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half-of-deripaska

By John Helmer in Moscow

Denmark-based fleet operator Norden has hit United Company Rusal, the Russian aluminium monopoly controlled by Oleg Deripaska, with claims for shipping contract violations since last September. The liabilities total $98.3 million. Court documents break publicly for the first time the code of silence which usually covers Russian commodity trades, the cargo owners and the shippers.

Norden chief executive Carsten Mortensen refuses to say if London arbitration to enforce Norden’s contracts has already commenced.

US court records from the southern federal district of New York show, however, that Norden is charging a Jersey-registered Rusal trading company with breaking contracts for the shipment of 2.6 million tonnes of Queensland bauxite from the port of Weipa to Porto Vesme, the alumina refinery port in Sardinia. The tariff agreed was $64.64 per tonne, making a gross charge of $167 million. For this year, the contracts specify 15 shipments of 300,000 tonnes.

Rusal, one of the leading primary aluminium, alumina and bauxite producers in the world, has said in the past that all shipping data are company secrets; the company itself is privately owned and publishes no financial reports. Trade data are kept secret, because of the complex tolling and tax schemes which Rusal uses in Russia, and in its international operations. The Australian government keeps bauxite export data confidential.

According to the US court documents, Norden went into the New York federal district court in February to attach Rusal bank funds to secure payment, in the event the London arbitration awards Norden its claim. On February 10, US judge Richard Berman ordered 15 US and international banks, including Nordea of Finland, to freeze Rusal accounts up to $93.8 million in cash value.

The case is the first to reveal Rusal’s trading practices. It comes as a group of more than 70 international banks are competing against Russian state banks, and three other Russian shareholders, for the repayment of up to $17 billion in overdue loans. The UK High Court is also considering the claim of another Rusal shareholder, Michael Cherney, whose shareholding violation suit against Deripaska is worth more than $6 billion.

A Russian shipping source told Fairplay: “When the rates were sky-high, Norden kept to its part of the agreement. As soon as the market collapsed, Rusal reneged on its obligations. Typical Russian business approach.”

Norden’s silence is explained by an international shipping analyst: “they still have a lot of other Russian customers for dry cargo (Severstal, Mechel, etc.) and they don’t want to antagonize them. They were forced into the claim in order to protect the shareholder value, but would have preferred to keep it under the radar. These types of conflicts antagonize customers and in this market, where the rates have gone down by more than 90 percent, it is important to keep your customers happy.” End+

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