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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By John Helmer in Moscow

Leading Tajikistan figure ordered to testify by London judge or “evidence will fall away”.

A London High Court judge warned this week that unless one of the leading figures in Tajikistan appears in London in October for cross-examination on oath, the key evidence in the high-profile Tajikistan aluminium case “will fall away”.

Justice Tomlinson was referring to Hassan Saduloev (the High Court spelling; also known as Asadulozoda in Tajiki). He is brother in law of the Tajik President, Emomali Rahmonov (Rahmon); chairman of Orienbank; and the man reputed to be the principal arranger of the billion-dollar annual operations of Tajikistan Aluminium Plant (Talco), the country’s principal consumer of electricity and source of export earnings.

After weeks of uncertainty, lurid press speculation, and missed deadlines, Saduloev, according to his UK lawyer in court, signed a required witness statement on July 25. However, the authenticity of this document, and of Saduloev’s signature, were challenged by lawyers for Avaz Nazarov and the Ansol group of companies. The latter have been sued in the High Court by Talco, and they are counter-suing. Both sides allege fraud and massive diversion of hundreds of millions of dollars in the smelter’s earnings over the past decade.
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by John Helmer - Saturday, August 2nd, 2008
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By John Helmer in Moscow

Russian state uranium miner now no.2 in control of world uranium resources.

The structure for managing and -run capitalizing the mining of uranium in Russia, and Russian uranium mining ventures abroad, is now clear. And also large, as Russia has recently moved into the number-3 spot in the world ranking of uranium reserves — number-2 if Russia’s equity stake in Kazakhstan reserves is counted.

After a confusing spell, in which it was preceded for a year by the Uranium Mining Company (UMC), Atomredmetzoloto (ARMZ) has been authorized to take equity and operational control of Russia’s three operating uranium mines; five planned new mines; and joint ventures in Kazakhstan, Namibia, and Canada.

Atomredmetzoloto — literally, “atomic, rare metal and gold” — is a venerable name from the Soviet era of the nuclear industry administration, when it was an enterprise of the atomic energy ministry. In those days, it not only supervised uranium mining, but also gold at the well-known Muruntau deposit in Uzbekistan.
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by John Helmer - Wednesday, July 30th, 2008
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By John Helmer in Moscow

Oleg Deripaska’s bid to take control of Norilsk Nickel, Russia’s premier mining company, came to an end on Monday at a meetingin Moscow. The meeting, to which Norilsk Nickel controlling shareholder Vladimir Potanin was also summoned, concluded with an unambiguous veto on Deripaska’s ambition to buy a controlling stake in Norilsk Nickel, and make a reverse listing of Rusal through the takeover.

At Deripaska’s Basic Element holding, Deripaska’s spokesman Sergei Bobichenko wasasked if Deripaska had met Deputy Prime Minister Igor Sechin. He responded that he can neither confirm nor deny the information. Sources close to Potanin also declined to confirm or deny the meeting and its outcome. Sechin’s spokesman refused to say, and referred the question to the prime minister’s press service. An official there said he did not know, and requested the question to be submitted in writing.

Sechin is formally in charge of Russian policy for industry and oil. He is acknowledged to be the most important policymaker under Putin on the award of the country’s natural resource concessions.
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by John Helmer - Tuesday, July 29th, 2008
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