By John Helmer in Moscow

Alexei Mordashov, owner of the Russian Severstal steel and mining group, has lifted his takeover offer for High River Gold (HRG:CN) by 8 Canadian cents per share, after his earlier bids for the 43% minority shareholding failed at 18 cents and 22 cents. The new offer is 30 cents. If there are any takers, that would oblige Mordashov to reach into his pocket for C$84 million (US$77 million). The institutions holding roughly half of the minorities, and the smaller, individual shareholders, say that’s too little, too late.

The new offer was posted on Severstal’s website yesterday. Because HRG’s share price has been held in check by the previous offers, the new one lifted the price on a modest increase in trading to 30 cents. The range for HRG is between last year’s peak of $3.47 in February of 2008, and 4 cents last November. In the year to date, HRG has been restricted between 12 and 24 cents.
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by John Helmer - Wednesday, July 29th, 2009
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By John Helmer in Moscow

Pressure on the new head of Alrosa, Fyodor Andreyev, to boost rough diamond sales by discounting the price made a prompt appearance in the Russian press — within hours of Andreyev taking his seat on July 15. “The new president of Alrosa has decided to increase sales using discounts”, claimed an anonymous source “close to Alrosa’s supervisory board”, and reported by a Moscow newspaper last week. “A change of marketing policy is being discussed”, the newspaper reported an unnamed representative of the Ministry of Finance as saying — without giving details. Another Russian press agency has claimed that Alrosa plans to reopen its selling window, closed since December, with a $50 million contract, and with a target of $2 billion worth of sales for the full year.

This is premature and wishful thinking, according to Alrosa’s spokesman, Andrei Polyakov, and diamond manufacturers in Moscow. “We cannot speak about discounts while the orders aren’t yet formed”, Polyakov told PolishedPrices.com. “But we have plans for the future”. He said it is “too early to speak of changes in the company’s pricing and marketing policy if we connect these changes with Mr Andreyev’s arrival, because he’s been in his post for two weeks only.” Moreover, he noted, “the pricing policy changes when the situation in the market changes, not the company’s president.”
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by John Helmer - Tuesday, July 28th, 2009
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On July 27, Russia’s NTV network broadcast an interview with President Dmitry Medvedev (the Russian name means “bear”). The President was asked about the image of the bear in recent Russian history, and for the future. Here is what he replied:

QUESTION: You know, the widespread image of Russia in the world is a certain Russian bear.

PRESIDENT MEDVEDEV: This is close to me.

QUESTION: We constantly see it in caricatures, in other ways; it is constantly written about; this image has spread. In your opinion, what, maybe, is necessary to change in the country so that we look different abroad as well? Are there any problems that prevent us from looking successful on the international arena?

PRESIDENT MEDVEDEV: Well, in my opinion, it is certainly not the image of a bear. To me this image is dear and positive. Speaking seriously, in order to look strong, we, of course, should be modern. Therefore, for us to have a correct image, we should solve our urgent problems, first of all, those social and economic ones. Because, if we can solve them, it will be certainly easier for us to solve international problems. Here we see the objective law – coming back to what we began our conversation with. Therefore, if our international position directly influences the standard of living in our country, then our rate of success inside the country finally reflects in our image outside Russia. And this is also important.
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by John Helmer - Tuesday, July 28th, 2009
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By John Helmer in Moscow

Time to remember the famous advertisement of Wendy’s, the American burger chain, which contrasted the substance of its product with the paltriness of its rivals. So now let’s ask the biggest unanswered question in Russian political economy — what happened to the stimulus funding the Russian government was supposed to have, and promised to have available a year ago, in the event that a global collapse of demand for steel left Russia’s steel industry dependent on domestic demand, instead of exports?

Not a single owner of a major Russian steel or pipemill, who attended last Friday’s summit meeting with the government, dared to wonder aloud. And there’s not a trace of an answer in the morning-after reports of what was said at the session. Instead, the major steelmakers, who met with Prime Minister Vladimir Putin in Magnitogorsk on Friday, refuse to say whether they believe the government intends to implement their requests for state financial support. In addition to representatives of the steel and pipe mills, the largest of Russia’s steel consumers such as Gazprom, the Transneft pipeline company, and the Russian Railways (RZD) also attended.
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by John Helmer - Monday, July 27th, 2009
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By John Helmer in Moscow

The growing number of tape-recorded disclosures from a bed belonging to Italian Prime Minister Silvio Berlusconi has attracted a rising vote of no-confidence in the prime minister from Italian voters, and unusual interest in what happened on the bed in much of western Europe. One Italian opinion poll published at the end of last week reports that Berlusconi has lost 4 percentage points.

A ranking Russian official has telephoned to make absolutely plain that whatever was done on the bed was Italian, and that nothing can be found there from Russia. He was responding to a request to the Russian Prime Minister’s office to clarify reports that Berlusconi had been heard on tape claiming to a lady friend that a bed in his apartment, on which he proposed she and he lie together, had been the gift of Vladimir Putin, now Prime Minister of Russia.

The Russian official identified himself by name. A subsequent check of the official records has verified his name and position in the Press Office of the Prime Minister. The official requested that he not be identified by name, but his remarks, he said, could be quoted as from the Press Office of the Prime Minister. He spoke in English.
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by John Helmer - Monday, July 27th, 2009
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By John Helmer in Moscow

Severstal, the Russian steelmaker owned by Alexei Mordashov (pictured), sought today to play down a rating downgrade by Fitch, issued earlier this week. At the same time, the company has removed the head of its loss-making North American division; and announced that in Italy, where its Lucchini steel operations are also loss-making, Mordashov has been awarded the Italian state’s Order of Merit.

