|
Article Excerpt
IN BRIEF
Editor's Choice
*** Steelmaker Evraz has posted H1 losses of just under $1 billion to IFRS, considerably higher than analysts forecast. It says it expects increasing demand from the world's emerging markets to inform better results in H2. The Group said it is also rounding off talks with VTB on extending the maturity of a 10-billion ruble loan by four years and discussing efforts to avoid breaking covenants on earlier loans. Evraz said it does not plan to draw a Sberbank credit facility of 8.8 billion rubles if market conditions do not deteriorate. It is not planning to pay dividends for 2009. All the group's plants also this week returned to full working weeks.
*** Russian gas giant Gazprom said this week that it does not see any need to purchase Japanese-produced pipes for the construction of the Sakhalin-Khabarovsk-Vladivostok gas pipeline. Gazprom is upping its activity in the Pacific region, especially at the offshore Sakhalin and West Kamchatka blocks, but despite being offered a tied commodity loan from Tokyo on beneficial terms in exchange for the purchase of pipes produced in Japan, Gazprom believes Russian plants are capable of ensuring the construction of Russian-produced pipes.
*** It was reported this week that the Mechel coal and steel group could assume the management of several members of peer Estar steel group. Mechel could, for the period of one year, take control of the management of the Guriyevsk Steel Works (GMZ), which specializes in steel milling balls, th Zlatoust Steel Works in the Chelyabinsk region, and Rostov Electrometallurgical Plant in southern Russia. Mechel is said not to be thinking of acquiring or managing the plants, but looking at cooperation under bilateral product supply contracts.
*** Alrosa announced this week that is ramping up capacity at its diamond mines. The Yakutia-based diamond monopoly said it would restore operations at its mines and ore mills in full on September 1 after capacity had been forced to idle due to the economic downturn. Revenue from the sale of core products was $199.5 million in August, Alrosa announced. Alrosa is currently building three deep mines at its diamond pipes in Yakutia, where near-surface reserves are becoming depleted, at a cost of approximately $1 billion each. The company commissioned the first of these, capacity 6 million tonnes of ore per year, at its Mir pipe in the middle of August.
*** Uzbekistan's State Geology and Mineral Resources Committee this week announced the formation of a joint venture with China's CGNPC Uranium Resources Co Ltd. to explore the Boztau uranium property in the Navoi region. Uz-China Uran, as the 50:50 joint venture will be known, will be Uzbekistan's first uranium exploration joint venture with a foreign company and boast equity of $4.6 million. The Chinese partner will pay its share in cash and equipment, and Uzbekistan will contribute geological, geophysical and other information so far obtained at the property. It will be seeking to identify commercial black shale uranium deposits on entrepreneurial risk term and will receive a three-year exploration license. The Uzbek State Geology Committee has said 27 uranium deposits in the Central Kyzyl Kum, with an estimated 55,000 tonnes of uranium, form the core of the country's uranium mining industry. Uzbekistan has the world's seventh biggest uranium reserves.
PRECIOUS METALS
Barrick Gold representative quits Highland Gold board
MOSCOW. (Interfax) - Barrick Gold representative Alex Davidson has resigned from the board of directors at Highland Gold Mining Ltd (HGM), which produces gold in Russia, HGM said in a statement.
Three independent directors, James Cross, the former board chairman, Christopher Palmer-Tomkinson and Tim Wadeson, left the HGM board in July 2008.
Millhouse, which represents Roman Abramovich and his business partners, increased its stake in HGM to 40% from 25% at the beginning of last year. It sold 8% to independent director and Millhouse board chairman Eugene Shvidler in May 2008. Millhouse then got three representatives, including Shvidler himself, Eugene Tenenbaum and Olga Pokrovskaya, elected to the HGM board of directors.
Independent director Duncan Baxter currently chairs HGM's board. The board also includes Nicholas Nikolakakis, who is a Barrick Gold representative, and Terry Robinson and Ivan Koulakov.
HGM is owned by Millhouse, Barrick Gold and Tremadon Ventures, whose beneficiaries are Evraz Group shareholders Alexander Abramov and Alexander Frolov.
HGM boosted gold output 14% year-on-year in the first half of 2009 to 78,421 ounces. The company is currently mining only one field, Mnogovershinnoye (MNV), in the Khabarovsk territory.
