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IN BRIEF
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*** The co-owners of MMC Norilsk Nickel, Vladimir Potanin's Interros and Oleg Deripaska's United Company RUSAL, this week appeared to have resolved their corporate conflict as they dropped their complaints against each other, saying the conflict over the world's biggest nickel and palladium producer had been exhausted and that all of Norilsk's future transactions will be agreed upon and carried out by consensus. The two billionaires cited the ongoing financial crisis as the catalyst for their truce, the terms of which will include the election of a new Board of Directors at an EGM on December 26. Interros has nominated four independent directors for the board of directors at MMC Norilsk Nickel. Potanin also said that Norilsk could consider a possible merger with Alisher Usmanov's Metalloinvest holding, the third largest shareholder in the Arctic mining and smelting giant, and that any possible merger between Norilsk and RUSAL would not be considered for at least 3 years.
*** State-owned uranium miner Atomredmetzoloto this week announced it expects to boost uranium output in Russia and Kazakhstan 12% in 2009 to 4,300 tonnes as part of an estimated 203 billion-ruble expansion plan through 2024 to meet increased demand from the nuclear power sector. ARMZ is also planning to create an engineering center along similar lines to silver miner Polymetal and MMC Norilsk Nickel, and involve private companies in this. It also announced it is considering offering bonds in 2009 if the cost of borrowing rises. However, ARMZ's flagship enterprise, Priargun Mining, has decided to postpone a bond offering worth 2.4 billion rubles due to the situation in the financial markets.
*** Rosnedra, the Russian Federal Subsurface Resources Agency this week announced it private companies may be invited to bid alongside state-owned uranium mining company Atomredmetzoloto at tenders for licenses to 14 medium and small-sized uranium deposits. The deposits, located in Buryatia, Tuva, Khakasia, Chita and Kurgan regions and Khabarovsk territory, have combined proven reserves of 76,600 tonnes of uranium. ARMZ has already said it is unlikely to bid for every license, and several other Russian companies have the necessary permission to compete for them.
*** Severstal Resources, the upstream unit of steel major Severstal, this week announced it is increasing its stake in Canada's High River Gold to 50.1% on a fully-diluted basis by buying 282.3 million newly issued common shares for a total of $45 million. Severstal intends to place its representatives on the HRG board of directors. At the same time, HRG is finalizing the acquisition of a 50% stake in the Prognoz silver field, and already owns 84.9% of common shares in Buryatzoloto and 99% of Berezitovy Gold Mine LLC, with annual attributable gold production from these assets expected to exceed 300,000 ounces in the near future.
*** Russia's Evraz Coal and Steel Group this week confirmed it has received a loan for $1 billion from the Bank for Development and Foreign Economic Affairs, Vnesheconombank, and that the first $200 million tranche has been used to refinance short-term debt. VEB decided to provide the company with over $1 billion and $800 million to refinance debt from loan agreements with syndicates of Western banks and is also holding talks on loans with steelmaker Severstal, pipe producer TMK and the Mechel coal and steel group.
*** Russia could form a federal reserve of mineral sections in 2009, with the government also set to draft regulations to lower administrative barriers in mineral development and to ensure reserves replacement, including in East Siberia and the continental Shelf, under plans announced this week. These also foresee extensive geological surveys in the Artic and Antarctic next year and a count of solid mineral reserves in 2010. Also on the cards is the implementation of a set of measures aimed at strengthening the resource base for solid fuel, ferrous metals and base metals. The report sees Russia as unable to achieve full mineral reserves replacement by the targeted date of 2012.
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Norilsk and RUSAL - peace or truce?
MOSCOW. (Interfax) - The co-owners of MMC Norilsk Nickel, Vladimir Potanin's Interros and Oleg Deripaska's United Company RUSAL, said they had resolved their corporate conflict and dropped their complaints against each other. Analysts, though, said they were not so sure.
Conflict exhausted
"The conflict at Norilsk Nickel has been exhausted," Potanin said at a joint press conference with Deripaska on November 25.
"All of Norilsk Nickel's future transactions will be agreed upon and carried out by consensus," Potanin said.
"We're starting a clean sheet in our relations," he said.
"The crisis has forced us to look past our personal ambitions and focus on restoring the company's value," he said.
Talks on finding a resolution to the conflict were initiated back in August, he said.
"The agreement was drawn up in such a way as to provide comfort to both parties," he said.
