By John Helmer in Moscow

Russia tries cooling steel prices.

The Russian government has postponed a decision on whether to impose export duties of up to 20% on steel products, despite a flurry of press and brokerage reports claiming the government’s senior industry minister has already promised not to levy new taxes.

A meeting between steelmakers and Deputy Prime Minister Igor Sechin on Saturday last, June 21, did not reach a policy conclusion, both government and industry sources report.

The duty scale proposed by the government may parallel the regime recently adopted by the Indian government — 5% for zinc-galvanized products; 10% for cold-rolled and hot-rolled products; and 15% for semi-fabricated slabs.
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by John Helmer - Wednesday, June 25th, 2008
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By John Helmer in Moscow

Russians out-play Saudis as Gazprom calls for OPEC replacement.

The view from British Petroleum’s front-window on to St. James Square in London is an irony BP Chairman Peter Sutherland and Chief Executive Tony Hayward have not noticed; at least not yet.

In the middle of the gated garden, there is a fine statue of William of Orange, the Dutch champion of Protestantism, who became King William III, and, by reputation, rescued the English from a Roman Catholic dynasty, and all manner of French and popish plots.

William is mounted on a fine horse. The plaque fails to mention that William met his death when he fell from the horse; broke his collar-bone; contracted pneumonia; and promptly expired. Because the horse tossed the king after stumbling in a mole’s burrow, William’s enemies used to toast “the little gentleman in the black velvet waistcoat”.
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by John Helmer - Wednesday, June 25th, 2008
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By John Helmer in Moscow

Reported Russian billions for Zambian copper are flash in the pan.

The prospect of several billion dollars in Russian mining investment in southern Africa cannot fail to be alluring.

But an announcement by a single newspaper in Moscow last week that three major Russian mining companies “hope to announce a major investment worth more than $2 billion in Zambia next month” triggered the reaction from miners and investment advisors alike that it’s a mirage. According to one well-known SA mining advisor, “it sounds like an unlikely story to me. Russians never actually invest their money into Africa, and especially not into Zambia.”

He claims that a major Euro-Russian ferrochrome acquisition from Samancor in SA was financed internally by SA banks and cashflow from the project itself.
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by John Helmer - Tuesday, June 24th, 2008
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By John Helmer in Moscow

Rusal seeks four seats on the Norilsk Nickel board.

Capt. W.E. Johns, the favourite novelist of English schoolboys, wrote 104 books about Biggles – Flight Captain James Bigglesworth, a World War I air ace. The boys’ demand for his adventures was so great, Johns had to press him back into service against the Luftwaffe in World War II.

Johns and his Biggles series are publicly celebrated for many things, but not the most important. Through hundreds of dogfights in the air, and adventures on the ground, Johns illustrated a maxim he didn’t coin – wickedness has character, cleverness none. The German Erich von Stalhein is vicious, since he’s always after Biggles’ blood. But since he also always manages to fail, his vices never materialize beyond the leer on his lips. He doesn’t even get worse when he becomes a Nazi.

Biggles, on the other hand, is clever to the point of genius, but internally blank, externally unlovable. Not even an affair with a beautiful French woman, whom Biggles meets after landing lost (a true story about Capt Johns, it turns out), generates a scintilla of sympathy for the mechanics of successful cause and effect.
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by John Helmer - Wednesday, June 18th, 2008
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By John Helmer in Moscow

MOSCOW – The spear points of the fence that guards the Royal Courts of Justice, off Fleet Street in London, haven’t been used to display the severed heads of criminals for half a millennium. They remain sharp, and deterring, nonetheless. Inside, and upstairs to the left, the swinging oak doors of Courtroom 4 are also deterring, if you are the Tajikistan Aluminum Plant, the biggest-spending plaintiff in recent English legal history.

It is in this courtroom that the fates of the smelter owners, the rulers of far-off Tajikistan, are being decided. On June 10, in a hearing before High Court Justice Tomlinson, English lawyers argued over whether Hassan Saduloev (also spelled Sadullaev in Russian, Asadullozoda in Tajik) the second man in Tajikistan, brother-in-law to President Emomali Rahmon, and a key witness in the London court case, is alive or dead. Reports that he had been shot were published last month.

Saduloev is required to testify in court, and if he is dead he cannot. If he is alive, he must. If he is in hiding, he may be cited for contempt of court, and the case may be dismissed by the judge.
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by John Helmer - Wednesday, June 18th, 2008
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By John Helmer in Moscow

Russian specialty steelmaker spins off coal-mining and ferroalloy units to add value, deter asset attack.

A series of new executive appointments, announced this week by Mechel, suggests that the group’s controlling shareholder, Igor Zyuzin, is preparing for the possible, much rumoured sale of the Mechel steel division to the state-owned RusSpetsStal (“Russian Special Steel”, RSS) group.

