NEWYORK, Aug. 5 -- Russian billionaires Vladimir Potanin and Oleg Deripaska, locked in a dispute over control of the world's biggest nickel supplier, OAO GMK Norilsk Nickel, offered to buy each other out as their feud reaches stalemate.

Potanin's Interros Holding Co., which gained more influence over Norilsk after a June 28 board election, is interested in raising its stake, spokesman Andrei Kirpichnikov said today by phone from Moscow. That follows Deripaska's July 30 offer to buy out Potanin's shares and install new management at Norilsk, Russia's biggest mining company.

The government may need to intervene to break the deadlock as neither side plans to sell, Troika Dialog said in a report today. Russian President Dmitry Medvedev has ordered the Prosecutor General's Office to review the situation, the state- run RIA Novosti news agency reported yesterday.

"The resolution of the conflict is clearly going to be a drawn-out affair," Alexander Pukhaev, an analyst at VTB Capital in Moscow, wrote today in a note. "Should either of the parties buy the other out, it would be favorable for Norilsk."

Potanin and Norilsk directors are preparing a joint bid for the 25 percent of the company held by Deripaska's United Co. Rusal, the Vedomosti newspaper said today. Kirpichnikov said he had "nothing to add" to the report. Norilsk is able to buy out Rusal, the nickel maker's spokeswoman Erzhena Mintasova said.

"Norilsk can easily borrow money to buy out Rusal's stake and let the company develop without the shareholder conflict," Mintasova said by phone from Moscow. "A pool of lenders, including state-owned banks, could be picked quickly to raise the necessary funding."

Use of Cash

Rusal spokeswoman Vera Kurochkina questioned how Norilsk could use funds on its balance sheet to buy out investors and reiterated that the Moscow-based aluminum company won't sell.

"A decision on what Norilsk must do with its cash and for what purposes the company needs to obtain credit should be made by shareholders, not by the management," Kurochkina said in an e-mailed reply to questions. "It's impossible to buy something which isn't for sale."

Russia could take a stake in Norilsk through a state-run company to help defuse the dispute, three people familiar with the situation said last month. State-run Russian Technologies Corp. had begun talks with Norilsk investors including billionaire Alisher Usmanov, one of the people said.

Flare Up

"The state will have to get involved, albeit behind closed doors," said Chris Weafer, chief strategist at UralSib Financial Corp. "The advantage of that for the state is that it will allow for an opportunity to push a resolution that suits its long-term interests."

The fight for Norilsk flared up this year following a seven-month battle in 2008, when Deripaska sought to merge the nickel producer with Rusal, a deal Potanin opposed.

Rusal claims the June 28 vote was manipulated and asked the state to probe a result that left Deripaska's company with three board seats to Potanin's four. Norilsk management, which voted with an 8.5 percent stake of treasury stock, got three seats.

"The balance of power within the company is currently tipped in favor of one shareholder, Interros, and reflects the malfunctioning system of checks and balances," said Mikhail Stiskin, an analyst at Troika Dialog in Moscow.