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*** Prime Minister Vladimir Putin believes Russia and Mongolia will be able to reach an agreement on the joint extraction and production of uranium ore within the next few weeks. The Russian partners in the venture would be state corporation Rosatom, while Mongolian companies Erdenet and Mongolrostsvetmet will benefit from the entry of the Rostekhnologii state corporation into their equity. Meanwhile, Russian Railways has received a 50%-stake in a joint venture with state-owned companies from Mongolia that will develop Mongolia's railway infrastructure, primarily to carry output from coal, copper and iron ore deposits as they come on stream.
*** Russian Federal Subsurface Resources Agency Rosnedra announced this week that Alisher Usmanov's Metalloinvest holding remains obliged to pay for the 15-billion-ruble license to the giant Udokan copper field that it won at an auction last autumn in full by June. The company has already paid 5 billion rubles, but could forfeit that sum if it fails to meet the deadline. Usmanov has been reported as saying that the construction of a mining complex at Udokan, estimated to have a cost of 100 billion rubles, must be put back due to the economic crisis.
*** Mechel coal and steel group this week finalized the acquisition of 100% of Bluestone Coal Co., located in the U.S. state of West Virginia, from the family of businessman James Justice. The aggregate merger consideration is $436 million paid in cash (including $36 million interest paid), approximately 83.3 million preferred shares, plus the assumption of approximately $132 million of net debt. Other business activities conducted by the owners of Bluestone Coal Corp., including steam coal operations in Kentucky and other non-coal operations, were not included in the transaction. The transaction documents also contemplate that the parties will conduct a public offering of the preferred shares as soon as market conditions are favorable.
*** Russian steelmaker Severstal is reportedly looking to pull out of the North American market and is idling production at two facilities in the United States. Severstal Warren (formerly WCI Steel) will halt all production operations, while cold rolling and coating operations at Severstal Wheeling (formerly Esmark) will be idled due to continued deterioration of economic conditions and declines in customer orders and 3,000 employees at the two facilities will be furloughed for the next several months.
*** Russian Prime Minister Vladimir Putin this week signed a decree imposing an 8%-import duty on large-diameter steel pipes from China. The duty applies to 17 types of steel pipe and enters into effect on June 8. It will remain in force until December 21, 2009. An original 8% duty on pipes more than 508 millimeters in diameter for a period of three years was introduced in December 2006, but was not applicable to countries that enjoy trade preferences, such as China - which is one of the two biggest large-diameter pipe supplier to Russia. A special regime applies to shipments from Ukraine, the other of these suppliers.
*** Shareholders in Polymetal, Russia's biggest silver producer and a major gold producer, will vote on a share issue at an EGM on June 19. The shareholders already voted at a March 17 EGM in favor of issuing 30 million new shares, but the company has since announced two new transactions, for which its shares could be used as payment. So the shareholders will have to vote to reverse the March 17 decisions and accept new terms for the share issue. The board is proposing to issue 84.375 million new shares in a private subscription.
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Metalloinvest must pay for Udokan copper license in June - agency
MOSCOW. (Interfax) - Alisher Usmanov's Metalloinvest holding must pay for the license to the giant Udokan copper field that it won at an auction last autumn in full in June, Anatoly Ledovskikh, chief of the Russian Federal Subsurface Resources Agency (Rosnedra), told reporters.
"The deadline for payment is June," Ledovskikh said.
Ledovskikh said Metalloinvest had assured Rosnedra it would meet the deadline. "Of course they would make promises like this, seeing as they have already paid 5 billion rubles," he said.
But the company might lose this money if it misses the June deadline. "They'll lose the 5 billion rubles if they don't pay," he said.
Metalloinvest originally paid 4.5 billion rubles towards the 15 billion rubles it is due to pay for the license but then received a six-month deferral on outstanding payments for the license to field, which is in the Chita region. The holding resumed those payments in April.
Usmanov has been reported as saying that the construction of a mining complex at the Udokan copper field must be put back due to the economic crisis.
Metalloinvest intends to develop the field in a consortium with the state Russian Technologies (Rostekhnologii) corporation.
Metalloinvest had planned to start building the Udokan mine in 2010. Planned investment in the project exceeds 100 billion rubles.
"The timing of the construction and other terms of the license must be changed. We can't try and fool the government and banks by claiming we will deal successfully with the old terms at today's copper prices. Earlier it was seven years, but now I think it will be nine or ten," Usmanov has been reported as saying.
