By John Helmer, Moscow

Announcing its sale of the South African asset, Highveld Steel & Vanadium, to Nemascore, a company created just weeks before, Evraz issued the following announcement: “EVRAZ announces intention to sell its South African steel mill. EVRAZ plc…announces the signing of a non-binding term sheet in respect of the proposed sale of its 85% stake in EVRAZ Highveld Steel and Vanadium Limited (“EVRAZ Highveld”) to Nemascore (Pty) Ltd, black economic empowerment consortium, for an indicative cash consideration of approximately US$320 million (the “Transaction”). EVRAZ will utilise the sale proceeds for general corporate purposes.” That was on March 27.

Yesterday, April 18, the company referred in a quarterly report of its production results to the following “recent development”: “In March 2013 Evraz executed a non-binding term sheet for potential sale of Evraz Highveld.”
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by John Helmer - Thursday, April 18th, 2013
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By John Helmer, Moscow

United Company Rusal appears to have been stripping assets from the Aluminium Smelter Company of Nigeria (Alscon) at the same time as it was creating large loan obligations which the loss-making smelter has little chance of repaying.

Public protests got under way at Alscon, which is located at Ikot Abasi, in the southernmost corner of the country, after Rusal announced on March 26 it was sacking most of Alscon’s workforce. On April 14, Bassey Udo, a leading investigative journalist in Nigeria and business editor for The Premium Times in Abuja, reported details of the annual Alscon company report for 2011. This is the most recent annual report from Alscon on file. The details have been retrieved from the records of Nigeria’s Corporate Affairs Commission. KPMG, which is the designated auditor for Rusal’s consolidated financial reports, refuses to confirm that it provided a qualified report and notes to the Alscon filing. Udo reports he obtained the filing on application to CAC. Read Udo’s full report here.
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by John Helmer - Tuesday, April 16th, 2013
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By John Helmer, Moscow

When Oleg Mukhamedshin, head of investment strategy for United Company Rusal, was in London recently, he complained the stock market isn’t giving Rusal’s share price a fair valuation, taking into account how much profit the non-aluminium line of business – that’s the dividend to be paid to Rusal by Norilsk Nickel — is likely to generate this year for Rusal’s loss-making bottom line. What Mukhamedshin didn’t mention is that the market suspects Oleg Deripaska, chief executive and manager of the controlling shareholders’ trust, of operating a scheme to protect asset value and income for an inner circle of Rusal shareholders, and let all other shareholders suffer the worst.

Initial evidence of the inner circle scheme was first uncovered in the records of RTI Limited (aka Rusal International Trading), a Jersey Island-registered entity which appears to be the next to highest control entity in Rusal’s corporate organization. Registered on October 27, 2006, one day after the parent company was incorporated in Jersey, RTI’s carefully worded articles of association contain a code which provides privileged treatment for one class of Rusal shares at the expense of the founding shareholders; the latter include Mikhail Prokhorov, Victor Vekselberg, Len Blavatnik, and Glencore; and the shareholders who “anchored” Rusal’s Hong Kong Stock market listing in January of 2010, including the Russian state banks.
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by John Helmer - Sunday, April 14th, 2013
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By John Helmer, Moscow

Nemascore, the South African buyer of Evraz Highveld, the loss-making steel and vanadium producer, is run by a part-time lawyer, a part-time entrepreneur, and the part-time executive of Fire Check, a Durban-based company specializing for the past twenty years in installing home and office fire alarms around that east coast city.

One of this trio has acknowledged that to find $320 million — the price Nemascore has agreed to pay Evraz for the loss-making Highveld — it is negotiating with the South African government’s Industrial Development Corporation (IDC) to guarantee repayment of a loan for the transaction amount. That loan, according to other SA sources, is to be issued by Russia’s state-controlled bank, VTB. Why everything else is secret about a deal which (apparently) repatriates to South African ownership a well-known steelmaking company listed on the Johannesburg Stock Exchange, is a deep-six mystery. Read the story so far here.
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by John Helmer - Friday, April 12th, 2013
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By John Helmer, Moscow

Nigerian judge, Okechukwu Okeke, failed to show up in his Lagos court yesterday for the scheduled trial on arms smuggling charges of the crew of the Myre Seadiver. There was no explanation for his non-appearance.
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by John Helmer - Thursday, April 11th, 2013
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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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