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A word about the common, green, wrongly maligned toad. “Don’t play with the toad,” French mothers used to warn their children, “because if he pees in your eye, you will become blind”. The youngsters might have been forgiven for not knowing what to do, because the appearance of the ugly creature was also said to do good, such as bringing rain to crops; and because it was also said that harming the toad would bring bad luck. Then again, country people believed it would provide protection to hang a dried toad’s body at the door to the henhouse and the stables.

Oleg Deripaska, chief executive of Russian Aluminium (Rusal), Russia’s largest aluminium producer, and head of Base Element, which holds his investments in other sectors of the Russian economy, has been feeling wrongly maligned for a long time now. A two-year old lawsuit by smelter rival Mikhail Zhivilo in New York, accusing Deripaska and his associates of illegal tactics in the acquisition of his assets, has been dismissed for lack of jurisdiction. But in all likelihood the case will be returned to the courts on appeal, or refiled. The trouble Deripaska has had with the US authorities preceded the court case, and appears to be persisting, despite the efforts of well-known American lawyers he has engaged to clear him. In Zurich, Deripaska has lost an appeal of an arbitration panel’s award of $90 million to Krasnoyarsk arch-rival, Anatoly Bykov. He faces more of the same in other European jurisdictions. In Frankfurt, lawyers defending Germany’s leading financial newspaper, Frankfurter Allgemeine Zeitung, from a defamation suit filed by Deripaska have turned up more than he can have bargained for.

In Russia, Deripaska can also complain that he’s been wrongly maligned. In Moscow, he is the target of a recent petition to the Kremlin by paper and pulp producers who accuse him of a variety of hostile takeover tactics. His acquisition of the Ingosstrakh insurance company is under investigation by the General Prosecutor. Although he married into the Yeltsin circle, he hasn’t been able to turn his Kremlin connexions to much account in recent months. The four keys to his profit margin in the aluminium trade -electricity, alumina, freight rates, and tolling privileges – have come under serious pressure. His attempts to secure shareholding control or regional political influence over the price of energy to his smelters have been less than effective. His control of the Nikolaev alumina refinery, the supplier of roughly one-third of his smelter’s raw material requirement, is under threat from the government in Kiev, and from an ambitious Ukrainian metals magnate. Rail tariffs have recently been raised 5% or more,and the possibility of special discounting has shrunk. Deripaska was able to lobby Finance Minister Alexei Kudrin to drop his attempt to halt the tax concessions conferred by tolling contracts. But he lost a similar bid in the Ukraine.

Through Rusal Deripaska has made big promises-to build a new smelter in Murmansk, a new bauxite mine in Guinea, a new partnership with the Chinese Aluminium Company, a new metals complex in Australia, a new smelter in western Ukraine – but there is little yet to show for any of them. In the section describing investment plans for the next five years, Rusal’s website lists four priority projects that are quite different, and a good deal less costly. A Ukrainian court recently appointed an expert to take inventory of what exactly has been done at the site of the promised Pervomaiskoye smelter, in order to enable the court to rule on whether Deripaska has broken the terms of the agreement with the Ukrainian government that allowed him to take over the Nikolaev asset.

To the question of why his fellow oligarchs are looking to cash out at least some of their assets, but not Deripaska, the short answer may be that he has looked for a multitude of exits, only to find the way is blocked. He can’t list Rusal shares on the London or New York stock exchanges, because the company’s assets have yet to be consolidated into a single shareholding company. Although Deripaska recently denied that he had made a deal with Roman Abramovich to buy Abramovich’s half-share of Rusal, sources inside Millhouse, Abramovich’s holding company, claim that Deripaska has been making a bid, but lacked the cash to pay the $3 billion sale price outright, and cannot come to terms with other shareholders at Millhouse, who don’t share Abramovich’s desire to cash out of Russia. They may be biding their time for a counter-bid aimed at Deripaska’s half-share of Rusal. Then on October 3, Deripaska turned around and declared he had bought a 25% stake in Rusal from Abramovich. No price or payment terms were disclosed. Deripaska has never revealed the price of any of his transactions, or how they have been paid for.

Borrowing to fund asset takeovers, or to leverage existing assets, or even to pay for production upgrades and expansions, isn’t easy for Deripaska. Although he considers that a current debt portfolio totaling $1.5 billion -including last week’s $100 million loan from Credit Suisse First Boston – is a gilt-edged indicator of his international creditworthiness, he still trails behind his fellow oligarchs in being able to obtain unsecured credits. For every dollar Rusal borrows, international banks want their hands on a metal ingot.

It was therefore noteworthy when Deripaska, on a recent visit to the southeast Siberian city of Irkutsk, announced that he wants to add to his stakes in the region’s Bratsk smelter, a new smelter site at Taishet, and the regional electrical utility, Irkutskenergo. According to his quoted remark, Deripaska said he aims to bid for Sukhoi Log (“Dry Gulch”), the largest unmined gold deposit in Russia, and one of the largest in the world.

Now goldmining would be a first for Deripaska, and Sukhoi Log nothing if not expensive. A few days before his remark, Deripaska had lost out in the bidding for a 45% state shareholding in Lenzoloto, the Irkutsk region goldminer, which has been taken over by Vladimir Potanin’s Norilsk Nickel group at a price of more than $152 million. Potanin would like the market to think that, with control of Lenzoloto, he now has the inside running for the state award of the Sukhoi Log mining licence, which will go up for tender after the presidential election next March.

Deripaska’s announcement suggests that he thinks Potanin may be politically vulnerable, and open to a Kremlin challenge to knock him out of the race. Other declared bidders for Sukhoi Log include Polymetal of St.Petersburg, led by Alexander Nesis; and Khazret Sovmen, former owner of Polyus, Russia’s largest operating goldmine acquired a year ago by Potanin. One thing all of them have already learned – the tender will not be issued by the Minister of Natural Resources, Vitaly Artyukhov, until he learns whom the Kremlin wants to win. And that decision won’t be made until after the election season is behind us.

So Deripaska’s open bid for Sukhoi Log turns out to be a wager that, among the oligarchs and Yeltsin leftovers, he has a better chance of surviving than Potanin. Little wonder Deripaska thinks he’s been wrongly maligned to date.

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