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IN BRIEF
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*** Russian Prime Minister Vladimir Putin this week proposed setting up an integrated mineral reserves agency. Speaking at a meeting that addressed ways to improve the system for monitoring controlling reserves, Putin said that a working group should be to create a centralized, vertically integrated system of mineral resources management and to remove red-tape in the resources sector. Putin said to the production of extractable resources remains a priority for his government, which has also called for comprehensive programs to be drawn up together with extractive companies for the development of large fields. Putin was informed that Russian companies invested approximately 200 billion rubles in exploration last year - ten times more than the state.
*** Russia's leading gold producer Polyus Gold this week agreed the final terms for purchase of a 50.1% stake in KazakhGold, lowering its offer to $269 million in cash and stock from the more than $300 million discussed previously. Polyus will now pay $7.18 and 0.064 Polyus shares for each share in the Kazakh miner, which will Polyus now ranked among the world's top-ten gold producers. London-listed KazakhGold once had a market cap of $1 billion and is the parent company of the Kazakhstan-based KazakhAltyn, which produced 7.4 tonnes of gold in 2007. Polyus wasn't the only Russian precious metals miner acquiring Kazakh assets this week, with the country's top silver producer Polymetal this week agreeing to purchase the Varvarinskoye gold and copper deposit in Kazakhstan from Orsu Metals in a deal estimated to be worth $235 million. Polymetal itself said the total consideration payable to Orsu by Polymetal comprises of $8 million in cash payable upon completion, and deferred consideration of up to a maximum of $12 million (plus any deferral interest), contingent on and calculable in reference to future prices of gold and copper.
*** A source at Norilsk Nickel said this week the Arctic mining and smelting giant is studying the possibility of creating its own refining capacity, with Krasnoyarsk territory viewed as the best location for the new facility. However, no decision has yet been made on location or whether Norilsk will build a new refining facility or acquire existing capacity such as Krastsvetmet, which among other things processes precious metals delivered by Norilsk. Any deal might be financed with a portion of proceeds from the sale of non-core assets.
*** Russian uranium holding Atomredmetzoloto (ARMZ) announced this week it will receive about 17% of shares in Canadian Uranium One, which has operations in Australia, the U.S., South Africa and Kazakhstan, in exchange for a 50% stake in Kazakhstan's Karatau LLC. ARMZ will also receive $90 million in cash under the deal. In addition, ARMZ will have an option to increase its stake in U1 to 19.95%. The deal, which is subject to regulatory approvals from Kazakhstan and Australia, should be closed by December 15. It should enhance Uranium One's position as one of the world's leading uranium suppliers, and turn ARMZ into one of the Canadian company's biggest shareholders on. Karatau is one of two Kazakhstan-based uranium mining joint ventures that ARMZ acquired stakes in from Vasily Anisimov, co-owner of the Metalloinvest holding, earlier this year.
*** Kazakhstan's state-owned nuclear holding Kazatomprom pledged this week to meet all the targets set for the company before the arrest of its top managers and also said it still intends to be the world's number one uranium miner by the end of the year. Meanwhile, Kazakhstan's National Security Committee Chairman Amangeldy Shabdarbayev vehemently denied allegations of political motives being behind the case against former Kazatomprom President Mukhtar Djakishev.
TOP STORIES
Putin calls for centralizing mineral resource management
MOSCOW. (Interfax) - Russian Prime Minister Vladimir Putin has proposed setting up an integrated mineral reserves agency. Speaking at a meeting that addressed ways to improve the system for monitoring controlling reserves, Putin said that a working group should be to create a centralized, vertically integrated system of mineral resources management and to remove red-tape in the resources sector. Putin said to the production of extractable resources remains a priority for his government, which has also called for comprehensive programs to be drawn up together with extractive companies for the development of new oil and gas provinces, as well as large hydrocarbon fields. Putin was informed that Russian companies invested approximately 200 billion rubles in exploration last year - ten times more than the state.
Centralized management
"I suggest forming a special working group to draft proposals on setting up a centralized, vertically integrated system of mineral resources management," Putin said at a meeting that addressed ways to improve the system for monitoring controlling reserves.
"We don't have a universal system - information is still being stored at various agencies, in various ways," he said.
"The Natural Resources Ministry, Energy Ministry, Rosnedra, Rostekhnadzor, Rosprirodnadzor, the Regions Ministry and several other agencies all have regulatory functions, and it's virtually impossible to obtain full, exhaustive information about mineral deposits and mineral developers in one place," Putin said.
He also said there was still too much red tape in the resources sector, despite numerous calls to remove this.
"We still have too many administrative barriers throughout the chain, from issuing exploration licenses to starting commercial development," Putin said.