According to Fitch, it has reduced Severstal’s Issuer Default Rating from BB- to B+, and put the company on watch for possible further downgrades over the next six months. The reason, according to a release by the ratings agency, is “Fitch’s expectation that the current global recession will have a significant negative impact on Severstal’s operating performance and credit metrics….Fitch now does not expect that Severstal will be able to regain a “through-the-cycle” credit profile consistent with the ‘BB’ rating category within 18-24 months of the trough of the current recession.” Fitch also said there is “uncertainty regarding the outcome of negotiations with lenders in respect of potential covenant breaches under its various facilities.”

A source inside Severstal told CRU Steel News: “If you look at other similar ratings, you will see Severstal keeps at the general level of the sector”. The source noted that recently the company has shown positive results, as steel volumes have grown, adding: “the rating agencies are in doubt whether Severstal will be able to keep at that level further.”
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by John Helmer - Thursday, July 23rd, 2009
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By John Helmer in Moscow

While unpaid Russian workers on shore petition for Prime Minister Vladimir Putin’s help,block highways, or appeal for media coverage, Russian seamen have used a very old weapon to claw back their pay from Russian shipowners — their trade union. The union campaign at sea is without precedent on land.

Russia’s seamen said this week they are expecting to collect additional wage arrears, owed by shipowners, of at least $300,000, on top of the $400,000 already collected in this month’s campaign by the Russian Seamen’s Trade Union and the International Federation of Transport Workers (IFT).

Nikolai Sukhanov, head of the Russian union’s branch at Nakhodka, on the Sea of Japan, told Fairplay last week’s enforecement action took three months of preparation, and netted $400,000 in court-enforced collections from Russian shipowners on the mainland. He said $230,000 is still to be paid. He is expecting another $70,000 in arrears from owners of vessels in South Korea, and an unspecified sum from Japan, where 11 vessels were identified by IFT inspectors to be in violation of pay contracts, and are now under arrest orders to pay up.
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by John Helmer - Wednesday, July 22nd, 2009
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By John Helmer in Moscow

The St. Petersburg fight over port terminal andshipping assets has taken a muscular turn, as police raiders, acting at the behest of Bank St. Petersburg, appear to be grabbing assets worth more than a bank valuation allows, and despite a court order invalidating the seizure.

Vitaly Arkhangelsky’s Oslo Marine Group (OMG) says it came under attack at its St. Petersburg headquarters last week,when police ordered personnel out of their offices and started searching office files. Arkhangelsky told Fairplay it was the latest in a series of property raids and asset seizures, which began last month, and involve OMG shipyard, vessel, and port terminal businesses.

Arkhangelsky, 34, blames Bank St. Petersburg (BSP), for improperly seizing assets for non-payment of loans amounting to Rb4 billion ($125 million). He says the asset seizures exceed the value of the loans, adding that at least one of the loan pledge agreements between his group and the bank has been nullified by a local court ruling. But since then, Arkhangelsky adds, BSP has refused to return the West Terminal, a St. Petersburgcargo shipping facility, which BSP grabbed on June 20. Three days later, on June 23, says Yelena Murgina, a spokesman for OMG, a St. Petersburg court ruled that the pledge agreement of the terminal was null and void.
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by John Helmer - Tuesday, July 21st, 2009
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By John Helmer in Moscow

The reason for an unexpected Chinese advertisement for a billion-dollar iron-ore and steel complex in a remote part of Siberia became clear in Moscow today. It reveals that, starved for cash as most Russian metal and mining companies currently are, they aren’t yet prepared to let the Chinese build competing mines and steelmills on Russian territory.

According to sources at the federal Ministry of Natural Resources in Moscow, and at the Department of Metal Mining Industry in the Transbaikal Territory administration (Chita region), the Xiyang Group sent a company delegation to Moscow this month to try to head off the revocation of the mining licence it holds for an iron-ore deposit in the region, near the Chinese border. The Chinese were officially warned that the licence for the Berezovskoye iron-ore deposit, which was awarded on May 14, 2005, requires investment of Rb16.8 billion (currently $542 million).

The iron-ore deposit is located about 20 kilometres from the Chinese border. Known to Russian geologists since the Soviet period, the deposit is estimated to hold up to 750 million tonnes of iron-ore. Expert studies have identified special problems with processing this ore into concentrate, and thus for consumption by steelmaking blast furnaces. This, together with the remoteness of the location for electricity, coking coal supply and rail connexion, have deterred development in the past.
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by John Helmer - Tuesday, July 21st, 2009
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By John Helmer in Moscow

Silvio Berlusconi, the Prime Minister of Italy, has named a bed in his Roman home, Palazzo Grazioli, after the Prime Minister of Russia, Vladimir Putin, according to a conversation Berlusconi had last November with a young lady he was inviting to join him in the bed. The bed itself is described as having curtains.

The house belongs to a family of grain-grinders and bakers, who took cash from the ladies they married and invested it in land that grew the grain they used to mill and bake. They did well, and celebrated by buying the house, which they then redecorated in the 1860s.
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by John Helmer - Tuesday, July 21st, 2009
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