Norilsk Nickel shareholders didn't approve the spinoff of the company's electricity assets at a meeting Friday.
The deal to create a new company, EnergoPolyus, required approval by holders of more than 75 percent of voting shares.
"Preliminary voting results show that the spinoff proposal was not supported by the required quantity of shareholders," Norilsk Nickel said in a statement.
A company official said one major shareholder abstained while another was not present for the ballot, the Interfax news agency reported. It quoted Norilsk Chairman Andrei Klishas as saying only 20 percent of shareholders voted in favor of the spinoff.
Mikhail Prokhorov, the billionaire chairman of the Onexim holding group, which owns a blocking stake in OAO Norilsk Nickel, said before the meeting that Onexim intended to abstain. It was not clear which shareholder was not present.
Prokhorov told reporters that any spinoff of Norilsk's electricity assets should wait until after the pending sale of his stake in the metals giant.
"If we abstain, the decision for the spinoff cannot be made," Prokhorov said. "Our group does not support this as it is a matter for the new owners."
Prokhorov and Norilsk's other major shareholder Vladimir Potanin have been embroiled in an increasingly acrimonious division of their assets since the start of the year.
Prokhorov proposed last month to sell Onexim's 25 percent plus one share stake in Norilsk to Potanin for US$15.7 billion (10.8 billion EUR), equivalent to US$293.6 (202.6 EUR) per share - an offer that is due to expire next week.
But United Company Rusal, which is controlled by billionaire Oleg Deripaska's Basic Element holding company, reportedly reached an agreement to buy the stake. The Russian newspaper Vremya Novostei reported Dec. 4 that Prokhorov was preparing to sell his holdings in Norilsk to Rusal for US$12.7 billion (8.8 billion EUR) - a discount price compared to Potanin's offer - as well as another 4 percent he owns in the nickel and palladium producer via KM-Invest for US$2 billion (1.4 billion EUR).
Under his agreement with Rusal, Prokhorov would also gain an 11 percent stake in the aluminum producer, the paper reported, citing sources familiar with the deal.
Klishas did not rule out the possibility of a new vote in the event of changes to the company's shareholder structure, ITAR-Tass reported.
Norilsk's electricity-generation holdings include stakes in wholesale power generating companies OAO OGK-3 and OAO OGK-5, amounting to 65.2 percent and 1.7 percent of shares respectively.
Norilsk also owns stakes in regional power generating firms OAO TGK-1, which is based in northwestern Russia, OAO TGK-5 in the Volga River region, and OAO TGK-14 in eastern Siberia.
The company said last month that EnergoPolyus would have an implied market capitalization of US$7.6 billion (5.2 billion EUR).