NONFERROUS METALS
RUSAL clearing electricity debt to RusHydro
MOSCOW. (Interfax) - Aluminum giant United Company RUSAL (UC RUSAL) has started to clear its debt to RusHydro, the national Russian hydrogenerating company.
Yevgeny Desyatov, RusHydro's sales manager, said the debt, which started to accrue in March, had been reduced from 580 million rubles to 300 million rubles on August 28.
The latest payment comes after RusHydro had asked the market regulator, the Market Council, to discuss possible sanctions against RUSAL's smelters, Desyatov said.
He said RusHydro did not intend to renew bilateral contracts with RUSAL's smelters after the current ones, under which the indebtedness arose, expire at the end of this year.
FERROUS METALS
Evraz posts $999 mln H1 IFRS losses
MOSCOW. (Interfax) - Steelmaker Evraz has posted H1 losses of just under $1 billion to IFRS, considerably higher than analysts forecast. It says it expects increasing demand from the world's emerging markets to inform better results in H2. The Group said it is also rounding off talks with VTB on extending the maturity of a 10-billion ruble loan by four years and discussing efforts to avoid breaking covenants on earlier loans. It is not planning to pay dividends for 2009.
Losses
Evraz Group closed the first half of 2009 with net losses of $999 million to International Financial Reporting Standards (IFRS), the Russian steel and mining giant said in an earnings report.
Evraz had net profit of $2 billion in the first half of 2008.
The H1 2009 losses were way above the $351 million that analysts had forecast. Evraz said the results were "negatively impacted by $833 million due to a change in accounting policies. Excluding this impact, it would have been a $166 million loss."
Evraz said earnings before taxes, depreciation and amortization (EBITDA) were $468 million and revenue was $4.639 billion. EBITDA fell 87.5% year-on-year and revenue fell 56.5%.
Analysts forecast EBITDA of $563 million and revenue of $4.658 billion.
Evraz said capex fell 61% year-on-year in the half to $203 million, and net debt decreased from $9.03 billion to $7.83 billion during the quarter.
"In view of the positive pricing trends in recent months in our key export markets, driven primarily by robust demand from the emerging economies of Asia, the Middle East and North Africa, and the growing volumes of our Russian steel production from July 2009, we expect better results in the second half of the current financial year than in the first half," said Alexander Frolov, Evraz president.
"At the same time, the improving performance of our Russian and Ukrainian operations was overshadowed by the decreasing profitability of our international business units, particularly in North America. The situation in the mature markets of North America and Europe is still uncertain and although destocking in these markets is largely over, underlying demand remains distinctly weak," Frolov said.
Evraz Group financial highlights in H1 2009 ($ mln):
[TABLE OMITTED]
Revenue from sales outside Russia came to 73% of total steel segment revenue in H1 2009, up from 58% in the same period of last year.
Frolov said during a conference call that all of the group's Russia-based capacity was operating, but to varying degrees. Capacity in Europe and the United States is running at 50%. Evraz plans to increase capacity utilization gradually by the end of 2009.
Loan extension
Evraz Group is rounding off talks with VTB on extending the maturity of a 10-billion ruble loan by four years, Giacomo Baizini, the Russian mining and steel giant's vice president and CFO, said during a conference call.
Evraz raised the loan, which comes due in October this year, in 2008.
Evraz is also discussing efforts to avoid breaking covenants on earlier loans.
Baizini also noted that the Vnesheconombank (VEB) supervisory board had agreed to extend credit facilities for $1.2 billion allocated to Evraz by another year. Following the debt restructuring, Evraz's short-term debt will amount to $900 million.
The company has no plans to increase charter capital to finance the debt, although it has not ruled out the possibility of entering capital markets, he said.
Evraz said that several financial covenants could be violated on the day the company releases its financial results for 2009. If the company is unable to reach agreements with creditors by then, this could lead to cross defaults on other debt instruments.
In this event, the company's creditors would have the right to demand the immediate repayment of unpaid debt. Evraz is considering several alternative ways to resolve the situation, including the possibility of the creditors agreeing not to make such demands. Evraz could incur additional expenses as it resolves this issue.
Meanwhile, Evraz does not plan to draw a Sberbank credit facility of 8.8 billion rubles if market conditions do not deteriorate, Pavel Tatyanin, Senior Vice President, International Relations, said during a webcast.
Evraz and Sberbank signed the deal at the beginning of August. "We haven't drawn a kopeck of it yet," Tatyanin said. "We arranged the facility in case we needed working...
|
