By John Helmer

The world of manganese mining is so small, concentrated, and dependent on China, as both producer and consumer, that if there are shenanigans, the reputation of the trade can be swiftly and seriously threatened, especially in China.

For the biggest of the producers, the Australians and South Africans, manganese is a sideline. Samancor is the largest manganese producer in the world, with peak production capacity of 7 million tonnes per annum; currently, this has been cut to 5.5 million tonnes. But Samancor is not separately listed; it is 60% owned by BHP Billiton, and 40% by Anglo American Corporation, whose consolidated earnings dwarf the contribution from manganese. Eramet, the French mining company, ranks second globally in manganese output, with 3.3 million tonnes produced from its Moanda mine in Gabon. It has cut back on production by 60%. Last year, when manganese was booming on the back of steel, manganese contributed 50% of the Eramet group’s revenues; this past quarter, the proportion dropped to 43%.

Assmang, the second South African producer owned by the Sacco family through Assore Ltd., and by African Rainbow Minerals, has peak production capacity of 2.5 million tonnes. At peak last year, manganese generated 64% of Assore’s revenue; 74% of its earnings. Vale of Brazil has a 2-million tonne capacity, but in the first quarter of this year has announced a mining cutback of 77%; manganese forms a small part of Vale’s multimineral output, which is led by iron ore, bauxite, and coal. The Australian producer, Consolidated Minerals (Consmin), was producing at peak last year of almost 1 million tonnes; its Woodie Woodie mine has capacity for 1.1 million tonnes. It was followed by the Australian-listed OM Holdings, whose Bootu Creek mine in northern Australia, reached peak capacity of 690,000 tonnes (currently at 500,000 tonnes).

The last two, Consmin and OM, are manganese specialists; production and sales of the ore constitute 74% of Consmin’s annual revenue; 100% of OM’s. Until January last year, Consmin’s shares had been publicly listed on the Australian Stock Exchange. The Ukrainian entrepreneur Gennadiy Bogolyubov took over after a fierce takeover contest with Brian Gilbertson’s Pallinghurst Resources. Bogolyubov already had manganese mining and refining interests in the Ukraine, as well as in Ghana. His was the second last great battle for shareholder valuation in the manganese sector. At Bogolyubov’s buy-in and subsequent delisting, Consmin was valued at A$1.3 billion.
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by John Helmer - Sunday, May 17th, 2009
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By John Helmer in Moscow

The last time Russia took fighting pirates seriously was two centuries ago, when the Empress Catherine the Great, followed byher short-lived successor Tsar Paul I, backed the Knights of Malta, who in turn fought naval engagements with the pirates of Barbary — as the Arab statelets and fortress towns of the North African coast were collectively called.

Ransoming rich European hostages was a high-margin line of business for the corsairs;European hostages too poor to buy their freedom were put to work as slaves on shore, or as oarsmen for the pirate vessels. Individually, they didn’t last long, but that wasn’t the point from a naval point of view. The pirate vessels demonstrated much more manoeuverability in combat than the European navies could muster. When one oarsman died, the pirates simply grabbed another.

For a while, Russia had a pirate of her own. That was the legendary Maxim Vasilii, who learned his seamanship from the Barbary corsairs; adapted their tactics to stealhis own ship, the Thermopolae, from a Greek port; managed to circumnavigate the world in the mid-17th century; and was an advisor to Tsar Peter the Great on the creation of the first Russian naval fleet.