What isn’t clear yet is whether Zyuzin’s new structure is meant to repel, or absorb, an attack. This structure, comprising separate steel, mining, ferroalloy, and other divisions, is interpreted by some industry sources as a defense against a takeover. Others view it as making Mechel’s steel assets cheaper for a state steelmaking company to acquire, and easier for Zyuzin to let go.

There is no explanation from the company as to why the group’s coal and iron-ore mines are located in the mining spinoff, while chromium and nickel mines are in the ferroalloy unit; nor why transportation and electricity supply have been prized apart from steelmaking, the original function of Mechel, Russia’s fifth ranked steelmaker.
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by John Helmer - Tuesday, June 17th, 2008
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By John Helmer in Moscow

Russian largest silver and third largest gold miner, Polymetal, goes back to Nesis family.

Suleiman Kerimov finally did what he was always expected to do with Polymetal, Russia’s principal silver miner — he has sold out.

The move was confirmed in a Monday morning press release from one of the buyers, the ICT group belonging to former Polymetal owner Alexander Nesis. He has acquired a 24% shareholding. The sale to a consortium, which also includes Moscow investor Alexander Mamut (19%), and the PPF group of Prague (25%), also indicates that, in Kerimov’s judgement, Russian gold and silver miner valuations have reached their peak for the foreseeable future.

The ICT announcement says no price or valuation will be disclosed in their transaction. ICT says only that it is buying a 24% stake in Polymetal from Kerimov’s aggregate holding of 69%. The ICT press release also quotes Nikolai Dobrinov, a partner of Nesis, as hinting that Kerimov may have been obliged to accept less than he once thought his stake was worth.
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by John Helmer - Monday, June 16th, 2008
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By John Helmer in Moscow

China is a power behind global commodity flows as well as prices. But Beijing has been slow to understand that it is the horse that pulls the cart; the whip hand belongs to the coachman.

Chinese negotiators have already made one colossal mistake in pricing their supply of liquefied natural gas (LNG). They are making a second in trying to draw out of Russia a discount for natural gas. For China to insist on tying Gazprom down to the extraction cost of Siberian gas – at a fraction of the price Gazprom sells its gas to Western Europe – is producing an impasse in current negotiations and slowing down Russia’s readiness to invest in the pipeline systems, on which Chinese calculations depend.

President Dmitry Medvedev visited China last month. Ahead of the visit, he was reported as cautioning that Russian plans to export natural gas to China were under way, but that “technological details are still being discussed” and “negotiations were ongoing to finalize the price formula of Russian gas supplies to Chinese consumers”.
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by John Helmer - Friday, June 13th, 2008
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By John Helmer in Moscow

Co-owner of Polyus Gold Mikhail Prokhorov and chief executive Evgeny Ivanov are planning a roadshow this week to answer questions from minority shareholders. The presentations have been scheduled two weeks before the annual general shareholders meeting of the company, Russia’s largest and most valuable goldminer, due on June 26.

Prokhorov kicked off with a statement that flies in the face of everything that has emerged to date from his year-long conflict with co-controlling shareholder, Vladimir Potanin. Speaking on the sidelines of a St. Petersburg economic forum, Prokhorov said: “I didn’t break any agreements, the situation simply changed…And we are still friends.”

Continuing gyrations in the stock price of Polyus Gold, along with new evidence that a share option agreement of last July was designed to reward loyalists to Prokhorov, and disadvantage Potanin’s supporters, suggest that the negotiation between Prokhorov and Potanin is anything but friendly, while the appearance of their conflict continues to threaten the future of the company’s value, and add fuel for investigation by the London regulatory agency, the Financial Services Authority (FSA).
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by John Helmer - Monday, June 9th, 2008
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By John Helmer in Moscow

After rejecting a share-buy by a Potanin ally, Prokhorov makes a counter-bid to start new share price spiral.

The end of Sherlock Holmes came when he and his greatest adversary, Professor Moriarty, wrestle at the cliff’s edge above the Reichenbach Falls, in the Swiss Alps. Locked in combat, they take each other to their deaths down the 250-metre drop – although Holmes was subsequently resurrected. The Alps, on the French side, have also been bad luck for Mikhail Prokhorov.

In his latest move, he has taken his fight over Polyus Gold, the leading Russian gold miner, with ex-partner, Vladimir Potanin, to the precipice. There, with one more stumble, each risks having acquired more than 30% of the shares of the company; and with that, the costly obligation to buy out the minority shareholders.

After share trading last Friday evening, Polyus Gold confirmed that it had received an offer from Prokhorov’s holding company, Onexim, to “acquire the 12,476,401 ordinary shares in Company held by the Company’s wholly-owned subsidiary, Jenington International Inc. (representing approximately 6.54% of the total issued and outstanding ordinary shares of the Company) and confirms receipt of such offer. The offer is stated to expire at 6 p.m. (Moscow time) on 6 June 2008. There can be no assurance as to whether the offer will be accepted, or on what terms.”
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by John Helmer - Monday, June 2nd, 2008
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