By John Helmer, Moscow

Igor Zyuzin’s desperately indebted steel and coal-mining group Mechel is negotiating the sale of a 25% shareholding stake in Mechel Mining, his coal division, for $1.25 billion. That’s a fraction – maybe half — of what it was worth two years ago.

Would such a loss of capital value, and the still uncounted costs of Mechel’s unfinished, non-operational ElgaUgol coalmine in the Sakha republic have materialized if, instead of Zyuzin (left), the Kremlin had decided in October 2007 to award the project concession to the high bidder at the time, Lakshmi Mittal (centre)? Does anyone in the Kremlin believe today that the discount for ElgaUgol which Baosteel, China’s leading steelmaker, is about to extract from Zyuzin has been worth the six-year wait? Will President Vladimir Putin, who has been in charge of the milestones of wealth accumulation and loss marking Zyuzin’s career so far, instruct the government’s Control Commission to vote in favour of this strategic resource acquisition by the Chinese? And if the Chinese are acceptable as coalmining partners now, why weren’t the Indians in 2007?
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by John Helmer - Wednesday, April 10th, 2013
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By John Helmer, Moscow

Pavel (Pavlik) Morozov, aged 14, was murdered on September 3, 1932, along with his 9-year old brother, Fyodor. They were stabbed to death. Four people were convicted of the crimes – their grandfather Sergei and cousin Danila did the stabbing; uncle Arseny plotted the crime beforehand; grandmother Kseniya covered it up afterwards. The four were executed on April 7, 1933. Retrospectively, the forensic evidence in the case was too weak to substantiate premeditated murder, but of hatred, manslaughter, and criminal concealment there is no doubt the four accused were guilty.

Of the importance of what Pavlik Morozov’s death stood for at the time and for the all-Russia, all-Soviet generation to follow there is also no doubt. He was, as his British biographer has documented, the Soviet revolution’s boy martyr. That’s because Pavlik Morozov was reported to have been killed because he had informed on his father, Trofim, chairman of his village soviet, as well as on others in the village, whom he accused of hoarding grain from the harvest, hiding a gun and a horse harness, plotting against the new collective property rules. When his murderers were brought to trial, the charge against them wasn’t conventional homicide, but anti-state terrorism. Thus, Pavlik’s death came to symbolize far more than could possibly have been true.
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by John Helmer - Monday, April 8th, 2013
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By John Helmer, Moscow

Though their meaning and intent are identical, crocodiles are better known for their tears than for their smiles. So are Russian officials. Take Igor Shuvalov, the first deputy prime minister, for example.

When the chief executive of one of the largest mining companies in the world came to Moscow, a member of his entourage recalls, the senior government official he was scheduled to meet was Shuvalov. But the latter kept him waiting in the anteroom to his office. When Shuvalov finally appeared, the source remembers, “he apologized for keeping us waiting. He smiled.” Nothing concrete or valuable materialized at the meeting, nor since. But Shuvalov is remembered for smiling. The reason is that the chief executive of one of the largest mining companies in the world believes Russian officials never smile.
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by John Helmer - Friday, April 5th, 2013
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By John Helmer, Moscow

Alrosa is reopening its African business but there is no song and dance yet. The chief executive, Fyodor Andreyev, is in Angola this week, the company has confirmed, and is discussing with state diamond company Endiama the formation of joint ventures to explore for diamonds on the Angolan-Congolese border. Similar exploration ventures are being planned with Botswana Diamonds Plc and an unidentified company in Zimbabwe. Andreyev’s negotiations are the result of a still secret shift in Alrosa’s policy towards capital expenditure outside the republic of Sakha.

According to the company announcement on April 2, “in the near future, ALROSA’s geologists will conduct preliminary work to assess the areas most promising in terms of potential discovery of a primary diamond deposit.”
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by John Helmer - Thursday, April 4th, 2013
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By John Helmer, Moscow

If 85% of something was worth $320 million on March 27, then full value would be about $377 million. And if that something is identified as Highveld Steel & Vanadium Ltd. — a major South African producer of flat steel products and vanadium with which to harden steel — then how come that two days before, on March 25, the thing was valued on the Johannesburg Stock Exchange at just $140 million?

That Russians should want to sell at a 269% premium is plain. But if the evidence on the South African buyer’s side seems to defy commercial sense, two obvious questions follow — who in South Africa would agree to pay over the top for the asset, and why? The answer to the first adds mystery to the second – noone appears to know who the South African buyer really is.
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by John Helmer - Tuesday, April 2nd, 2013
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By John Helmer, Moscow

The text of the Guinean Government’s agreement with United Company Rusal for the prolongation of its Dian-Dian concession – one of the largest unmined bauxite deposits in the world – reveals an escape clause to enable Rusal to avoid the obligations the Guineans have been trying to enforce since the concession was first signed twelve years ago.