"The agreement will be disclosed by a regulatory body in accordance with the law," he said. "I hope that the three-year period we mentioned will be sufficient to restore the company's value," Potanin said.
UC RUSAL and Potanin's Interros holding said in a joint statement that they had "reached a cooperation agreement in relation to MMC Norilsk Nickel in order to restore the value of the company and provide for its dynamic growth."
They said they had "reached mutual understanding regarding corporate procedures for decision-making on all major deals and other important matters, including dividend policy, raising finance, share capital matters and mergers and acquisitions."
"Interros and UC RUSAL believe that their cooperation creates a solid guarantee for promoting the interests and observing the rights of all shareholders which is fundamental to the sustainable development of the company. It will strengthen the trust of the Russian and international community towards the company. The current world crisis is the best time to consolidate efforts and promote joint actions which will quickly restore the company's value and provide for realization of its huge potential in the interests of all shareholders. This agreement is important for the investment climate in Russia and will strengthen its status on the global market. It is an example of a well-thought strategy and search of the most effective solutions in complicated situations."
New board
"The parties plan to coordinate their positions on the composition of the new Board of Directors that will be elected at the extraordinary general meeting of Norilsk Nickel shareholders on 26 December. This will ensure balanced representation of the interests of all shareholder groups. The parties consider optimal a variant when there will be four representatives from Interros and four from RUSAL, three independent directors, Norilsk Nickel General Director Vladimir Strzhalkovsky and one representative of the state on the new Board. At the next regular meeting of the Board of Directors, on December 1, a list of candidates will be approved."
"The parties also support the election of an independent candidate to chair the Board of Directors and plan to discuss the candidacy for this position during consultations with minority shareholders. RUSAL and Interros believe that the state will also support this candidacy as its representative."
Potanin said at the press conference that "not only managers should join the board, but professionals with industrial experience."
"Klishits, Bugrov and Bulygin should all join the Norilsk Nickel board of directors," he said.
RUSAL earlier proposed to appoint four state representatives to the company's board and planned to conduct consultations on this with the government.
RUSAL has long demanded the election of a new board, as it said the current board was not capable of acting in the interests of all shareholders.
Interros on November 26 nominated four independent directors for the board of directors at MMC Norilsk Nickel.
The four candidates are: Alexander Voloshin, the former head of the presidential administration, former chairman of the RAO UES board of directors and a member of the MRSK Holding board and the Energy Systems Vostok board; Gerard Holden, head of Barclays Capital's investment division for the metals and mining industries; Brad Mills, general director of platinum producer Lonmin in 2004-2008; and Farhad Moshiri, chairman of the Metalloinvest board of directors and a business partner of Metalloinvest founder Alisher Usmanov.
Interros' own nominees for the board are Andrei Klishas, chairman of the Interros board of directors; German Aliyev, a deputy general director; Andrei Bugrov, a managing director; Alex Polevoi, deputy general director for financial affairs; Anton Chyorny, deputy general director for investment; and Sergei Batekhin, a former deputy general director and first deputy general director at Norilsk Nickel.
The Norilsk Nickel board of directors is to be comprised of four representatives each from United Company RUSAL and Interros, three independent directors, one government representative and Norilsk Nickel CEO Vladimir Strzhalkovsky. A source close to the situation said earlier that Interros would nominate two independent directors, while UC RUSAL would nominate one.
The new board will be elected at an extraordinary shareholders meeting on December 26. The list of candidates will be approved on December 1.
UC RUSAL and Interros also both support the election of an independent candidate as chairman of the board.
Government representatives must be elected to the Norilsk Nickel board of directors to ensure the interests of the Bank for Development and Foreign Economic Affairs (Vnesheconombank, VEB), which issued UC RUSAL a loan for $4.5 billion to pay off a loan it received from a syndicate of Western banks in April 2008 for the purchase of 25% plus two shares in Norilsk Nickel. VEB took on this stake as collateral.
Merger considerations
Potanin also said on November 25 that Norilsk Nickel "is prepared to consider" a possible merger with Alisher Usmanov's Metalloinvest holding.
"We [Interros and ourselves] have agreed that we are open to cooperation with companies with which this would be of interest, primarily Metalloinvest," Potanin said.
"First and foremost we will consider a partnership with Metalloinvest, especially since it is a shareholder of our company," Potanin said.
Metalloinvest founder...
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