By John Helmer, Moscow
It isn’t known whether Dmitry Shatokhin (right), the chief executive, board chairman, and apparent control shareholder of Siberian Anthracite, reads the news. Not the commodity price reports showing that the demand and price for the coal he is selling are falling. Rather, the news that President Vladimir Putin, along with the heads of the other G8 governments, agreed formally this week to put a stop to concealment of beneficiary ownership of public companies, and of the trust, tax and trading schemes by which hidden owners cheat public shareholders.
According to the G8 communique, “a lack of knowledge about who ultimately controls, owns and profits from companies and legal arrangements, including trusts, not only assists those who seek to evade tax, but also those who seek to launder the proceeds of crime, often across borders. We will make a concerted and collective effort to tackle this issue and improve the transparency of companies and legal arrangements. Improving transparency will also improve the investment climate.” If that’s the standard, how come Siberian Anthracite refuses to publish audited financial reports and won’t disclose the shareholding structure of the company?
This week Siberian Anthracite told Reuters and Vedomosti that it is planning an initial public offering (IPO) to list its shares on the London Stock Exchange; and that a 25% stakeholder, the London-based GLG Emerging Markets Growth Fund, is selling out. Four banks were named as underwriters — JP Morgan, Morgan Stanley, Raiffeisen Bank International, and Sberbank. At much the same time of year in 2011, Siberian Anthracite made a similar announcement, when it said it planned to float in London that autumn. In February 2012 the company announced it was delaying the share sale until the spring of that year. The underwriters were identified as Deutsche Bank , Morgan Stanley and JPMorgan. The bankers did the talking anonymously; the company refused to comment; the IPO was postponed out of 2012 – until now.
In this week’s announcement, it has been claimed the company’s sales revenue last year was $508 million, and its net profit was $117 million. The 25% shareholding for sale is said to be worth $200 million, which makes the entire company’s value about $800 million. The announcements also claim that last year production of coal was 4.2 million tonnes, reportedly an increase of 23.5% over the previous year. This year a target of 5 million tonnes has been set; that’s a growth rate of 19%.
According to Shatokhin in a rare interview he gave in December of 2007, “we have three phases: production to increase to three million tonnes, then up to six million, then to ten.” Six years on, it isn’t clear why the company has been falling behind. The company website reports that at the start of June, “the company miners reached the second million tons of anthracite which was planned to be mined in 2013.” If this rate continues, by the end of the year output should be 4.8 million tonnes. The new target date for hitting annual production capacity of 9.5 million tonnes is now 2017.
There are no financial reports on the company website; no disclosure of shareholdings; and no identification of the board of directors. This unusual approach to a London listing has yet to be approved by the UK Listing Authority.
Siberian Anthracite explains that its coal is located in the Novosibirsk region, south of Novosibirsk city. The type of coal mined is sold to steel smelters, electrode plants, and chemical refineries. The company says it supplies its coal “to more than 50 companies in Russia and abroad: to the European Union states, China, Japan, South Korea, India, and Brazil”. It doesn’t say how much of the output is exported, nor is it possible to follow the offshore trading schemes typical of Russian coal companies.
According to Russian commodity exporters and their accountants, recent changes in Russia’s transfer pricing regulations are intended to crack down on schemes which lower taxable profit in Russia and move tax liabilities to related parties in low-tax jurisdictions offshore. Coal exporters say the new rules are far from clear, and enforcement unpredictable.
Siberian Anthracite was asked to identify its auditor; to provide copies of audited financial reports for the past three years; and to clarify the shareholding structure of the company. The disclosures are required for the company to issue a prospectus and sell shares on the London Stock Exchange. The company identified Ernst & Young as its auditor. It refused to provide financial reports or identify the names of its beneficial shareholders.
It did identify the Alltech Group as holding 75% of Siberian Anthracite. Alltech says little about itself, and appears to be controlled by Dmitry Bosov. He is a figure who moves in and out of the Russian aluminium story documented during the London High Court trial of Boris Berezovsky’s claims against Roman Abramovich. The picture (right) shows Bosov front. According to the evidence in that case, Bosov was a partner of Lev and Mikhail Chernoy, and one of the original shareholders of the Krasnoyarsk Aluminium Plant forced into selling to Abramovich, and ultimately Oleg Deripaska. Alltech was asked to confirm who its shareholders are, and what stakes they hold in Siberian Anthracite. Alltech refused.