Later, and for a very brief time — after Napoleon took Malta for France in 1805 — Tsar Paul became the principal host of the Knights of Malta and their commander in St. Petersburg.At that distance from the Mediterranean, this naturally made not a whit of difference to the pirates.
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by John Helmer - Sunday, May 10th, 2009
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May 8-July 3, 2009

Adam Waldman of The Endeavor Group, Washington, DC, for “correction” of media publications reporting that he is Oleg Deripaska’s lobbyist to recover Deripaska’s US visa, revoked by the US State Department in 2006

Registration with the US Department of Justice by Adam Waldman for The Endeavour Group, pursuant to the Foreign Agents Registratrion Act, May 8, 2009:
http://www.fara.gov/docs/5934-Exhibit-AB-20090508-1.pdf

Reports and correspondence

http://www.intelligenceonline.com/Identification/p_identification.asp?rub=login&lang=ANG&service=ART&context=BOI&doc_i_id=63906361
CORPORATE INTELLIGENCE
Deripaska in Frantic Bid for Visa
354 words
18 June 2009
Intelligence Online
INTON
596
English
Copyright 2009 Indigo Publications All Rights Reserved

Close to Hillary Clinton, the Endeavour company has been hired to obtain a visa for Oleg Deripaska.
Since July, 2006, the chairman of the aluminum giant Rusal, Oleg Deripaska, has lacked a visa for the United States: the State Department cancelled the former visa without explanation two years after issuing it. The travel ban could play havoc with the oligarch’s finances at a moment when he needs the most help. Rusal is currently negotiating for fresh terms with its creditors who are owed USD 7.4 billion. The talks with banks were almost completed as Intelligence Online went to press.
To help persuade the State Department to give him a new visa, Deripaska retained the services of a small lobbying concern, Endeavour Group, at the end of May. Run by Adam Waldman and Ashley Allen, Endeavor specializes in providing services to billionaire and show business personalities. It is particularly known for mounting philanthropic projects on behalf of its clients but it equally acts to resolve delicate private matters.
Deripaska’s choice of Endeavor to land him a visa was dictated by the fact the firm is close to secretary of state Hillary Clinton. One of the partners of Endeavor, Lorrie McHugh-Wytkind, was Clinton’s head of communications when she was a senator for New York state.
Some of the firm’s advisers are also close to the Clinton couple, including Bill Clinton’s former secretary of the interior, Bruce Babbitt. And financier Richard Blum, husband of the influential Democrat from California, Diane Feinstein, is also a consultant of Endeavor, as is Ed Mathias, one of the founders of the Carlyle equity fund. Mathias is also an adviser to the business intelligence concern Diligence, who worked for Deripaska for years.
Before taking his business to Endeavor, Deripaska had other firms working on his visa problem. One who banged on the State Department’s door on behalf of the oligarch was Bob Dole, former Republican senator and presidential candidate. Dole works as a lobbyist for the law firm Alston & Bird.

http://www.intelligenceonline.com/Identification/p_identification.asp?rub=login&lang=ANG&service=BRE&context=BOI&doc_i_id=64767470
CORPORATE INTELLIGENCE

02/07/2009 UNITED STATES
Clarification
Following publication of our article “Deripaska in Frantic Bid for Visa” in our last issue, the oligarch’s public relations firm in Washington, Endeavour, contacted Intelligence Online to specify that Lorrie McHugh-Wytkind, former head of communications for Hillary Clinton and a partner in Endeavour, was not involved in the firm’s work on behalf of Deripaska . The latter’s visa was withdrawn by the State Department in July, 2006 without explanation and he has been trying ever since to have a new one issued. Elsewhere, Endeavour said that Bill Clinton’s former interior secretary, Bruce Babbit, who sits on the company’s informal advisory board, has no contact with its customers. Endeavour also pointed out that it was not a lobbying concern, as Intelligence Online stated.

—– Original Message —–
To: jcooke@blumcapital.com
Sent: Thursday, July 02, 2009 11:31 PM
Subject: From Moscow — re Oleg Deripaska visa representation

FROM JOHN HELMER
MOSCOW BUREAU

President, Endeavour Group
2001 K Street, NW,
Washington, DC 20006
USA

Dear Mr Waldman:

I am the longest serving American correspondent in Russia. You may find background and samples of my coverage, which is published around the world, if you will go to the website address indicated in the header. My questions relate to the report of your firm’s engagement by Oleg Deripaska.

I am grateful to Ms Cooke for agreeing to convey to you, and the other appropriate members of your firm, my request for clarification of the matters arising from the recent reports by Intelligence Online
(www.intelligenceonline.com).

