By John Helmer in Moscow

The Udokan copper contest has been won, but by whom?

In April, Mineweb reported that Russia’s biggest copper contest was going to be a very private affair.

Even if there are just two, possibly three contenders — we said at the time — predicting who will win over the next 90 days of the contest may prove to be more frustrating than it looks:
http://www.mineweb.com/mineweb/view/mineweb/en/page36?oid=50524&sn=Detail

This week, the decision to award Russia’s largest unmined copper deposit to a duo, Metalloinvest and Russian Technologies, which has never mined copper, confirmed, after the contest had stretched to six months, just how private — and how unclear the prospects for the project continue to be.

Metalloinvest is an unlisted private conglomerate, with two steel mills and two iron-ore mines, which has been having trouble getting a valuation and an underwriter to list its shares on the London Stock Exchange. It is owned in three stakes, whose magnitudes have never been publicly confirmed or verified, by Alisher Usmanov (with about 50%); Andrei Skoch (30%); and Vasily Anisimov (20%).
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by John Helmer - Wednesday, September 10th, 2008
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By John Helmer in Moscow

In antique legend, Icarus was the boy who, ignoring his father’s prudential warning, flew too close to the sun, melting the wax from his wings, and plummeting to his death as a consequence. In W.H. Auden’s modern reflection on the incident, noone witnessing the plunge cared much, while “the expensive delicate ship that must have seen/Something amazing, a boy falling out of the sky/ had somewhere to get to and sailed calmly on.”

The commodity market has been like that recently, sailing on, as high-flyers like Uralkali, the leading Russian potash stock (ticker URKA:LI, URKA:RU) dropped into the sea.

The current standing for Uralkali, at the end of trading on September 9, is a share price of $7, and market capitalization of $14.9 billion. Since June 20, ten weeks ago, Uralkali has fallen from $16 per share, with market cap of $34 billion; a decline of 56% and $19 billion in value.
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by John Helmer - Wednesday, September 10th, 2008
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By John Helmer in Moscow

BHPB’s Russian relationship hostage to Canberra uranium threat as Australian govt invokes Caucasus war to stir uranium sale opposition.

A threat last week by Australian politicians to revoke a year-old agreement for Australian uranium concentrate to be processed into fuel in Russia has been met with calm in Moscow, where sources noted that the uranium is not planned to start moving for another seven years, until 2015. Russian sources close to the uranium negotiations between the two countries also point out that the major loser, if the Australian government implements its threat, will be BHP Billiton, which had been one of the most active lobbyists for the uranium supply deal in the first place.

At a public hearing in Canberra by the joint parliamentary committee on treaties on September 1, Kelvin Thompson, a backbencher who chairs the committee, said he wants to delay ratification of the agreement on uranium supply, processing, and nuclear energy cooperation, which was signed by then President Vladimir Putin and former Prime Minister John Howard, on September 8.
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by John Helmer - Monday, September 8th, 2008
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By John Helmer in Moscow

If anyone needed convincing, the paper which British Petroleum (ticker BP:LN) signed yesterday with Mikhail Fridman and his Russian shareholding partners proves that defying the law of gravity is unlikely to succeed for long; even if the world’s weakest prime minister, Gordon Brown, and his foreign minister David Miliband, have tried to stake their short-term political careers on it; and even if the Financial Times has tried to make the inevitable fall appear to be a masterly exercise in BP negotiating skill.

To hang on to the 23% of its global oil reserves located in Russia, 25% of its current oil production, and a comparable amount of its market capitalization, BP has been trying to defy a losing position since Robert Dudley, BP’s chief operative in Moscow, was found out, having tried to negotiate secretly with Gazprom the sale and purchase of the 50% stake in TNK-BP.

