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By John Helmer, Moscow

Metalloinvest, the steel and iron-ore holding controlled by Alisher Usmanov, has issued a press release summarizing what it claims are audited financial results for the six months to June 30. The good news has been timed, and also trimmed, to boost Usmanov’s attempt to find market demand and regulatory approval for an initial public offering; or for a takeover and reverse listing transaction with London-listed Vallar.

Although Metalloinvest says the financial report has been prepared according to international financial reporting standards (IFRS), it has issued its data in roubles, not in the customary US dollar equivalents. In fact, the group refuses to release a financial report at all. A Metalloinvest source told CRU Steel News that its auditor is PriceWaterhouseCoopers, but that as for the financial details and auditor’s notes, “we cannot add anything here.”

The company release says its sales revenues in the six-month period amounted to Rb99.9 billion ($3.2 billion), a gain of 43% on the first half of 2009. But no financial report for last year has been published, and the comparison is not like for like. That is because the group has begun counting sales of steel produced at its new Hamriyah rolling-mill in the United Arab Emirates. This takes billets, semi-finished steel supplied from Metalloinvest’s Russian mills, and rolls them into reinforcement bar and other construction steels for sale in the Middle Eastern market. With a 300,000-tonne annual capacity, roughly 75,000 tonnes of rebar, worth about $40 million, have been added to Metalloinvest’s revenue line, as well as the corresponding amount of billet sold between mills of the group. On a like for like basis, the latest financial result is likely to be at least 5 percentage points less positive.

Costs have not been reported in the Metalloinvest release today. Earnings (Ebitda) are said to have come in at Rb36.5 billion ($1.2 billion). After-tax income was Rb15.6 billion ($503 million), up 47% year on year.

Eduard Potapov, chief executive of the group, is cited in the company release as saying: “We are looking to expand our investment activities to enable further development of our companies and ensure increased production of high added-value products. We are planning to double output of HBI in the next five years. We also intend to expand pellet production capacities at our Mikhailovsky Mining and Processing Plant (Mikhailovsky GOK).”

Metalloinvest says that in the first half it lifted iron-ore output to 17.1 million tonnes; its two iron-ore mines are Mikhailovsky and Lebedinsky. When the ore is refined into pellets, the output is 8.9 million tonnes, up 33% on last year. Another refined product, hot briquetted iron (HBI), is running at the same level as a year ago – 1.2 million tonnes. Also reported in today’s press release is a 7% increase in Metalloinvest’s iron-ore reserves from 13.8 billion tonnes to 14.9 billion tonnes, following an investigation in September by International Mining Consultants (IMC). This is a German outfit, whose client list identifies Metalloinvest, along with M N Rothschild, one of the units backing Vallar in its pursuit of iron-ore and coalmining assets in Russia.

Potapov is forecasting “full year 2010 will see a 20% year on year growth in iron ore concentrate production volumes, while pellet production volumes are expected to increase by 14% year on year.”

Total steel production, including the two Russian mills, Oskol and Ural Steel (aka Orsk-Khalilovsky), plus Hamriyah was 3.1 million tonnes. Since this aggregate is unchanged from a year ago, but Hamriyah has started up, the production level in Russia appears to be falling.

The company says its debt is currently at Rb137.9 billion ($4.5 billion).

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