Regarding the June 18, 2009, report, and the July 2 “clarification”, would be kind enough to say:

1. Has your firm been engaged by Mr Deripaska? If so, when?

2. Is the purpose of the engagement to assist Mr Deripaska in securing State Department and other US Government endorsement for the issuance of a visa permitting him to enter the US?

3. Has your firm registered pursuant to the Foreign Agents Registration Act? If so, when?

4. What members of your firm have been designated to work on this engagement for Mr Deripaska?

5. Are you aware of, and do you believe to be true, US reports that in relation to the US visa matter, and other issues, Mr Deripaska met together with the Republican presidential and vice presidential candidates, prior to Election Day last year, on board a yacht outside the territorial limits of the US, in Canadian waters?

6. According to your website, Edward Mathias is listed as an advisor to your group. According to Intelligence Online, Mr Mathias is “also an advisor to the intelligence firm Diligence”. Are you aware, and has Mr Mathias made you aware, that Mr Deripaska is one of the proprietors of the Diligence firm?

I shall be obliged if you would respond by email, or by telephone, as soon as possible.

Should you decline to respond, you and your firm may be reported as refusing to respond.

With my thanks,

John Helmer
Moscow Correspondent

—– Original Message —–
From: Adam Waldman
Sent: Friday, July 03, 2009 12:58 AM
Subject: Your July 2 Fax

Dear Mr. Helmer:

I just received a copy of your fax (and have long been a follower of your fine coverage).

I would like very much to respond to your questions, and have requested permission from my client to do so. Mindful of the time difference, what is your deadline?

Kind regards,
Adam Waldman

Sent: Thursday, July 02, 2009 7:54 PM
To: Adam Waldman
Subject: Re: Your July 2 Fax

Dear Mr Waldman:

Thank you for your prompt response. I’d like to offer you as much time as you think reasonable with respect to those questions your client may oblige you to obtain his permission to answer, subject to the confidentiality provisions that prevail. I take it you have been in discussion with your client on this point for at least two weeks — since June 18, the publication date of the first report by Intelligence Online.

Your second sentence, and also the July 2 response to Intelligence Online, appear to answer Q1. With respect to Q3, I suppose it is to the US statute, not to Mr Deripaska’s permission, that your duty is owed.

Qs 5 and 6 relate to matters of fact occurring before the engagement; and so I have difficulty in seeing how your knowledge, or non-knowledge, of them can be subject to non-disclosure or withholding retrospectively.

With my thanks,

John Helmer

—– Original Message —–
From: Adam Waldman
Sent: Friday, July 03, 2009 6:49 PM
Subject: RE: Your July 2 Fax

Dear Mr. Helmer:

As a general matter, the Intelligence Online piece you inquired about did not make any attempt to contact my firm Endeavor or me before running its piece; I immediately sent Intelligence Online a correction of factual inaccuracies which they agreed to run. I am not a subscriber to their service but assume they have done so at this point. I sent a similar note to Harper’s, which cited the Intelligence Online piece, and they also agreed, and did indeed, print a correction.

I do appreciate, in contrast, your request for accurate information in advance of running a piece. The following are responses to your questions in the order you presented them:

1. Although Endeavor rarely comments publicly about any aspects of its engagement with clients, it is a matter of public record that we work with Mr. Deripaska.

2. The purpose of the engagement is to advise Mr. Deripaska and entities controlled by him on a range of commercial, regulatory and philanthropic matters. We have not had any engagement with the US government about any visa matters on his behalf. Our web site is www.theendeavorgroup.com – this will provide you some feel for our work.

3. Yes, and it is a publicly available filing.

4. The answer to your question is contained in the filing; but for your convenience my colleague Carolyn Mansfield and I work with Mr. Deripaska.

5. No such meeting has ever taken place and, consequently, no such discussion of visa or other issues ever happened.

6. Mr. Deripaska is not a proprietor of Diligence, or of any other intelligence firm.

I hope these factual clarifications are helpful to you.

