By John Helmer in Moscow

Icebreaking is the key to the expansion of energy and mineral shipments in the Arctic.

It is a little early for Russia to begin producing bananas and other soft, sun-dependent commodities. But depending on which global warming forecast you read, there may come a time when it will be cost-efficient to do so, earning the increment in export value of commodities, whose price is moving faster than the oil and gas-fired energy and fertilizers required for them to grow.

And since Russian energy leads the world in volume and value of export trade and reserves, it stands to reason that one Russian strategy for diversification downstream into energy-intensive products, and up the value chain, would be a form of agro-industry that is indifferent to Arctic cold.

Gazprom strategists are already contemplating one set of targets for this strategy. These are to acquire control of major nitrogenous and diversified fertilizers, and the intermediate ammonia producers providing feedstock for urea and nitrate fertilizer manufacture. An immediate target is the EuroChem group of Moscow, currently owned by Andrei Melnichenko, a metals and banking oligarch, who has offered to sell his 96% stake in the company; but who, according to Gazprom, is asking too high a price.
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by John Helmer - Monday, March 17th, 2008
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By John Helmer in Moscow

Norilsk/BHP Billiton “alliance for development of huge Russian nickel deposit raises some questions.

Norilsk Nickel, Russia’s leading mining company, has announced that it has won a regional auction for exploration and mining rights to Russia’s largest undeveloped nickel prospect. The Iisko-Tagulsk deposit, located in the Irkutsk region of southeastern Siberia, was won at an open-auction tender for $30.7million. Exploration and other preliminary prospecting and feasibility work is estimated to cost another Rb2.5 billion ($100 million).

While this task and the amount are clearly within Norilsk Nickel’s financial and technical capacity to manage, the company announcement, issued Thursday, said it has invited BHP Billiton to join in the first phase of the project. The language used was: “the geological [work] will be done in alliance with BHP Billiton.”

This carefully skirts legislative amendments now proceeding through the State Duma, backed by Norilsk Nickel, which would exclude foreign mining companies from the Russian nickel sector entirely. As Mineweb reported early in the week, the list of strategic minerals on the foreign exclusion list are diamonds, uranium, quartz, cobalt, nickel, beryllium, lithium, the platinum group metals (PGM), tantalum, and niobium.

Alrosa, the state owned Russian diamond miner now diversifying into gold and other minerals, was the second, and losing bidder in the Irkutsk auction.
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by John Helmer - Saturday, March 15th, 2008
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By John Helmer in Moscow

Russia’s new parliament reopens debate on proposed limits on foreign mining.

A new round of debate on proposals to regulate access by foreign mining companies to the Russian resource sector has begun, this time with a set of legislative amendments that were submitted to the newly elected State Duma last week. But there is a catch.

This time, the origin of the amendments leaked to the press is not the federal Ministry of Natural Resources, the agency in charge of drafting the amending measures, and implementing the current mining law. The leaks have also been delivered to the press from a committee of the Duma which has played no role in mining regulation before. These are signs of an intense lobbying effort, most likely to undermine the conditions which have been disclosed, and force fresh changes. According to Russian mining sources, the power behind this lobbying is the oil and gas sector. A high-ranking mining administrator told Mineweb that what is happening now is “a mess”.

The threshold reserve levels, at which foreign mining companies are excluded from operating or equity control, appear to remain the same as Mineweb reported last October:

http://www.mineweb.com/mineweb/view/mineweb/en/page675?oid=38965&sn=Detail

These have been fixed for four resources — oil, gas, gold, and copper.
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by John Helmer - Thursday, March 13th, 2008
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By John Helmer in Moscow

Nesis considers chrome sell-out in the most lucrative, short mining career on record

A press leak in Moscow on Monday, followed by a confirming announcement from Mechel, the Russian stainless steel producer, have indicated that Igor Zyuzin, Mechel’s controlling shareholder, is trying to buy out chrome producer Oriel Resources, owned by Alexander Nesis and the ICT group of St. Petersburg.

Mechel’s corporate office was initially reluctant to confirm the reported talks, and the company’s press release said only that Mechel “is currently contemplating the acquisition of Oriel. This process is at an early stage and there can be no certainty that any offer will ultimately be forthcoming.”

