MOSCOW, November 7 (RIA Novosti commentator Peter Lavelle) - Russian metals giant Norilsk Nickel intends to spend $546 million to become self-sufficient in the transportation and handling of its products by 2008. Promoted as a cost cutting program, investors are concerned the company may needlessly become distracted from its core business.

Of the total investment layout, $40 million will be devoted to constructing a terminal in the northern port of Murmansk with capacity for 2 million metric tons of metals. The company, which posted a net profit of $1.8 billion in 2004, may then buy five or six Arctic-class ships, each worth around $84 million. Norilsk estimates the use of its own vessels to transport products to foreign markets could cut its transport costs by 25%-30%.

Although the move may further vertically integrate Norilsk, it will likely also diffuse the company's focus from its core business - mining. Norilsk's goal of self-sufficiency is strikingly at odds with the recent decision to separate and list Polyus, Russia's largest gold-mining company.

Spinning-off Polyus achieves precisely the sort of maximization of value Norilsk should be seeking, but assembling its own fleet may have the opposite effect.