Kind regards,
Adam Waldman

—– Original Message —–
To: Adam Waldman
Sent: Saturday, July 04, 2009 11:20 AM
Subject: Reply and follow-up questions

Dear Mr Waldman:

Thank you for taking time out of your holiday to respond, and for writing so painstakingly. At risk and with regret of interrupting your fireworks celebration, may I point out some problems that remain with your response:

Attached below is the full text of the “Clarification” published by Intelligence Online. There appears to be no “correction”, as you use the term or as you mean readers to understand it. The reference relating to Ms McHugh-Wytkind from your side clarifies what the original publication sourced to someone referring to Mr Deripaska’s intention in engaing your firm, not to what you say is your current or future “work”. I am persuaded that you are not denying the original report at all, or the implication that your firm was sought out for influence-peddling. Whether you wish to acknowledge that you accept Mr Deripaska’s idea of you (including Carolyn Mansfield) as an influence-peddler is a judgement that reasonable people are bound to be able to make if they have access to the full record.

Your two other clarifications in the Intelligence Online note — one related to Mr Babbit and one to the interpretation of the term lobbying — suggest the follow-up:

(1) Are you saying that you and Mr Babbit have gone through your list of assignments, clients, and “customers”, and have determined that Mr Babbit has had “no contact” with any of them?

(2) Are you saying that in relation to your engagement by Mr Deripaska, you and Ms Mansfield have made, and will make, no contact of any kind whatsoever with any US government official, any member of the US Congress, or anyone else connected such officials?

(3) Please clarify for me what is Ms McHugh-Wytkind’s association with your firm, and what contacts with what US Government officials she has made since she commenced with your firm, and in particular since May 8.

In relation to the wording of Question/Answer 2, you state: “The purpose of the engagement is to advise Mr. Deripaska and entities controlled by him on a range of commercial, regulatory and philanthropic matters. We have not had any engagement with the US government about any visa matters on his behalf.”

In the filing to the US Department of Justice which you signed on May 8, Registration Number 5394, at
http://www.fara.gov/docs/5934-Exhibit-AB-20090508-1.pdf

you state: “the agreement or understanding between the registrant and the foreign principal is the result of neither a formal written contract nor an exchange of correspondence between the parties”. Please explain how you reached your understanding with Mr Deripaska, and through what persons acting for him, and what persons acting for you?

You also state: “Endeavour Group is engaged at will by Mr Deripaska to provide general legal advice on issues involving his US visa as well as commercial transactions.” You repeat this point at Box 7 of the registration form: “”Endeavour Group provides legal and advisory services to the principal Mr Deripaska around US visa issues and commercial transactions.”
At Box 8, your work on the US visa issue is explained in greater detail: “Endeavor Group assists the principal Mr Deripaska in the preparation of a US visa application and advocates for US approval of such application”.

At Box 9, you state: “Endeavour Group expects to engage with the U.S. Government regarding the status of the foreign principal’s visa application”.

If all true, please explain:

(4) How your admissions to the US Government do not belie your claim to me: “We have not had any engagement with the US government about any visa matters on his behalf”?

(5) How your “advocacy” is not “lobbying” as this term is understood in the US Code?

(6) To which officials, by name, at what US Government agencies, have you or your Firm or any person in any way connected with you and your firm made contact in relation to Mr Deripaska’s visa issue?

(7) In your registration, you state you are being paid $40,000 per month, plus expenses, by Mr Deripaska. Since Mr Deripaska as chief executive and stakeholder of Rusal, and as controlling shareholder of other companies in the Rusal and Basic Element groups, is currently the object of government supervision, bank investigation, court claims for insolvency, and public protest as a payment defaulter; and since he and his group have unpaid obligations estimated to be about $17 billion, will you please state whether you are being paid monthly in advance; monthly in arrears; or by another sum paid in advance?

(8) Do you believe it to be lawful for your firm to be representing entities that may be trading as insolvents in one or another foreign country, and lobbying for their financial interests before the US Government?

