By John Helmer, Moscow

Renco and its subsidiary RG Steel, the defendants in Severstal’s New York court claim, have a month to file their reply, and for the time being they are saying nothing. Bette Kovach, spokesman for RG Steel, and Andrew Shea, spokesman for Renco, say they “will not comment on matters in litigation.” Nor will they answer whether it is Renco’s position that the March 2011 takeover terms for the three US steelmills did not obligate Renco and RG Steel to make a cash payment of $125 million to Severstal without agreement on subsequent accounting and valuation adjustments, and post-deal due diligence.
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by John Helmer - Sunday, October 16th, 2011
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By John Helmer, Moscow

Severstal has issued a claim in US Federal Court (Manhattan Southern District) against RG Steel, a unit of the private American steelmaking group, Renco. Severstal owner Alexei Mordashov (left image) wants it to be known in the Russian media that he thinks he’s been stiffed. But he doesn’t want anyone to read too carefully into the court papers in case they detect evidence of Severstal accounting…. well, let’s not say fraud until and unless the US court rules on the matter.
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by John Helmer - Friday, October 14th, 2011
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By John Helmer, Moscow

Fitch Ratings issued a modified warning on Sovcomflot this week, claiming that the big Russian’s tanker revenues were at risk of coming up short against the company’s obligations. In that event, Fitch London analyst Jeannine Arnold reports, Sovcomflot may have to sell off the hulls and newbuildings which are on order, but still on the shipyard slips in South Korea, China, and Finland.

Fitch is also acknowledging that the release of its new ratings report was delayed by several days, and that the ratings agency analysts have come under the pressure of persuasion from Sovcomflot to change their recommended rating.
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by John Helmer - Thursday, October 13th, 2011
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By John Helmer, Moscow

When crisis strikes the global steel sector, sales revenues drop faster than costs, and earnings and profits shrink. The normal correction is for mill owners to cut their costs by reducing production, closing furnaces, furloughing workers, trimming supply of steel into the marketplace, cutting product prices to clear unsold inventories, and crossing fingers for an improvement of demand. If they can help it, the proprietors of steelmills don’t normally lift their interest expenses by raising debt loads.
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by John Helmer - Thursday, October 13th, 2011
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By John Helmer, Moscow

The Russian government has made good on an earlier threat to penalize grain exports if the export tonnage exceeds the level that threatens domestic supplies and triggers grain and bread price increases before the December parliamentary elections. Fear of bread price rises detonating voter discontent first appeared a year ago, when the Kremlin’s front-line defence at the time was an embargo on all grain exports until the new harvest was in.
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by John Helmer - Wednesday, October 12th, 2011
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By John Helmer, Moscow

Now for those who think the appetite for due diligence and accountability deadens the taste for opportunity, the good news from the Russian goldmines comes today from Alfa Bank’s metals analyst Barry Ehrlich, in a set of three fine reports.

The global supply and demand balance for gold is stable: the gap between under-supply and expanding demand is closing, compared to 2010, but supply growth appears to running at 3% per annum, and demand growth at 5% per annum. If that’s right, the gold price will be secured by the increase in jewellery and bullion buying in China and India, and by government stockpiling of gold worldwide, as a hedge against volatile currency movements.
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by John Helmer - Tuesday, October 11th, 2011
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By John Helmer, Moscow

Sergei Naryshkin (right image), the Kremlin chief of staff, who has been chairman of the board of Sovcomflot, the state-owned tanker operator, has been replaced by Ilya Klebanov (left), a former federal minister of industry, according to a Kremlin release last Friday, October 7. The appointment appears to have taken Sovcomflot by surprise, as the company, run by Sergei Frank, has yet to issue its own news release, and has been refusing for several weeks to answer questions on Naryshkin’s status on the board.
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by John Helmer - Monday, October 10th, 2011
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By John Helmer, Moscow

Alrosa, the Russian state diamond monopoly and world’s largest producer of rough, moved last week to resist price-cutting and discounting pressure across global diamond markets by announcing it will reduce its supply of rough for sale instead.
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by John Helmer - Monday, October 10th, 2011
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By John Helmer, Moscow

Oleg Mukhamedshin, the man in charge of raising money and covering debt for United Company Rusal, was spotted last week in London carrying bags into his mansion. This is what has been happening to the aluminium he has been selling:
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by John Helmer - Friday, October 7th, 2011
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By John Helmer, Moscow

Mikhail Prokhorov – Russia’s no-fault oligarch, according to a dozen people familiar with the matter at Bloomberg – was tossed out of Russian politics for his incompetence last month. Yesterday it turned out that the only company he controls with an international share listing and a positive profit line, Polyus Gold, has been kissed off by the international mining market.
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by John Helmer - Thursday, October 6th, 2011
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