By John Helmer in Moscow

Potash prices are soaring and the major beneficiary is LSE quoted Uralkali, Russia’s largest producer.

A handful of patience is worth more than a bushel of brains. That is what the Dutch used to say, while watching their tulips grow.

But for the world’s potash miners, meeting this month in Canada, a bushel of grain is another kettle of fish. Referring to the April 3 record of $6 fixed for a bushel of corn on the Chicago Board of Trade’s May contracts, a leading Canadian potash miner said this was a “beautiful chocolate sundae”. The increasing pressure on the corn price of North American ethanol demand, he added, is the “cherry”on the cake.

The mixed metaphors make the point. The global feast of foodstuffs is driving potash demand far faster than the miners can produce it. The result is that the benchmark commodity price being set by Uralkali and its trader, Belarusian Potash Corporation (BPC), the swing producer in the world, is driving up the share prices of the mining companies, which deliver the fertilizer to the market.
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by John Helmer - Tuesday, April 15th, 2008
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By John Helmer in Moscow

Russia’s big copper contest goes on the boil

Russia’s biggest copper contest is going to be a very private affair. Even if there are just two, possibly three contenders, all Russian household names, predicting who will win over the next 90 days of the contest may prove to be more frustrating than it looks.

Forecasting the award of rich state assets like these, over the transition period between the two Russian presidents, should be a reminder of the ancient Harpies. Zeus, the Greek god, was so jealous of Phineas, the man who knew too much, he sent him to an island, sat him down at a dinner-table, and loaded it with food, which the Harpies would fly in to steal, before Phineas had a chance to eat. The Harpies – three winged creatures, with feminine bodices and monster trunks – left their guano behind to make Phineas feel even worse about his appetite.

Udokan, located in the southeastern Siberian region of Chita, near the Chinese border, isn’t made of guano. The largest unmined deposit of copper in Russia, and one of the largest in the world, Russian studies indicated a year ago that its mineable ore reserves break down into sulfides 43%, mixed 40%, and oxides 17%. Official reserves, according to the Russian classification, amount to 1,310.8 million tonnes of ore, 19.7 million tonnes of copper (average grade 1.51%) and 11,900 tonnes of silver (average grade 9.6 g/t). International studies, which include BHP and Bateman, estimate Udokan reserves at 27 million tonnes of copper. At current copper prices, this is a feast worth more than $170 billion, plus another $7 billion for the silver.
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by John Helmer - Thursday, April 10th, 2008
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Norilsk Nickel shareholders ask where the cash for the new deal will come from

Oleg Deripaska and his United Company Rusal were trounced in their bid to elect three directors on the Norilsk Nickel board today. The vote saw Vladimir Potanin’s Interros holding, plus most of the free float of 40%, put a full-stop to Rusal’s six-month ambition to take control of Russia’s largest mining company, and become the largest mining and metals conglomerate in the country.

A brief announcement from Norilsk Nickel said that at voting early in the afternoon, an emergency general meeting of shareholders voted against early termination of the current board of directors, and against new elections. Prokhorov had called the meeting with the proposal to replace his men on the board, with those of Rusal, to whom he was planning to sell his Norilsk Nickel stake. Unofficial reports of the EGM voting indicate that Prokhorov voted his shares (34.5%) in favour of this proposal, but they were outvoted by the opposition (64%). Notwithstanding the way he voted, Prokhorov has changed his mind on the Rusal takeover, and he now argues that Rusal cannot meet its buyout and payment terms.
The outcome is the status quo ante, and so the 9-man board remains. Norilsk Nickel chief executive Denis Morozov sought to portray the result as a vote in favour of “professionalism and outstanding service of the acting Board of Directors… I would like to thank our minority shareholders for their support and active participation in voting in such crucial time for Norilsk.”
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by John Helmer - Tuesday, April 8th, 2008
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By John Helmer in Moscow

Russian miners’ union confident of gaining strike demands as Rusal postpones legal action.

Striking bauxite miners at the Rusal-owned Severuralsk mine, in central Russia, have called off their occupation of one of the mine shafts, on signs that Rusal is ready to make wage, welfare, and other labour contract concessions.

A spokesman for the striking miners, Oksana Sgibneva, told Mineweb that a court hearing, convened last Friday on Rusal’s move to call in police and marshals, was postponed until April 8. “Everything now depends,” she said, “on the condition of the case.”

Severuralsk (“North Ural Bauxite Mining Company”, Russian acronym SUBR ) operates five shafts, and all have been shut down since the day after miners at the Red Riding Hood mine refused to come to the surface, when their shift had ended on March 26. The miners then circulated a list of 11 demands. Rusal warned that the strike was illegal, and promised court action to put an end to the occupation.
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by John Helmer - Monday, April 7th, 2008
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By John Helmer in Moscow

Polyus shareholders give Potanin big win over rival plan to transfer assets.

In Harold Pinter’s play, The Birthday Party, a group of seedy characters in a rundown boarding house, at a miserable English seaside town, arrange a birthday celebration for one of their number. But he denies it’s his birthday, and in the drunken uproar, he tries to strangle one of the women, and rape another. On the morning after, two other characters end the play bv telling the birthday boy that they are going to take him away. In sing-song alternation, they say: “We’ll watch over you. Advise you. Give you proper care and treatment. Let you use the club bar. Keep a table reserved. Help you kneel on kneeling days. Give you a free pass. Take you for constitutionals. Give you hot tips.” Some of Pinter’s interpreters believe this to symbolize the impact of the all-powerful state on the hapless individual.