(9) In the registration, at Q8 (b), you have marked the “No” boxes to the following questions: “Is this foreign principal “supervised by a foreign government”, and “financed by a foreign government”. Do you claim to be unaware of Mr Deripaska’s obligations to the Russian state banks, including for $4.5 billion to Vnesheconombank (VEB), chaired by Prime Minister Vladimir Putin; of the state Accounting Chamber’s investigations and supervision of Rusal accounts and payment compliance: and of the intervention, supervision, and investigation by Russian state bodies, including the Prime Mibistry and the Arbitrazh courts, of Mr Deripaska’s indebtedness and lack of financial means? Do you wish to amend the meaning of your registration and file “Yes” to these questions?

(10) With respect to the lobbying assignments you have registered you and your firm as performing for Mr Deripaska relating to aluminium and “General Motor’s [sic] European operations”, what claims have you made regarding your client’s means to make good on payment commitments?

(11) With respect to the claims and evidence currently before the US courts in the Norden case — http://johnhelmer.net/wp-content/uploads/2009/03/norden-cmplnt1.pdf — please tell me what you advocate before the US Government regarding the value of Mr Deripaska’s contract coomitments?

(12) You refer in your Question/Answer 2 to “philanthropic matters” on behalf of Mr Deripaska. What amounts of money and for what “philanthropic” purposes is Mr Deripaska and his group giving away, subject to your expertise and advice?

Finally, and do pardon me for the detail of this follow-up, occasioned by the nature of your reply,

(13) Please explain why you think your reference in your last line to “factual clarifications” might be “helpful”, if the facts in the public record appear to be at considerable variance with your claims? And if that is so with regard to your claims regarding the US visa issue, will you reconsider and reword your claims with respect to Questions/Answers 5 and 6, relating to the meetings on board Mr. Kerimov’s boat, and with respect to direct and indirect forms of ownership and control of Dilgence? Or are you now saying you and your firm do not know, and have not investigated directly and independently, whether what you have been told of these matters is true or false.

With my thanks,

John Helmer

by John Helmer - Friday, May 8th, 2009
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By John Helmer in Moscow

Evraz, the most heavily indebted of Russia’s steelmakers, has refused to respond to questions about disclosures in its annual financial report for 2008, released on April 30, that the Russian group has pledged virtually its entire shareholding stakes in its North American assets, and in its lead longs mill, West Siberian Metallurgical Combine (ZSMK, Zapsib), to secure repayment of loans and refinancings of the debt incurred to make the asset acquisitions.

Evraz is controlled by Roman Abramovich, and run by former controlling shareholder, Alexander Abramov.

Evraz investment relations spokesman Sergei Lavrinenko was asked to clarify Russian media reports of the asset pledges. He then refused to respond by email or telephone. The disclosures are highly sensitive, because of fears, widespread throughout the Russian steel industry, that the Russian government may take shareholding control of steelmakers, which prove unable to meet the heavy debts they have run up, particularly in premium-priced acquisitions in Canada and the US.

At page 35 of the 44-page report, Evraz reveals, for the first time, details of the state bank bailout loan from Vnesheconombank (VEB), which late last year saved Evraz from default. VEB is chaired by Prime Minister Vladimir Putin. According to the Evraz report, the VEB loan “is granted in 5 tranches of U.S.$201.3 million each to partially refinance the company’s principal installments falling due in 2008 and 2009 under the US$3,214 million syndicated loan borrowed in November 2007. The loan is secured with pledge of 99.999993 % of ZSMK shares and assignment of receivables under certain ZSMK and NTMK export contracts, and bears interest at 12-month LIBOR plus a margin of 5% per annum. Each tranche is repayable on the first anniversary of its respective disbursement date, with the final repayment in December 2010. On December 10, 2008, Evraz Group S.A. entered into a U.S.$800 million loan with VEB. The full facility amount was utilised on December 12, 2008. The facility is secured with pledge of 100% of shares in Evraz Inc. NA Canada, all movable and immovable property of Evraz Inc. NA Canada, as well as suretyships provided by NTMK and ZSMK, and bears interest at 12-month LIBOR plus a margin of 5% per annum. The facility is repayable in one instalment in December 2009. It was utilised to refinance the two U.S.$400 million bridge facilities arranged in June 2008 for the acquisition of the IPSCO Tubulars business from SSAB.”
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by John Helmer - Wednesday, May 6th, 2009
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By John Helmer in Moscow