Usmanov has said he thought the Metalloinvest-Rostekhnologii consortium could finance 30% of the declared amount of investment in Udokan (80 billion rubles) after paying the 15 billion rubles for the license, and borrow the rest from state banks. Metalloinvest is planning, according to the current terms, to start building a hydrometallurgical plant in the Chita region in 2010 and the first stage of the plant, capacity 150,000 tonnes of cathode copper or 12 million tonnes of concentrate per year, should be commissioned in 2014. Full design capacity of 474,000 tonnes cathode copper per year (36 million tonnes concentrate) should be achieved in 2016.
Rosnedra has said that as of January 1, 2008, Udokan contained B+C1 reserves of 14.43 million tonnes copper and C2 reserves of 5.52 million tonnes. The ores have a Cu content of 1.56%.
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Putin hopes deal to be reached soon on Russian-Mongolian uranium JV
ULAANBAATAR. (Interfax) - Russian Prime Minister Vladimir Putin believes Russia and Mongolia will be able to reach an agreement on the joint production of uranium ore.
"I believe we will be able to implement agreements we reached earlier on the joint extraction and processing of uranium ore," Putin said at a press conference following Russian-Mongolian talks.
Russia and Mongolia are determined to launch joint investment mining projects as soon as possible, Putin said.
Russia has placed particular emphasis on investment cooperation, and on overall trade and economic cooperation, especially in light of the global financial crisis, Putin said.
"Naturally we discussed and agreed further measures on modernizing joint ventures" that are at the foundation of cooperation between the two countries, he said.
Putin said that he thought a planned Russian-Mongolian uranium production and processing venture would take "several weeks" to set up.
The Russian partners in the venture would be state corporation Rosatom, regulator of the country's nuclear industry, Putin told reporters in the Mongolian capital.
The Mongolian companies Erdenet and Mongolrostsvetmet will benefit from the entry of the Rostekhnologii state corporation into their equity.
The work will be concentrated on technical re-equipment, strengthening management and increasing the resilience of the companies in the current difficult economy.
Russian Energy Minister Sergei Shmatko told reporters in Ulaanbaatar later on May 13 that a document on the creation of a joint venture to develop uranium fields was ready to be signed.
Shmatko said Sergei Kiriyenko, the chief of Russian nuclear power corporation Rosatom, had told him "everything's ready." "The documents are ready to be signed, and might involve further steps to develop this business, including the purchase of uranium," Shmatko said.
The document has been endorsed by Mongolia. "The terms have been agreed, there are no questions," he said.
Mongolia favors the intensification of the establishment of a uranium production joint venture with Russia, Mongolian Prime Minister Sanjaa Bayar said.
"We should accelerate the drafting of documents on setting up a Mongolian-Russian uranium production joint venture," Bayar said.
Mongolia and Russia have already reached an agreement on training 15 Mongolian specialists in this sector annually, he said.
"Negotiations and the drafting of documents with investors on the development of major fields, such as Tavan Tolgoi, are underway," Bayar said.
Mongolia is also interested in cooperating with Russia in the mining sector and in infrastructure construction through introducing new technologies, making investments, and establishing new joint ventures in this area, he said.
"Mongolia will always support Russia's accession to the WTO [the World Trade Organization]," Bayar said.
Meanwhile, Russian Railways (RZD) has received a 50%-stake in a joint venture with state-owned companies from Mongolia that will develop Mongolia's railway infrastructure, RZD said in a press release.
The joint venture's founding documents were signed on May 13 during Ru Putin's visit to Mongolia.
The Mongolia-based joint venture's equity will initially be approximately $1.8 million.
"This is the first stage in the joint project to develop the Ulaanbaatar Railway and build new infrastructure in Mongolia," RZD chief Vladimir Yakunin was quoted as saying.
Railways are the main form of transport in Mongolia. They carry 80% of the country's domestic freight and all of its international cargo.
Freight shipments grew 6.7% to 14.6 million tonnes in 2008. They are expected to rise to 20.1 million tonnes in 2010 and grow 8%-12% annually after that as new coal, copper and iron ore deposits come on stream.
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Polymetal shareholders to vote on revised share issue June 19
MOSCOW. (Interfax) - Shareholders in Polymetal, Russia's biggest silver producer and a major gold producer, will vote on a share issue at an EGM on June 19, the company said.
The shareholders already voted at a March 17 EGM in...
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