Russian billionaires tend not to be hapless. But they do crave proper care and treatment, not to mention free passes and hot tips.
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by John Helmer - Monday, April 7th, 2008
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By John Helmer in Moscow

Underground mine costs are pushing Alrosa towards diamond prospects in southwestern Africa

Back in the good old friendly days,one thing was always understood by the senior executives and mine engineers of De Beers and Alrosa, the world’s diamond mining leaders. Alrosa faced serious risks and incalculable costs in trying to mine underground, as its open-pit operations at Mirny and Udachny reached exhaustion.

From the De Beers point of view at the time, that meant that Alrosa’s annual production of rough diamonds was facing inevitable decline — and with that, its global market challenge to De Beers itself.

Alrosa’s annual report for 2006 showed what was happening. Udachny, supplying 35% of Alrosa’s total carat output, had suffered a 13% decline over the prior two years (measured in dollar value, because carat data are not released). Offsetting the decline at the Udachny open-pit operation, the new Nyurba mine grew 29% in value, while Mirny,where underground mining had started, gained 28%. Gain overall, however, was less than 8%, and rising dollar prices for diamonds in the period masked the trouble carat volumes were facing.

Sincedecline remained an unpleasant prospect, Alrosa’s planners and prospectors argued, it stood to reason that it might be cheaper for the company to try to find new diamond pipes in Russia — starting, naturally, in Alrosa’s backyard, Yakutia (Sakha), and in Arkhangelsk, on the western side of Russia.
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by John Helmer - Saturday, April 5th, 2008
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By John Helmer in Moscow

An unprecedented strike by Russian bauxite miners halts Rusal production in Urals

Richard the Lionheart (1157-99) was the greatest of English soldiers; the greatest artilleryman of all time. In laying siege to an enemy’s position, Richard applied the principle of concentrating force at the point of least resistance – bombarding a castle wall at its weakest point, at the same time as sappers dug under the foundation to bring the structure down.

The Independent Miners’ Union of Russia hasn’t read the playbook of Richard’s sieges. They are professional, however, when it comes to undermining a fortified position. Their down-tools strikes at coal pits and rail blockades in 1995 compelled then President Boris Yeltsin to make concessions to wage demands, which no other Russian workforce has been able to achieve since the end of Communist power. The independently unionized bauxite miners have now emerged to wage a week-old strike against Oleg Deripaska’s United Company Rusal in the Urals mining town of Severuralsk, in central Russia.

This is the first organized claim by miners against a Russian metals oligarch for a share in the wealth he has been accumulating in the current commodity boom. It is also the first break by an independent miners’ union to overwhelm resistance from the company-favoured union.
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by John Helmer - Thursday, April 3rd, 2008
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After a series of battles with Newmont, Indonesian officials and NGOs keep up the anti-mine fight, this time targeting the Toka Tindung gold project.

Author: John Helmer
Posted: Monday , 31 Mar 2008

LONDON –

The boomerang is an Australian aboriginal word for a throwing stick; but the weapon itself isn’t indigenous to Australia. Its killer edge and return trajectory have been exploited on most shores of the Indian Ocean from East Africa to India and Australia.

On Indonesian islands like Sulawesi, game and trouble abound, but the rain forest is too thick for the boomerang to be a practical weapon. Single and double-edged knives and spears are the preferred type of throwing stick. When it comes to catching the underwater Hairy Octopus, the boomerang is useless.

The Hairy Octopus is one of dozens of creatures, which live on the sea bottom of the Lembeh Strait, at the northeastern tip of the Indonesian province of North Sulawesi. The seafloor is unique for “muck divers” from around the world. Their name distinguishes them from coral-reef divers.
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by John Helmer - Monday, March 31st, 2008
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By John Helmer in Moscow

Russian multi-mineral fertilizer group calls for investor upgrade ahead of IPO.

Traced on the map, Verkhnekamskoye (“Upper Kama”) looks like a molar tooth, with an unusually deep root. On the ground, in the Perm region of central Russia, it is the second largest deposit of potash known in the world.

About 3.8 billion tonnes of potash ore are estimated to lie at relatively shallow depth of less than 400 metres. Verkhnekamskoye is thus not only the largest undeveloped source of potash in the world; but it is also potentially the cheapest to mine, and bring to market.

Digging into this deposit is an opportunity that third-ranked listed Russian producer Acron acquired at a state auction on March 12, bidding Rb16.8 billion ($704 million). Crossing the Verkhnekamskoye threshold marks Acron’s biggest market move ahead of it’s plans for international public placement later this year.

It also marks a milestone in Acron’s five-year strategy to become vertically integrated upstream for raw materials, and to establish the independence of its complex fertilizer business of rival phosphate and potash mining companies. In October 2006, Acron bought licences for two apatite-nepheline deposits in the Murmansk region of northwestern Russia. In five years’ time, and with an investment of about $300 million, Acron’s North-Western Phosphorus Company (NWPC) is expected to produce 1 million tonnes of phosphates; and another 1 million tonnes of nepheline (for processing into alumina).
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by John Helmer - Friday, March 28th, 2008
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By John Helmer in Moscow

Deripaska and Prokhorov holding companies trade claims over Norilsk Nickel deal contract.

Onexim, the Moscow holding unit for Mikhail Prokhorov, has broken its silence on the troubled sale of a 25% stake in Norilsk Nickel — in a manner of speaking.

Terms for the deal between Prokhorov and Oleg Deripaska, controlling shareholder of United Company Rusal, were first negotiated last August and September; the deal was announced in November. If fully consummated, it represents the largest corporate takeover in Russian history, and the most expensive hostile bid on the Russian record.

Mineweb reported yesterday on evidence of the apparent breakdown in the six-month old bid by Deripaska to take control of Norilsk Nickel from Vladimir Potanin and the Interros group, formerly Prokhorov’s partner:

http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=49850&sn=Detail
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by John Helmer - Thursday, March 27th, 2008
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