Russia’s state-owned crude oil pipeline company Transneft will commence loading oil tankers at Kozmino, the newest Russian oil port to be launched, as soon as December. With eventual capacity to load and ship 50 million tonnes per year (1 million barrels per day), Kozmino is to be one of the largest oil outlets opening on to the Asian and Pacific market.

Starting this year, Igor Demin, spokesman for Transneft, told 21st Century Business Herald that Russian rail deliveries of up to 15 million tonnes of crude oil (300,000 bd) will be loaded at the new port. Five million tonnes of that (100,000 bd) are already committed by contract to be shipped to China, under loan and oil supply contracts recently signed in Beijing by Transneft and Rosneft with the China Development Bank and the China National Petroleum Company.

Another 15 million tonnes (300,000 bd) of Russian crude are committed, according to the same contracts, for delivery to northern China through the new overland pipeline being built from Skorovodino to the Chinese border. In four years’ time, as Transneft builds the rest of the planned pipeline from Skorovodino to Kozmino — called the East Siberian Pacific Ocean, or ESPO, pipeline — a total of 80 million tonnes (1.6 million bd) of new Russian crude will flow for export eastwards. Of that amount 30 million tonnes (600,000 bd) are already committed for delivery to China by the northern overland pipeline and from Kozmino port.

Demin also revealed that about 3 million tonnes of the new oil will go to domestic Russian refineries, including a new one to be built by state oil company Rosneft, located 4 kilometres from the terminus of the ESPO pipeline and the tanker terminal at Kozmino Bay. Demin’s disclosure of the 3-million tonne capacity at the new refinery is substantially below previous published estimates. This hints at competition between the two state companies, Transneft and Rosneft. It also suggests that Transneft sees more profit for itself in exporting crude through Kozmino, rather than delivering the crude for Rosneft to refine, and then export as petroleum products.

Until the ESPO pipeline opens in 2013, Demin said he expects 7 million tonnes pa (140,000 bd) of rail-delivered oil will be traded on spot or contract terms from Kozmino, starting at the end of this year. Demin said that South Korean buyers have already signaled interest in this crude, and that Chinese buyers will also be able to buy on spot-price terms.
(more…)

by John Helmer - Wednesday, May 6th, 2009
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By John Helmer in Moscow

In the world of mining, it can be much more profitable to leave the gold in the ground, and take out the cash from booming share or equity value. According to Oleg Mitvol, the mine regulator for the Russian Ministry of Natural Resources until last month, Russian goldminers are guilty of investing in only one kind of digging — on the stock exchanges, where share prices are driven by gold reserves in the ground.

The paradox of Russian gold equity value starts with this: in terms of gold reserves, Russia ranks second in the world, trailing only South Africa. However, in terms of gold production, Russia is currently lagging in sixth or seventh place – behind China, South Africa, Australia, the US, Peru, and sometimes Indonesia.

For stock market hustlers, this discrepancy is treated as a positive – a disproportionately low production level relative to the resource base, suggests significant upside or growth potential. If a global or emerging market investment strategy recommends the gold sector for all the reasons that make the precious metal attractive in current conditions, then this anomaly, the reserve potential factor, should recommend Russian goldmining stocks for buying.

That is, unless investors suspect that Russian reserve potential is a mirage, a pig in a poke, or worse, a fake — that there’s a relatively high Russian risk that the local miners will delay the capital expenditure required to bring their new projects into production, and fill out their reserve totals by moving paper, instead of shovels.

Just how far and how fast gold equity values can move can be seen in China, where two of the leading goldminers listed on the stock exchanges are Zijin Mining Group, with a current market capitalization equivalent to $3 billion; and Zhongjin Gold Corporation, worth roughly the same.