The target of takeover is an integrated ferrochrome producer based in the Leningrad region, the Tikhvin ferroalloy plant, with its own raw supply from two mines in Kazakhstan — a chrome mine called Voskhod, and a nickel mine called Shevchenko. Nesis’s ICT group have been involved in the chrome project for several years, when Nesis owned Polymetal, a St.Petersburg based silver miner. In 2006 Nesis sold Polymetal for $930 million in cash to Suleiman Kerimov, and began investing some of the proceeds in the chrome project.
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by John Helmer - Tuesday, March 4th, 2008
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By John Helmer in Moscow

Potanin’s cash and shares deal puts Deripaska in the hole.

Just two things are remembered about King Canute, a Viking who invaded England in 1013. One is that he had a large hooked nose. The other is that he tried to command the sea tide not to roll into shore. The second has made Canute’s name synonymous with the folly of being on the losing side, when you don’t have to be.

In the fierce war for Norilsk Nickel, the most expensive fight over a Russian mining asset ever fought, it is becoming as clear as arithmetic, and the sea tide, what the outcome will be. A recent report in a Russian newspaper, claiming that a member of the Norilsk Nickel board, Ralph Tavakolian Morgan, believes the company cannot afford to buy back a bloc of its shares is therefore interpreted as either a misquote, or Morgan’s miscalculation.

The buy-back scheme is part of chief shareholder Vladimir Potanin’s defence against a hostile takeover by Rusal and its owner, Oleg Deripaska. He and Potanin’s disgruntled former partner Mikhail Prokhorov began their assault on the company, after Prokhorov sold 25% plus 1 share in Norilsk Nickel to Deripaska in December. Mineweb has reported on the reaction to that deal, and Potanin’s new arrangement with the Kremlin, after Potanin met President Vladimir Putin in Sochi on February 5:

http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=47758&sn=Detail
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by John Helmer - Monday, March 3rd, 2008
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By John Helmer in Moscow

Drilling into SA diplomatic communiqués comes up empty for manganese and platinum

An unusual meeting of South African (SA) and Russian government ministers two weeks ago in Moscow has triggered recriminations in Pretoria and Moscow. These follow the refusal of SA officials to clarify an upbeat description of co-operation in mining projects, which Russian sources deny.

Nkosazana Dlamini-Zuma, SA’s Foreign Minister, who headed the delegation to Moscow on February 12-13, claimed there has been commercial progress in the Russian-SA relationship. The evidence for that, according to an official communiqué issued in Pretoria on February 13, is the activity of a single, well-known Russian oligarch, Victor Vekselberg, who owns the Renova group. Dlamini-Zuma said in the communiqué she personally “welcomed progress with regard to Joint Venture Manganese Project by the Renova Group and South African company Pitsa ya Setshaba and wished the company well in the second phase of the project. ”

Renova refuses to provide details of its investment and exploration spending in South Africa, since the award of licences to Heuningdraii and Mooidraai in the Kalahari Manganese Field (KMF) in 2005.
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by John Helmer - Sunday, March 2nd, 2008
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By John Helmer in Moscow

RUSSIAN government officials have revealed that relations with SA are in crisis, after cancellation by Pretoria of the two largest commercial agreements ever negotiated between the countries.

The crisis directly affects SA government plans for nuclear energy to increase Eskom’s power supply, and for SA military and civilian satellite communications.

The breakdown in relations triggered an urgent mission to Moscow two weeks ago by Foreign Affairs Minister Nkosazana Dlamini-Zuma. But her failure to repair the damage has led to recriminations in Pretoria, and an order to South African ambassador Bheki Langa and other South African officials to cover up what has happened.

A multibillion-rand contract to build nuclear reactors for Eskom — one of the largest government contracts contemplated by SA — was to have been open for bidding by the Russian reactor builder, Atomstroyexport (ASE), according to agreements reached during President Vladimir Putin’s visit to SA in 2006, and reiterated by officials of the two governments in the middle of last year .

Eskom said the licensing process for the five nuclear power stations, which would produce up to 20000MW of electricity, would start this year.
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by John Helmer - Saturday, March 1st, 2008
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By John Helmer in Moscow

Two steel oligarchs are trying riding the Russian wave of boom and bust.

