|
Article Excerpt
IN BRIEF
Editor's Choice
*** Alexander Voloshin, chairman of the board at Arctic mining and smelting giant Norilsk Nickel, said this week that it will be up to shareholders alone to decide whether a metals holding is set up at Norilsk. Russian President Dmitry Medvedev met this week with Norilsk Nickel co-owners Vladimir Potanin and Oleg Deripaska, and with the company's general director, Vladimir Strzhalkovsky, but Voloshin denied decisions on the creation of such a holding had taken place, reiterating that shareholders will be responsible for deciding the merger issue, not the Kremlin. The meeting with Medvedev instead focused on ways to support the metals industry during the global financial crisis, in particular state support for the base metals sector and the possibility of the state procuring what the sector produces.
*** The license to the giant Sukhoi Log gold field in Russia's Irkutsk region will probably be allocated on the basis of a government order and not by tender, the region's acting natural resources minister announced this week, saying the government will likely allocate the field to a company or a consortium. The Irkutsk region could be producing more than 80 tonnes of vein gold per year when production at Sukhoi Log peaks. Local miners have said they are already prepared to produce up to 10 tonnes a year, but they will not manage that due to a shortage of electricity, which has caused production to plummet 17%. Capacity for 70 megawatts currently exists in the Bodaibo gold province, but 300 megawatts will be needed when Sukhoi Log goes on stream.
*** VTB Bank this week withdrew its request for clearance from the Federal Antimonopoly Service to purchase up to 50% of shares in Polyus Gold. As yet there has been no decision reached made concerning an application by Suleiman Kerimov's Nafta Moskva to purchase shares in what is Russia's number 1 gold miner. Regulators earlier indicated that a VTB application to buy the shares would be turned down. Newspapers this week suggested Vladimir Potanin had sold a large block of shares, around 20% in Polyus Gold top firms controlled by Kerimov. Vedomosti said the arrangement for Potanin to receive the rights to United Company RUSAL's debt of $2.8 billion to Mikhail Prokhorov in return for a 35%-stake in Polyus Gold held by Interros (and the stake's subsequent sale to Suleiman Kerimov for $1.2 billion-$1.3 billion) was no longer under consideration.
*** The world's largest aluminum producer UC RUSAL has yet to sign an agreement with foreign banks to restructure a syndicated loan of $7 billion, a source at one of the lenders told Interfax this week, adding that the company would soon release an official statement when the agreement will, in theory, be signed. March 3 was the due date for payment on the loan. The banker declined to comment on whether RUSAL made a payment. RUSAL principal shareholder Oleg Deripaska told reporters in late February that the company expected to sign a standstill agreement with foreign banks at the beginning of March. Meanwhile, firms from Deripaska's Basic Element (BasEl) holding owe $1.5 billion to VTB, Russia's second biggest bank. RUSAL accounts for approximately half the debt of Deripaska's companies, but "is not VTB's biggest borrower." VTB said it has no unresolved issues in relations with Vladimir Potanin and Usmanov's Metalloinvest has "a performing loan."
*** Russian coal companies have this week asked the government to help them service their debts amid the financial crisis and steep drop in demand for coal, with the country's leading coking coal producer Mechel proposing that the budget allocate 2.5 billion to 4 billion rubles in 2009 to subsidize two-thirds of the refinancing rate on loans to coal companies. Belon has suggested subsidizing two-thirds of the refinancing rate to the Energy Ministry, and the ministry supported the suggestion. Participants at round table on support for the industry said that average interest rates on loans to coal companies had shot up to 24% from 9% before the financial crisis. Mechel, meanwhile, expects export demand for coking coal to resume growing in the second quarter of 2009.
*** MMC Norilsk Nickel and a copper-aluminum company from Shandong, China, have agreed to explore the possibility of forming a joint venture to produce copper tubes and copper-nickel alloys. Norilsk has also reached agreement to form a joint venture to produce platinum and palladium catalysts with either a noble metals institute from Yunnan province in the country's south or with the country's Northwest Nonferrous Metals Institute, which already produces catalysts. Norilsk sees China as a strategic market for development and is interested in listing palladium on the Shanghai Gold Exchange, which already trades platinum; and nickel on the Shanghai Futures in order to bolster sales in China itself. Norilsk has also opened a new sales office in Shanghai, adding to its representative office in Beijing and sales office in Hong Kong.
*** Steelmaker Severstal could invest between $7 million and $10 million in iron ore exploration in Liberia by 2011-2012, after owner Alexei Mordashov visited Liberia this week and told government officials there that the company could invest "hundreds of millions of dollars in Liberia's economy" if exploration goes well.Severstal Resources, the Severstal group's mining division, closed the purchase of up to a 61.5% stake in African Iron Ore Group Ltd (AIOG), which owns, through subsidiaries, the exploration rights for an iron ore deposit in the Putu Range area, Liberia, in December last year. AIOG is now known as Severstal Liberia iron Ore Ltd, seeing as Severstal Resources is becoming its controlling shareholder. According to preliminary data, the Putu Range deposit contains more than 500 million tonnes of iron ore. This number may substantially increase as a result of a detailed exploration exercise which is planned by Severstal Resources.