In market value, they are less than half the value of Polyus Gold, Russia’s leading goldminer, whose market capitalization is currently about $8 billion. But each of the Chinese miners is substantially larger than the value of the second largest Russian goldminer, Polymetal, currently at $2 billion; or the next two Russian goldminers, Peter Hambro Mining and Highland Gold, at $1.7 billion and $241 million, respectively. Even allowing for Peter Hambro’s recent capital gain from absorbing its Aricom non-gold affiliate, the two Chinese goldminers are one and a half times the value of the three Russians.
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by John Helmer - Tuesday, May 5th, 2009
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By John Helmer in Moscow

Steady as she goes — that isn’t exactly the message from Sovcomflot, Russia’s largest shipping company, and one of the five largest energy shipping, oil and gas tanker fleets in the world.

Analysts at Moody’s Investors Service have issued a rating downgrade for the state-owned shipping company Sovcomflot, with a report that focuses on growing doubt that the Russian government will or can support the refinancing requirements of Sovcomflot’s fleet.

According to the April 29 report from Moody’s analysts in Italy and France, Sovcomflot has been downgraded from Baa1 to Baa2. “The rating action,” says the report, “reflects Moody’s decision to lower the government support assumptions for the company in the framework of Moody’s rating methodology for Government Related Issuers. Although the rating agency continues to believe that SCF enjoys a high degree of support from the Russian government, the one-notch downgrade reflects the view that, in the current market conditions, such support provides a lower level of enhancement to the company’s own creditworthiness.”

Moody’s report cautions that the national credit ratings for Sovcomflot are not comparable to non-Russian companies, or to other international shipping companies. They differ “from global scale ratings, as assigned by Moody’s Investors Service, in that they are not globally comparable to the full universe of Moody’s rated entities, but only with other rated entities within the same country.”
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by John Helmer - Monday, May 4th, 2009
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By John Helmer in Moscow

The Russian government now leads the international naval powers’ tablewith 29 pirates under arrest, 14 more than the number being held by France, which has taken an estimated 71 Somalis in all; sent 11 to prison in Kenya; killed 4; and returned the rest to the Somali shore. The US has shot 3, and is currently holding one for trial in New York. On the Somali side, the pirates are estimated to be holding at least 16 vessels and about 270 seafarers.

Anatoly Serdyukov, the Russian Defence Minister, told a Moscowtelevision news programme on Wednesday afternmoon that “in the nearest time we will make a decision on what to do with pirates.” Russian naval interrogators are handling the pirates for the time being. Serdyukov added that the Russian Navy’s patrol of waters of the Gulf of Aden and Horn of Africa will continue.

The heavy destroyer, Admiral Panteleev, which is designed primarily for anti-submarine warfare, captured the Somali pirates,their vessel, and weapons on Tuesday evening, 15 miles off the Somali coast. How exactly this was done has not been disclosed. The Panteelev had deployed against the pirates after they attacked the Russian tanker, NS Commander, a 105,000-dwt vessel built for Novrossiysk Shipping Company in South Korea in 2006. The Commander was manned by a crew of 23 Russians.

The Russian Navy had despatched its anti-piracy patrol to the Horn of Africa last year, following the pirate capture of an Israeli-owned, Belize-registered vessel, the Faina, which was carrying Soviet-made tanks, air-defence weapons, and other arms intended for Kenya, and then possibly the southern Sudan. Most of the crew were Ukrainian; the master of the vessel and 2 crew memberswere Russian, and the master was reported to have died during the hostage-taking.

Russian tankercrews have also been taken for ransom off the west African coast.
(more…)

by John Helmer - Wednesday, April 29th, 2009
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By John Helmer in Moscow

In the global marketplace for potash — one of the vital nutrients for plant growth, food production, and fertilizer fortune — noone is sharper at spotting a bargain than China. That’s because Chinese farmers, and the state fertilizer distributors, comprise the world’s largest consumers and importers of potash. And more than that, when the Chinese fix their annual contract price for potash imports, they set the marker for counterparts in India, southeast Asia, and Brazil, the next biggest potash markets, to follow.