The new document, titled Annex No. 11 to the original July 21, 2001, Dian-Dian convention was signed on December 28, 2012. Signing for the government was the Guinean Minister of Mines and Geology, Mohammed Lamine Fofana; for Rusal, Vladislav Soloviev, first deputy chief executive. Three days later Rusal issued its summary of what had been agreed, revealing that it has extended the time required to meet its original obligations until 2019, and longer. The terms of the deal apparently ended threats by the government of President Alpha Conde, and predecessor governments over several years, to cancel the Dian-Dian concession because of Rusal’s failure to honour the original terms, invest and build a new bauxite mine, along with a refinery to convert the bauxite ore into alumina for smelting into aluminium.
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by John Helmer - Sunday, March 31st, 2013
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By John Helmer, Moscow

Sergei Kirienko has a reputation which survives no matter how selfish his aims, destructive his methods, ruinous his results. He was small enough to be looked down upon by President Boris Yeltsin; he hasn’t grown under President Vladimir Putin. As prime minister in 1998 – the smallest, shortest PM in Russian history — he presided over the government’s bond default and collapse of domestic savings, only to disappear abroad, some allege (falsely) with a fortune. Since Kirienko doesn’t answer unscripted questions from the press, he never admits making mistakes. Not even the most costly one in Russia’s recent history.

Russia managed to survive that one. It is less certain that Kamchatka would survive the one Kirienko as head of the State Atomic Energy Corporation (Rosatom) has been planning. That is the installation of the floating nuclear reactor vessel, Academician Lomonosov (right image), a 21,500-tonne barge being completed in St. Petersburg, and scheduled to be swtiched on at the Vilyuchinsk Naval Base in Avacha Bay, less than 20 kilometers from the city of Petropavlovsk-Kamchatsky.
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by John Helmer - Thursday, March 28th, 2013
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By John Helmer, Moscow

Oleg Deripaska, the chief executive of the state aluminium monopoly Rusal, believes in an ethical code in which there’s little room for recreation, let alone holidays. He says: “I simply enjoy working. Work just happens to be something I have always enjoyed doing ever since I was a child. With the sort of opportunities I now have I can influence the work of a lot of companies. That is a lot of responsibility. As long as I can do what I am good at, managing businesses, I am going to continue doing it.”

His work ethic goes back a long way. “I was eleven when I received my first pay check working at a reduction plant. I was an electrician’s apprentice, in other words, I was a real worker and even had my own locker.”
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by John Helmer - Wednesday, March 27th, 2013
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By John Helmer, Moscow

Oligarch ownership hasn’t given Russian goldmines a good name, or at least not a stable one. So if you take the 5-year view and judge that the gold price has peaked, while the cost of developing new mines is going up, the grades going down, you don’t need to be an oligarch with a short attention span like Mikhail Prokhorov, to figure out that the prudent investment direction is the exit.

When Prokhorov sold his 37.78% stake in Polyus Gold last month for $3.6 billion, his Onexim holding announced: “in light of …our view of the balance between the company’s achievements and its potential, we made the decision that the time had come for Onexim Group to sell and realize its profit.” On the 5-year view there have value peaks on paper, but ultimately no profit. Prokhorov has also failed to find an international goldminer willing to buy the assets. As Russian dealmaking goes, selling to Suleiman Kerimov, or to his stand-ins, as Prokhorov has announced, is a nothing more than a state bank bailout.
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by John Helmer - Tuesday, March 26th, 2013
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By John Helmer, Moscow

President Vladimir Putin will raise with African leaders this week the case of the Myre Seadiver and its 15-man Russian crew, who were arrested and imprisoned in Nigeria last October. The story so far. Putin will be in Durban, South Africa, on March 26 and 27.

The Myre Seadiver crew have been accused by the Nigerian Navy of arms smuggling, charges the Russians say were fabricated by the Navy after a month of authorized portcall anchored in the harbour of Port Lagos. The Navy has de facto control of Nigerian coastal and maritime border enforcement, after blocking the establishment of an organizationally separate coast guard. A government attempt announced earlier this month to give the Nigerian police superior authority through a new maritime command covering ports, territorial waters and inland waterways, is expected to suffer the same fate.
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by John Helmer - Monday, March 25th, 2013
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