*** Yekaterinburg-based Russian Special Alloys (Rosspetssplav), a holding company of special alloys producers, and Russpetsstal, the special steels division of the state Russian Technologies (Rostekhnologii) corporation, this week signed a strategic cooperation agreement on technological cooperation and the creation of a reliable system for supplying Russpetsstal members with ferroalloys and alloying agents. The products approved for supply to the special steel makers include more than ten types of alloys and other products made by Rosspetssplav's Klyuchevsk Ferroalloy Works in the Sverdlovsk region. Rosspetssplav has not supplied products to Russpetsstal before.
TOP STORIES
Shareholders, not state to decide Norilsk Nickel's future - Voloshin
KRASNOYARSK. (Interfax) - It will be up to shareholders alone to decide whether a metals holding is set up at MMC Norilsk Nickel, Alexander Voloshin, the Arctic mining and smelting giant's board chairman, told reporters on the sidelines of the economic forum in Krasnoyarsk on February 27.
Russian President Dmitry Medvedev met with Norilsk Nickel co-owners Vladimir Potanin and Oleg Deripaska, and with the company's general director, Vladimir Strzhalkovsky, on February 26. Asked whether the meeting produced a decision to form a mining holding, Voloshin said: "Decisions of that nature could not have been reached at the meeting. This is for shareholders, only they can decide matters of that nature."
The shareholders are primarily responsible for deciding the merger issue, not the Kremlin, he said.
Regarding the possibility of Norilsk merging with Alisher Usmanov's Metalloinvest, Voloshin said he had "not heard anything specific - this is so far just a concept, which is at the discussion stage."
The meeting with Medvedev on February 26 evening focused on ways to support the metals industry during the global financial crisis. Presidential spokeswoman Natalya Timakova said "safeguarding the interests of the sector's employees was also addressed, separately."
A source close to Norilsk Nickel's shareholders said the meeting dealt in particular with state support for the base metals sector and the possibility of the state procuring what the sector produces. The source said the possibility of forming a metals holding was not discussed at the meeting.
Norilsk Nickel, which is weathering the crisis with much lighter losses than many other mining companies, became the setting for a battle between shareholders looking for ways to solve their debt refinancing problems quickly at the end of last year and early this year.
Alisher Usmanov, who controls around 5% of Norilsk, suggested a merger between Norilsk and his Metalloinvest at a ratio of 2:1, with the possibility of absorbing Oleg Deripaska's RUSAL in time, once the latter had settled its debt problems. The government would have received a blocking stake in exchange for the conversion of debt.
Potanin and Deripaska, who control 30% and 25% of Norilsk Nickel, respectively, did not take to Usmanov's vision of the merger and suggested another, unworkable option, which sources with knowledge of the situation say had the sole aim of derailing the talks with Usmanov. The core shareholders suggested merging Norilsk with Metalloinvest, Evraz Group, Mechel and Uralkali. Evraz and Mechel were later replaced in this virtual configuration by RussNeft and Raspadskaya. But it would have been virtually impossible to merge all those companies in a short space of time.
Norilsk's Strzhalkovsky has said the company expects to close 2009 with operating profit of $1.6 billion-$1.8 billion. The company is due to pay off $867 million in loans.
TOP STORIES
VTB withdraws FAS application to acquire Polyus shares
MOSCOW. (Interfax) - VTB has withdrawn its request for clearance from the Federal Antimonopoly Service (FAS) to purchase up to 50% of shares in gold miner Polyus Gold, FAS deputy head Andrei Tsyganov told journalists.
No decision has been made concerning an application by Suleiman Kerimov's Nafta Moskva to purchase Polyus Gold shares, he said.
The slide in Polyus Gold's share price gathered speed after the news that VTB had withdrawn the request. The stock was down 7.3% from yesterday's closing price to 1,138 rubles a share by 2:29 p.m.
Alexei Ulyanov, the FAS official in charge of industry monitoring, said on February 11 that the FAS had received an application from VTB to buy up to 50% of the shares in Polyus Gold and that the application would be turned down.
A source close to the bank told Interfax that the bank had "been asked to finance [the acquisition of Polyus Gold shares] on behalf of a client." The source did not name the client.
Newspapers on March 3 quoted sources as saying Vladimir Potanin had sold a large block of shares in Polyus Gold top firms controlled by Suleiman Kerimov. Vedomosti said 20% had been sold and Kommersant said 22%.
Interros declined to comment but did say it intended to sell its stake in Polyus.
Interros officially admits to owning just under 30% of Polyus, but Kommersant claims Potanin's stake has reached 37%. The paper said 22% had already been sold and plans existed to sell the other 15% to investment funds later at a higher price. Vedomosti wrote about a 35% block of shares.
Vedomosti said the arrangement for Potanin to receive the rights to United Company RUSAL's debt of $2.8 billion to Mikhail Prokhorov in return for a 35%-stake in Polyus Gold held by Interros (and the stake's subsequent sale to Suleiman Kerimov for $1.2 billion-$1.3 billion) was no longer under consideration. The paper said the deal between Potanin and Kerimov was struck at the prices envisaged by the original configuration, in other words Interros will get $680 million-$740 million for 20% of Polyus.