TNK-BP (TNBP:RU) is the 50/50 joint venture which BP shares with the Russian trio of Fridman,Len Blavatnik, and Victor Vekselberg; reflecting the names of their respective holdings, Alfa, Access and Renova, they are collectively known as AAR.
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by John Helmer - Friday, September 5th, 2008
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By John Helmer in Moscow

Vladimir Kirillov, the new chief of Russia’s mine licence inspectorate, Rosprirodnadzor, has tried to fire Oleg Mitvol, his independent deputy, this week — after failing to oust Mitvol for the past seven months. In the annals of the federal Ministry of Natural Resources, Mitvol’s resistance is unique; as is the apparent reluctance of the minister, Yury Trutnev, a former provincial governor backed by the LUKoil oil company, to intervene in the contest of wills, and in the conflict below the surface of Russia’s use-or-lose resource licensing policy.

On June 18, the state newsagency Itar-Tass reported that Mitvol had been “stripped of his water, forest and ecological supervision powers, which have constituted most of his competences”. This was the first sign of an apparent official decision, following informal efforts by Kirillov, commencing in February, to press Mitvol to resign. An anonymous source was cited by Itar-Tass for its information. It was also reported that “according to the source, the Rosprirodnadzor chief, Vladimir Kirillov, has no intention of submitting a motion to Natural Resources Minister Yuri Trutnev for re-appointing Mitvol as his deputy.” Itar-Tass confirmed Mitvol as saying: “As far as I know, in a future staff list, yet to be authorized, the position of a fourth deputy, that is, of yours truly, is absent.”
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by John Helmer - Thursday, September 4th, 2008
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By John Helmer in Moscow

Anti-Russian allies fail to cook on hot air.

Russia demonstrated on Tuesday that it retains the backing of the major Central Asian gas producers and exporters to Europe – despite public calls from UK Prime Minister Gordon Brown and American figures that alternative, non-Russian supplies of Europe’s gas should be developed swiftly.

In a ceremony in Tashkent on Tuesday, Prime Minister Vladimir Putin and Uzbek President, Islam Karimov, agreed that Gazprom, Russia’s largest enterprise, will buy gas from Uzbekistan at European prices, and build a new gas pipeline from Central Asia, transiting Russia, in order to boost gas purchases from Uzbekistan and Turkmenistan. For lack of available gas-feed, the Tashkent deal dooms the Nabucco alternative pipeline, proposed by the NATO alliance to cross Georgian territory, and under the Black Sea to Austria.

In March, Gazprom had agreed with Kazakhstan, Uzbekistan and Turkmenistan over gas purchases starting in 2009 at European prices that have already reached $400 per thousand cubic metres (tcm); this is 50% to 100% higher than the current purchase prices of Central Asian gas.
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by John Helmer - Wednesday, September 3rd, 2008
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By John Helmer in Moscow

The IMR takeover of Shaft Sinkers is the second major asset purchase in SA for a trio of Kazakh businessmen.

THE decline in mining stocks and metal prices is unlikely to hurt SA’s specialist in shaft and tunnel excavation for mines, Shaft Sinkers MD Rob Schroder says. Johannesburg-based Shaft Sinkers has won a $270m contract, its first in Russia, to dig one of two shafts at a new potash mine being developed south of Moscow by the Eurochem group.

“The market has been reflecting a rapid increase in demand over the last 12 months,” Schroder told Business Day in a recent interview.

“Not only due to the commodity boom, but to resources in general. Hydro-electrical schemes with their shaft requirements, as well as long-term nuclear storage facilities for waste, are also coming to the fore.”
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by John Helmer - Monday, September 1st, 2008
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By John Helmer in Moscow

One word explains why the United States, NATO and the European Union have obliged themselves to sit on their hands, while Russia’s defends its citizens, and national interest in the Caucasus, and liberates Georgians from the folly of their unpopular president, Mikheil Saakashvili — Kosovo.