"Orders to ease the bureaucracy have been issued on numerous occasions, but things are moving too slowly," he said.
"Mineral developers still have to wait years to process the necessary documents after decisions have been reached," he said.
"They have to spend years going round all these agencies, and that's the big developers. What do the small and medium ones have to go through?" he asked.
The hurdles that prevent "geological exploration from becoming a full-fledged business, capable of delivering a product to the market in the form of a mineral deposit that is ready to be exploited, with all the related technological information, permits and licenses" need to be removed," Putin said.
Priority
The Russian government will continue to give priority attention to the production of extractable resources, said Putin.
"This, as they say, is the goose that lays the golden egg. Therefore, this issue deserves its rightful attention," he said.
He added: "We have many times spoken about the priorities for the mid-term and the long-term." "These remain unchanged. This is the innovative development of the Russian economy. However, efforts in the production of extractable resources can and should be tied with high-tech," Putin said.
He also said that work in this sector was "bringing in large revenues for both companies and the budget."
Full reserves replenishment was achieved for almost all Russia's strategic resources, including oil, gas, gold and copper, in 2008, Putin said.
Proven reserves are increasing in volume, and the extent of geological exploration has started to grow. There are eight or ten rubles of private money for every ruble the state invests in exploration, Putin said.
New mineral provinces are being developed, notably oil and gas fields in East Siberia, the Caspian shelf, Sakhalin and Yamal.
At the same time, "these major projects have exposed some problems and bottlenecks in the management of our resources," he said.
The system for controlling mineral resources needs to be improved, Putin said. "I'm talking about a whole set of measures that require coordinated decisions, including the organization of exploration, equipping fields rationally, implementing effective extraction methods and logistics," Putin said.
Development
The Russian government has called for drawing up comprehensive programs jointly with extraction companies for the development of new oil and gas provinces as well as large hydrocarbon fields, Putin said.
"Our goal is to draw up comprehensive programs jointly with extraction companies, natural monopoly companies and the regions for the development of new oil and gas provinces and other large fields," Putin said.
Such projects above all include fields in Eastern Siberia (Talakanskoye, Verkhnechonsk) and the Uvat district (Tyumen region) as well as prospects for a unified project to develop fields in Yamal and the northern Krasnoyarsk territory, he said.
Creating such programs is a necessity because "a comprehensive approach to developing new territories is lacking for now" in Russia, Putin said.
"Setting up a wide-ranging transportation system, energy systems and social infrastructure is much more efficient and less costly than doing this separately. The creation of unified, integrated infrastructure will provide additional opportunities for the development of small and medium-sized fields as well," he said.
"Combining efforts [in these programs] will significantly lower costs" for both businesses and the government, Putin said.
Investment
Russian companies invested approximately 200 billion rubles or ten times more than the state in exploration last year, Russian Deputy Prime Minister Igor Sechin said during Putin's visit to the State Mineral Reserves Commission (GKZ).
"Our companies spent 200 billion rubles on exploration in 2008, and [Russian Federal Subsurface Resources Agency] Rosnedra just 22 billion rubles," Sechin said.
The GKZ demonstrated an automated control system for state mineral reserves appraisal, which incorporates databases on the companies than develop them, on reserves at fields and tracks the movement of reserves. Mineral developers are also linked to the system, and are able to obtain updates about the status of applications to appraise reserves.
Putin enquired about control over mineral development, to which Natural Resources Minister Yury Trutnev responded by saying control was rigorous, and that some 100 licenses are in the process of being revoked.
Putin asked about inspections at specific fields, and Rosnedra chief Anatoly Ledovskikh gave the Russkoye field as an example.
Deputy Prime Minister Sechin, for his part, said TNK-BP had been able to extend a license after the situation with the field's development had been reviewed by an ad hoc commission.
State-of-the-art exploration and production technology is also being put to use, for example at the Priobskoye oil field, where recoverable reserves have been increased by 690 million tonnes at the section being developed by Rosneft alone.
PRECIOUS METALS
Polyus agrees to purchase 50.1% of KazakhGold for $269 million in cash and stock
MOSCOW. (Interfax) - Polyus Gold agreed the final terms for purchase of a 50.1% stake in KazakhGold, lowering its offer to $269 million in cash and stock from the more than $300 million discussed previously.
Polyus Gold, Russia's leading gold producer, will pay $7.18 and 0.064 Polyus shares for each share in KazakhGold, the Russian company said in a statement.
The deal should rank Polyus among the world's top-ten gold producers. It will be carried out via the company's subsidiary, the BVI-registered Jenington International Inc, which holds its treasury stock.
Under the terms of the Partial Offer, KazakhGold Shareholders will...
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