During the last few years, China’s demand has been supplied by several sources , including Canpotex of North America, representing Canadian and US mining companies such as Potash Corporation; the Belarusian Potash Corporation (BPC), representing potash mined in Belarus and Russia; and Israel Chemicals Ltd. (ICL). During the past four years of farm potash supply hunger, and commodity price boom, the China market grew steadily, and so did potash prices.

But that’s history now. In the last half of 2008, the crash of all commodity prices and the shortage of farm credit have led most producers of potash to curtail their production dramatically, and prevent the accumulation of unsold stocks. In the first quarter of 2009, the Russian producer Uralkali, for example, cut its production of potash from 1.3 million tonnes to 459,000 tonnes, a reduction of 63%. Potash Corporation, the world’s largest potash producer in Saskatchewan, has reported that in the same period it cut sales volumes to North American customers by 86%, and to the rest of the world by 78%.

But it’s spring in China; and after an unusually rainless winter, farmers preparing to plant must have more potash than usual to improve their yields out of the dry ground. This is also the time that China’s big-volume buyers usually meet with the major producers and suppliers to fix the volume of deliveries of imported potash for another six to twelve months. But if the China National Agricultural Means of Production Corporation (CNAMPGC), the China National Chemical Construction Company (CNCCC), and Sinopec — the three major Chinese import buyers – keep their pens in their pockets, and their contract orders off the table, what exactly is happening?
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by John Helmer - Wednesday, April 29th, 2009
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By John Helmer in Moscow

Russia’s maiden LNG terminal became operational in late 2008, after years of controversy over seismic and ground contamination onshore; threats to whale habitats at sea and tax evasion claims in Moscow. Gazprom, Russia’s dominant gas producer and monopoly exporter, now has shareholding control of the project operator, Sakhalin Energy, replacing Royal Dutch Shell. On March 29, the first LNG cargo was loaded aboard a tanker at Prigorodnoye port, on Aniva Bay, with 145,000 cubic metres of LNG bound for the Sodegaura terminal in Tokyo Bay, and for end-users, Tokyo Gas and Tokyo Electric. When the two planned production trains of the project reach full capacity in a year’s time, the Sakhalin LNG terminal will ship 9.6 million tonnes of LNG each year. Japan will take roughly two-thirds of the LNG from Sakhalin; South Korea will take most of the remainder.

As the world’s largest exporter of natural gas by pipeline, Gazprom has made no secret of its ambition to increase its share of the global LNG market, and improve the netback margins it may earn from exported gas sales. A recent Gazprom management review pointed out that LNG earns spot-price premiums compared to fixed-price long-term natural gas supply contracts that form the bulk of Gazprom’s sales revenues. But LNG projects are capital- and engineering-intensive, and take from 5 to 10 years to start. For these reasons, Gazprom concedes that it has run into capital-raising problems for the Shtokman field, in the Barents Sea; and these in turn are delaying a clutch of schemes for gasification and shipment of LNG from northwestern Russia.

Total of France, one of the Shtokman field developers with Gazprom, had been saying that it envisaged four LNG plants to be built as Shtokman’s output capacity ramps up; the first of these was intended for a start date of 2014.

According to Gazprom’s plan for entering the US and Canadian LNG markets, first announced in 2005, this first northwestern gasification plant and loading terminal was intended for Primorsk, near St. Petersburg, on the Gulf of Finland; its capacity was for 7.2 million tonnes per annum. A Gazprom analysis in 2005 claimed that “the most promising market in terms of LNG supplies is the USA where… LNG imports will grow tenfold (from 18 to 180 bcm/y) .” ConocoPhillips and Chevron agreed to study marketing plans for shipments to the US with Gazprom. The Russian company also negotiated potential supply deals with the Canadian LNG terminals being built in Quebec.
(more…)

by John Helmer - Tuesday, April 28th, 2009
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