There’s nothing like a little oil (and gas) to grease the wheels of demand. But announcements this week from two of Russia’s largest steelmakers — 3rd ranked Severstal, owned by Alexei Mordashov, and 5th ranked Mechel, owned by Igor Zyuzin — suggest that the boom in Russian demand for domestic construction is also lifting their confidence of surviving the redistribution of assets expected after Dmitry Medvedev wins the presidential election on Sunday.

Inadvertently revealing how nervous he is, Mordashov commissioned his London PR agent Tulchan to get out the message that, despite two serious blast furnace explosions this year, the company’s production is on the up, along with capital investment. Mordashov has also made a a show of support for Medvedev, telling a London newspaper last weekend: “I believe I should be a good CEO – and being a good CEO of a big industrial company I have to develop a relationship with the Government to help development of the company. It is in line with the normal rules of conduct. My personal relationship with the Kremlin is normal, it resembles those in France, or the US.”

Severstal recently admitted to industry analysts that all is not so normal, at least on the plant floor. its production level at the Rouge plant in Dearborn, Michigan — the largest of the units in Severstal North America — will be cut by 35% for up to two years, on account of the accident and explosion at blast furnace B. The accident occured on January 5 at the mill; no casualties were reported. The blast furnace had been relined in 1997.
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by John Helmer - Thursday, February 28th, 2008
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By John Helmer in Moscow

MOSCOW – Eric Ambler told the tale of a clapped-out reporter whose near-bankrupt newsletter suddenly starts to make a fortune on its classified advertisements. The journalist couldn’t understand why, but didn’t want to look his gift horse too closely in the mouth.

It turned out that someone was publishing coded intelligence on secret Chinese nuclear missile silos. The Chinese then tried to buy the newsletter at a premium to stop the disclosures.

Mysteries such as these, not all of them fictional, are remembered when phantoms emerge to sign apparently real mining concession agreements with real government officials. Take Pavel Krivoshei, whose name, possibly of Ukrainian ethnicity, suggests in Russian, Krivaya sheya, or “Crooked neck”. Krivoshei was reported by the press in Myanmar on February 16 as having signed on behalf of a Singapore-registered company, Chandwin International, an agreement to prospect for gold and other miners along the River Uru.

Krivoshei signed with U Win Te (also referred to as Win Ti), of the Myanmar Ministry of Mining’s Geological Survey and Mineral Exploration Department. Attending the ceremony was Brigadier General Ohn Myint, the mining minister, and Russian ambassador Mikhail Mgeladze. The news appeared first in New Light of Myanmar, and was then relayed by Reuters and Russian and Chinese wire services. These muddled the corporate details, and some reported that Victorious Glory International, the foreign concessionaire at the signing ceremony, is a Russian company. In Russian records there is no trace.
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by John Helmer - Wednesday, February 27th, 2008
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By John Helmer in Moscow

Never mind Walt Disney or Johnny Depp — the last certified Caribbean pirate was Edward Teach, aka Blackbeard. He died on November 21, 1718. His professional practice came to an end with five bullet holes, and 21 stab-wounds. His head was then cut off, and stuck on the bowsprit of a British naval vessel, HMS Ranger, before being taken ashore for the bounty claim. Daniel Defoe was the first to write up the tale in 1724.

The British are engaged once more; and this time the charge is piracy of an altogether modern sort. The locale is still the Caribbean. This time, the Financial Services Authority (FSA), the UK markets regulator, is to investigate whether Polyus Gold – listed on the main board of the London Stock Exchange since 2006 (PLZL:LI) — is the target of an asset-stripping scheme perpetrated by a British Virgin Islands-registered company called Polyus Exploration Ltd. This looks to be the same as the company called Polyus Geologorazvedka, established last May and registered in Moscow. The English appears to be a translation of the Russian in the company title. But they are far from the same company – and that’s the rub, or shall we say in pirate lingo, rub-out.

Polyus Exploration Ltd. was registered just two months ago at Tortola, BVI, on December 18, 2007. It was created by Mikhail Prokhorov and Yevgeny Ivanov; the latter was acting on Prokhorov’s orders as chief executive of ZAO Polyus Zoloto (Closed Joint Stock Company Polyus Gold). This is a wholly owned subsidiary of OAO Polyus Zoloto (Open Joint Stock Company Polyus Gold), which is the publicly listed vehicle.
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by John Helmer - Wednesday, February 27th, 2008
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