Eight hundred years of Caucasian history explain why Saakashvili has brought such destruction and ignominy on his countrymen over this past week. Queen Tamar, the greatest of the Georgian sovereigns (1184-1213), is responsible for the habit Georgian rulers have displayed for the past millennium of treating neighbouring Armenia, Azerbaijan, Ossetia, and the Black Sea coast of Turkey as protectorates. But as Tamar also taught her countrymen, Georgian ambition always runs out of gas when the neighbours prove to be just as ambitious, richer, or tougher.

The number 300 explains what tougher means — that’s the count of Russian artillery pieces that have been deployed to South Ossetia alone, once Saakashvili despatched his US and Israel-trained troops into action at Tskhinvali, capital of South Ossetia. That push, according to Russian military thinking, was not intended to hold Tskhinvali for Georgia, but to destroy it, and withdraw swiftly back into Georgia — ending the South Ossetian secession by liquidating its people.
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by John Helmer - Sunday, August 10th, 2008
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By John Helmer in Moscow

Oleg Deripaska, controlling shareholder of United Company Rusal, the world’s largest producer of primary aluminium, has reason to be an unhappy man. On Thursday evening, he called in a group of sympathetic reporters to explain how unhappy.

“You can sit a cat and dog next to each other,”he said, “but it’s unlikely you will get a family.” He is referring to Vladimir Potanin, the controlling shareholder of Norilsk Nickel, which Deripaska’s Rusal says it has been trying to take over for several months, only to be defeated by shareholder vote and the board of directors. According to the wire service text, Derripaska went on: “We have come to understand that Potanin has taken control of the company. If we find a basis to our claims our rights have been violated, we don’t rule out legal action.” Rejecting Potanin’s alliance with Metalloinvest, an iron-ore and steel group, controlled by Alisher Usmanov, Deripaska said: “A triple merger will never happen. It’s of no interest to us. We don’t see a future for ourselves in the steel business.”

In parallel, Rusal issued a public statement calling on the Russian regulatory authorities to intervene, and charge Potanin with concealing the extent of his shareholding in Norilsk Nickel. As evidence, Rusal repeated detail from an offer issued publicly early this week by Deripaska’s ally, and 14% stakeholder in Rusal, Mikhail Prokhorov. According to Rusal: “Vladimir Potanin’s Interros plans to buy a 16.66% stake in Norilsk Nickel from ONEXIM Group [Prokhorov]. When this deal is completed, Vladimir Potanin’s Interros could get control over a stake exceeding 30% and, according to Russian Federation legislation, will be obliged to make an offer and purchase the shares of the other shareholders of Norilsk Nickel.
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by John Helmer - Friday, August 8th, 2008
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By John Helmer in Moscow

The maxim that one should see, hear, and speak no evil appears to have started out in ancient China. Confucius apparently added the obvious fourth – do no evil. It was natural that the maxim should cross the water to Japan, but far from clear why three monkeys with their hands covering the affected body parts (the fourth has his hand over his crotch) should have appeared to bear the message so famously. It’s certain, however, that what everyone recognizes today in the wise monkeys was first spotted over the door of a 17th century shrine in Nikko.

The Russian combination of Mikhail Prokhorov, Oleg Deripaska, Vladimir Potanin, with Victor Vekselberg – all clutching parts of United Company Rusal and Norilsk Nickel — has been challenged recently to substantiate the wisdom of their combination. When Prokhorov issued an announcement this week of his intention to sell Potanin Norilsk Nickel shares he appears not to own, speculation gripped the market that one of the wise monkeys had taken leave of his senses altogether.

After reading this announcement on Tuesday, the market cut the value of Norilsk Nickel’s share (GMKN:RU) by 4.5% to price it at $206.50. Prokhorov’s offer proposed that Potanin should pay $315 – a 53% premium. The market also cut the value of Polyus Gold (PLZL:RU) – which Potanin and Prokhorov share – by 2.3% on the day to finish at $44.70. By the middle of Wednesday, the share prices of both companies were still falling on the Moscow stock exchange – down another 2.7% for Norilsk Nickel; and down 10% for Polyus.
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by John Helmer - Wednesday, August 6th, 2008
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