The acquisition of more than 20% of a company does not require approval from the FAS. Nafta Moskva had earlier requested clearance to buy 25%-50% of Polyus Gold, but a decision on that application has not yet been reached.
VTB is holding some Polyus Gold shares as loan collateral.
It emerged in February that the bank had asked the FAS to allow it to acquire 30% of the company on the grounds that the shares could pass to its ownership at some stage as the result of a margin call. VTB has not said who owns the shares that have been pledged with the bank, but analysts are sure that it is Interros. Vedomosti's sources say the sale of some of the shares would enable Interros to settle with the bank and discharge the remaining shares from collateral.
A source close to Polyus said Kerimov funded the purchase with a loan provided by the same VTB.
PRECIOUS METALS
Sukhoi Log gold license could be allocated without tender
IRKUTSK. (Interfax) - The license to the giant Sukhoi Log gold field in Russia's Irkutsk region will probably be allocated on the basis of a government order and not by tender, said Olga Gaikova, the region's acting natural resources minister.
"The government will probably allocate Sukhoi Log to a company or a consortium," Gaikova told reporters on February 27, adding that a tender would probably not be held.
Gaikova said Irkutsknedra, the local branch of the Russian Federal Subsurface Resources Agency (Rosnedra), had approved a feasibility study for the field in December and that the Russian Natural Resources Ministry had approved it at the beginning of this year.
Sukhoi Log contains just under 2,000 tonnes of recoverable gold at present but these reserves could be increased to 2,600-2,700 tonnes during the course of the project. A mine at the field could cost 49 billion rubles to build and produce up to 50-60 tonnes of gold per year in time.
Gaikova also said the Irkutsk region could be producing more than 80 tonnes of vein gold per year when production at Sukhoi Log peaks. Local miners have said they are already prepared to produce up to 10 tonnes a year, but they will not manage that due to a shortage of electricity. Capacity for 70 megawatts currently exists in the Bodaibo gold province, but 300 megawatts will be needed when Sukhoi Log goes on stream.
Polyus Gold plans to commission a recovery plant at the Verninskoye field in 2010 and, in time, at the Chertovo Koryto field, Gaikova said.
But any dramatic increase in gold production will depend on efforts to develop power infrastructure in the region's north, linking grids there up with the Yakutia grid, and building new generating capacity, some of it gas-fired. The first stage of this project, the link-up, will cost an estimated 12 billion rubles, and could be funded partly by the state Investment Fund, Gaikova said.
PRECIOUS METALS
Medusa Mining doubles gold production
SYDNEY. (Interfax) - Australia's Medusa Mining Limited, which is part-owned by a firm controlled by Russian businessman Alisher Usmanov, boosted gold production 119% in the first half of the 2008-2009 financial year to 19,144 oz, the company said.
Cash costs were $225 an ounce.
Net profit for the period was A$12.044 million (US$7.755 million), compared with A$1.595 million losses for July-December 2007. revenue soared 227% to A$20.169 million.
Medusa Mining holds licenses to deposits in the Philippines.
Gazmetall Holding, controlled by Alisher Usmanov's Metalloinvest, owns 11.96% of the company's shares. Citicorp is the biggest shareholder with 20.35%.
PRECIOUS METALS
Ukraine to uphold gold, forex reserves until end of 2009 - Yushchenko
KYIV. (Interfax) - Ukraine intends to keep current gold and forex reserve levels until the end of 2009, said President Viktor Yushchenko said during a meeting with G-7 ambassadors, as well as representatives of the International Monetary Fund (IMF) and the World Bank in Kyiv on Thursday.
Yushchenko said that Ukraine's current reserves come to $25 billion. He said the country plans to receive an IMF loan totaling $12 billion.
The National Bank of Ukraine's international reserves in January 2009 dropped by 8.6%, or $2.723 billion, to $28.82 billion. Reserves in foreign currencies shrank by 8.9% to $28.043 billion while gold reserves went up by 0.9% to $749.98 million.
The NBU's acting head, Anatoly Shapovalov, said this week that the bank's reserves had dropped to $27 billion. Since the start of October 2008, while the situation on the Ukrainian financial market was in crisis, reserves decreased by 26%, or $10 billion.
In light of the world financial crisis and the worsening situation in the country, Ukraine has appealed to the IMF for financial assistance. The IMF has agreed to provide Ukraine with a stand-by loan worth 11 billion SDR, the first tranche of which comes to 3 billion SDR.
The IMF's mission checks, on a quarterly basis, Ukraine's fulfillment of the loan's terms. According to the initial schedule, if the January IMF mission, having completed its negotiations with the Ukrainian leadership on February 6 regarding the first draft of the stand-by loan agreement, had given the project approval, the following tranche would be received on February 15. However, despite the IMF's demonstrated flexibility in regards to Ukraine, the timing of the tranches reception still remains unresolved.
According to a...
|
