin, the biggest shareholder and chairman of Norilsk, is seeking to turn the business into a holding company for planned acquisitions in metals and mining industries such as copper, iron ore, potash and uranium.

Nina Dementsova, a spokeswoman for Potanin's investment company Interros Holding Co., declined to comment today when contacted by Bloomberg News. Norilsk, which was sold by the government to investors including Potanin in 1997, will hold a shareholders meeting Dec. 26 to elect a new board.

``If the state's arrival resolves the shareholder issue, I'm only for it,'' Khudalov said. ``The endless corporate battle brings no joy to anybody.''

Norilsk gained 6 percent to 2,989.68 rubles by the close in Moscow, valuing the company at 575 billion rubles ($22 billion). The shares surged as much as 32 percent earlier today.

Buyback Questioned

Rusal, controlled by billionaire Oleg Deripaska, has also clashed with Potanin over Norilsk's decision to buy back shares last month at 6,167 rubles each, even after the nickel company's stock price fell to as low as 1,400 rubles in Moscow on Oct. 8.

Rusal, unable to benefit from the buyback because its shares were being held as collateral, won a court ruling to halt the stock purchases on Oct. 28.

The company spent 26 billion rubles buying back shares before the court order, Norilsk said today. Rusal said today it will urge Russia's markets watchdog to investigate the transaction.

Russia gave Rusal a one-year loan at 5 percentage points above the London interbank offered rate, or Libor, made via state-controlled Vnesheconombank and backed by its Norilsk stake.

To contact the reporter on this story: Yuriy Humber in Moscow at yhumber@bloomberg.net

Last Updated: November 5, 2008 11:11 EST