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IN BRIEF
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*** The Russian government's commission on foreign trade safeguards and customs tariff policy October 22 recommended that the export duty on scrap ferrous metal be raised from 15 euro to 40 euro, a Cabinet source has told Interfax. The Government had originally planned to raise the specific duty to 120-130 euro but, due to the changing price situation, it was recommended to raise the duty from 15 to 40 euros, the source said. When the proposals were drawn up in the summer, an export duty of 120-130 euro would have been adequate because it fully reflected the market situation, but now it has been decided not to raise the duty so radically because of the changes in the market.
*** After failing to get round to the topic of the reversal of a share buyback at an October 20 board meeting, the board of directors at Norilsk Nickel is expected to broach the subject this week, a source said. The source said the board meeting was not formally closed and that the items not discussed yesterday could be carried over to another meeting. Another source told Interfax that the board focused on technical issues yesterday and that another meeting was expected to be held this week. It has also been revealed that Norilsk plans to revise its investment to a certain extent. Oleg Lobanov said that the company would be focusing on upstream projects. Elsewhere in the company, Norilsk Nickel Australia is placing its Cawse laterite nickel operation on indefinite care and maintenance.
*** Oleg Deripaska's United Company RUSAL (UC RUSAL) has asked the banks that lent it $4.5 billion to buy a blocking stake in MMC Norilsk Nickel in the spring to give it more time to repay part of the loan. The lenders, including BNP Paribas, Merrill Lynch, Credit Suisse and Royal Bank of Scotland, agreed to extend a waiver to Rusal to come up with refinancing by the end of October. RUSAL has said that it intends to meet all its obligations to the banks in full and in the agreed timeframe. RUSAL said that it will borrow around $2 bln to refinance the loan by the end of October. Also, Rasperia Trading Limited, an affiliate of Deripaska's Basic Element has had to borrow 460 mln euros from Raiffeisen Zentralbank Oesterreich AG to refinance an existing margin loan secured by shares in Austrian construction company Strabag.
*** Alrosa could slash supplies of uncut diamonds to the market by up to 30%, a company representative told Interfax. The reduction will affect the whole range of Alrosa's diamonds. Alrosa, which mines approximately a quarter of the world's diamonds, said this was being done to stabilize the world diamond and gem market stable in the current economic situation. The company said world's biggest diamond mining companies are taking the measures needed to revive the market, including by cutting supplies. Meanwhile, banks participating in a $350 million syndicated loan extended to Alrosa in late 2007 might ask the Russian diamond mining monopoly to pay higher interest on the loan, a source at Morgan Stanley said.
*** Novolipetsk Steel has stopped its 1.3 million tpa No.3 blast furnace for maintenance and expects pig iron production this year as a whole to be 2% lower than targeted. As part of the process, there will be a change of refractory and refrigerators as well as a partial change of the furnace shell. The project will cost $3.5 million and is to be completed in December 2008. The maintenance work will reduce pig iron production volume by 170,000 tonnes (or 2%) of the volumes planned for 2008.
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Russia could hike scrap export duty to EUR 40 - source
MOSCOW. (Interfax) - The Russian government's commission on foreign trade safeguards and customs tariff policy October 22 recommended that the export duty on scrap ferrous metal be raised from 15 euro to 40 euro, a Cabinet source told Interfax on October 22.
"They originally planned to raise the specific duty to 120-130 euro but, due to the changing price situation, it was recommended to raise the duty from 15 to 40 euros," the source said.
Ferrous scrap prices on the world market were much lower than today in the summer, when the government drafted its proposals. "At the time, an export duty of 120-130 euro would have been adequate because it fully reflected the market situation, but now it has been decided not to raise the duty so radically," the source said. The commission's recommendations still have to be endorsed by the Russian prime minister. "The situation is complicated further by the fact that talks are being conducted on this issue with the EU," a source at a profile agency said.
Industry and Trade Minister Viktor Khristenko proposed at a metals industry conference in Nizhny Novgorod in July that the specific export duty on ferrous scrap be raised from 15 to 120-130 euro and that the ad-valorem duty of 15% remain intact.
Russian Prime Minister Vladimir Putin said at the same conference that tax and customs regimes should not encourage ferrous and nonferrous scrap exports.
In August, at a meeting of the Russian Union of Industrialists and Entrepreneurs (RUIE), representatives of metallurgical companies said that raising export duty on scrap would create additional problems with shipments to the EU, which had already warned of a possible 25% reduction in its quota.
"Russian steel roll shipments to the EU are governed by relations between Russia and the EU and one condition of this agreement is that Russia does not put up additional barriers to scrap exports," a representative of Novolipetsk Steel (NLMK) said at the RUIE meeting.
A 25%-cut in the quota would slash steel shipments from Russia to the EU by at least 760,000 tonnes per year. At the same time, if prices for scrap metal on the domestic market are too low, the EU and United States might start to criticize Russia for subsidizing its steel producers.
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RUSAL having difficulty refinancing $4.5 bln loan, delays a payment until end Oct - FT
MOSCOW. (Interfax) - Oleg Deripaska's United Company RUSAL (UC RUSAL) has asked the banks that lent it $4.5 billion to buy a blocking stake in MMC Norilsk Nickel in the spring to give it more time to repay part of the loan, the Financial Times said on October 20.
The FT quoted sources as saying RUSAL breached collateral covenants on the loan last month. The lenders, including BNP Paribas, Merrill Lynch, Credit Suisse and Royal Bank of Scotland, agreed to extend a waiver to Rusal to come up with refinancing by the end of October, the FT quoted its sources as saying.
RUSAL declined to comment on the October deadline, saying only it was "optimistic", the paper said.
"We intend to meet all our obligations to the banks in full and in the agreed timeframe," the paper quoted RUSAL.
RUSAL has said it intends to borrow around $2 billion to refinance the loan by the end of October.
But the FT said talks to secure $1.8 billion in partial refinancing from the same consortium of banks ran into trouble as the global crisis worsened.
An earlier report said RUSAL last week confirmed it had asked Russian Bank for Development and Foreign Economic Affairs (Vnesheconombank, VEB) for funding, but it did not comment on the terms for this.
RUSAL finished syndicating the $4.5 billion loan at the end of May. The mandated lead arrangers were ABN Amro, BNP Paribas, Credit Suisse, Merrill Lynch, Calyon, ING, Natixis, Barclays and Unicredit, and the senior arrangers were Morgan Stanley, Goldman Sachs and Deutsche Bank. The syndicate was also joined by Caja Madris, Orgresbank, Standard Chartered Bank, Deka Bank and Bank of Taiwan. The loan was oversubscribed, but it was not increased.
Elsewhere, Rasperia Trading Limited, an affiliate of Oleg Deripaska's Basic Element, has had to borrow 460 mln euros from Raiffeisen Zentralbank Oesterreich AG to refinance an existing margin loan secured by shares in Austrian construction company Strabag, Basel said on October 17.
Basel has owned 25% of Strabag since 2007.
The new facility to Rasperia, which has a term of two years, is guaranteed by Basel, the holding said.
"We view our stake in Strabag as a strategic investment and will continue to implement joint projects in Russia," Basel general director Gulzhan Moldazhanova said in the statement.
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Norilsk Nickel board could discuss buyback later this week
MOSCOW. (Interfax) - The board of directors at MMC Norilsk Nickel did not get round to discussing all items on the agenda...
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