July 14, 2020 / 1:24 PM / 24 days ago

UPDATE 1-Russia's Rusal seeks management changes at Nornickel after fuel spill

(Adds quotes, context on past Rusal-Nornickel relations)

MOSCOW, July 14 (Reuters) - Russian aluminium giant Rusal has asked the board of Norilsk Nickel (Nornickel) , in which it has a major stake, to change its management and overhaul its environmental policies after a fuel spill in Siberia.

Russia's environmental watchdog demanded Nornickel pay damages of about 148 billion roubles ($2.1 billion) after 21,000 tonnes of diesel leaked into rivers and subsoil on May 29 in the remote Arctic city of Norilsk.

Rusal's demand for management changes is the latest exchange in a series of disputes between the aluminium giant and Nornickel, which is run by Vladimir Potanin, who is also the palladium and nickel producer's biggest shareholder with 34.6%.

"We have presented the board of Ddirectors of Nornickel with a proposal to accept a resolution demanding that Vladimir Potanin, as the managing partner, changes the management team, relocates the company headquarters to Norilsk and overhauls corporate policies towards the environment and safety," Rusal said in a statement published on Tuesday.

Rusal, which owns 27.8% of Nornickel, said developments at the mining firm raised questions about "the competence of the company's management."

Nornickel declined to comment.

The environmental watchdog published photographs on Tuesday showing what it said was a spill at another Nornickel site. They showed pools of red liquid released over part of the plant site.

A spokeswoman for Nornickel said in a statement that the water had leaked from a pipe at its subsidiary, the Nadezhdinski metallurgical plant, but said the leak had now been fixed.

Rusal, the world's largest aluminium producer outside China, relies on Nornickel's dividend payments in tough years and has been involved in shareholder disputes on the issue with Potanin.

Potanin has previously sought to cut Nornickel's dividend to boost investment and, after the fuel spill, proposed capping Nornickel's 2020 dividends.

Rusal, whose aluminium market has been hit by the coronavirus crisis, has not rejected or accepted the proposal to cap dividends.

$1 = 71.1000 roubles Writing by Polina Ivanova; Editing by Louise Heavens and Edmund Blair

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