MOSCOW –

A man without enough zinc is likely to suffer from a loss of taste, smell, hair, and sexual arousal. It’s the zinc in oysters that is one reason, at least, for their popular association with libido.

For miners of the bluish-white metal, however, global insufficiency is proving to be very good for business. Although it is one of the most abundant of the minerals buried in the earth’s crust, and one of the most common in metal applications, the scarcity of zinc can be blamed on the Chinese – and not because they think its libidinal value is as good as rhinoceros horn, or tiger’s tooth. In the year 2000, China’s share of global zinc consumption was 15%. Five years later, it had risen to 27%, dwarfing everyone else. Annual growth in Chinese demand was 20% between 2003 and 2005, 13% in 2006, and 9% in 2007.

Total global consumption of zinc (refined) this year is estimated to be 12 million tonnes. Mine and smelter supply looks like reaching 11.86 million tonnes, roughly matching demand. But the three past years of deficit of supply have caused a halving of estimated zinc stocks, including London Metal Exchange (LME) measured stocks.
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by John Helmer - Thursday, July 19th, 2007
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MOSCOW –

Charles Ponzi, an Italian immigrant to Boston, gave his name to a scheme in which he promised a 50% return to investors within 45 days of their giving him money; or double their money within 90 days. About 40,000 people invested $15 million in 1920 dollars; today that would sum to $150 million.

In essence, the Ponzi scheme pays initial investors their return out of funds subscribed by those who follow, until the market gets wind; there are no new subscriptions to pay claims; and the scheme collapses. From Ponzi, only a third got their cash back.

Junior gold miners can promise something similar; but usually not quite so quickly; and sometimes more reliably.
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by John Helmer - Wednesday, July 18th, 2007
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By John Helmer in Moscow

Insomniacs count sheep to get off to sleep, but after that, dreams come plentiful and cheap.

When Oleg Deripaska lays his head on the pillow these summer evenings, wishful thinking appears to have led him to a colossal miscalculation. Even worse, Deripaska appears to have been dozing, when he made two catastrophic statements to a London financial newspaper this week. They have undermined, perhaps fatally, Deripaska’s ambition to vault over the latest of the consolidations by Rio Tinto and Alcan, in order to strike an eventual deal with Xstrata or Alcoa.

The statements lie, like depth-charges, under what was intended to be the Financial Times’s profile of best business practice in the history of the Russian aluminium sector. Deripaska spoke explicitly on the two topics, which his lawyers and investment bankers have repeatedly cautioned him to avoid. They were the two great unmentionables at the briefing for investment bank analysts, arranged by JP Morgan in London, on June 29. But in London, as in the preceding sessions in Frankfurt, New York and Boston, they were recognized as the two prime investor risks, which have been deterring almost all the bankers from recommending a main-board London Stock Exchange (LSE) listing for United Company Rusal – in which Deripaska owns the controlling stake of 66%.

Call them the Cherney and the Putin risks.
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by John Helmer - Friday, July 13th, 2007
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By John Helmer in Moscow

Gold raiders may be pushing gold mining asset holders on to the defensive in Russian Fareast

When Winston Churchill tried to express his ignorance of how Russians conduct their affairs, he famously referred to bulldogs fighting under a rug. These days, in the Russian gold mining sector, the bulldogs are hard at it again, but the rug has slipped off –well, let’s say half-off.

There are asset raids under way, driving share prices down, for Ovoca in Magadan region; and Highland Gold in Chukotka. Ovoca and Highland are both listed on the London Alternative Investment Market (AIM); Ovoca is also listed in Ireland.

The conflicts over their assets have also spilled over into investigations of regional and federal officials alleged to have taken sides, possibly corruptly. One of the allegations being aired publicly is that regional mine licence inspectors are not enforcing mandatory licence deadlines to produce gold from deposits under development.
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by John Helmer - Wednesday, July 11th, 2007
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By John Helmer in Moscow

Talk of oil supply crunch intensifies price threat as Russian output tips and additional export markets beckon.

Russian oil producers have been losing oil output at Russia’s onshore fields since February of this year, and a combination of tax, investment, and technical factors has led to a forecast of “dire straits”, according to a new report by Moscow’s Alfa Bank.

But these straits appear to be deeper and direr for oil consumers, than for Russia as a producer; especially since new oilfield developments are likely to swing the direction of oilfield growth in the direction of China. Korea, and Japan.
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by John Helmer - Wednesday, July 11th, 2007
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By John Helmer in Moscow

Russian aluminium giant, Rusal has held a secret briefing at London’s Skinners’ Hall for its London IPO investors .

When Gioacchino Rossini, the 19th century opera composer, had grown famous and rich, he was told that a group of his admirers were collecting the equivalent of $50,000 to erect a statue to celebrate him. Rossini responded: “Give me the money, and I’ll stand on the pedestal myself.”

Rossini came from humble origins; his father was a slaughterhouse inspector, his mother a baker’s daughter. He had made himself wealthy enough, and his career assured, by the age of 32; he stopped writing music for money five years later. But the problem of cash for the self-made rich is that they never feel secure without more of it coming in.

The problem of Oleg Deripaska and Victor Vekselberg — the two Russians who made themselves very rich in a short time by mining and smelting some of the world’s largest volumes of bauxite and aluminium — is that, like Rossini, they believe the only cure for nerves is cash. But unlike Rossini, they haven’t the public reputation to stand on a pedestal. Since an Initial Public Offering (IPO) is the London market’s equivalent of a statue on a pedestal, and the investor cash at stake runs into several billion dollars, the reputational risk of the pedestal is now the subject of extraordinary measures.
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by John Helmer - Tuesday, July 3rd, 2007
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By John Helmer in Moscow

Alrosa is retrieving its diamond market positions after initial misstatements by new CEO

Alrosa, the Russian diamond miner with the largest share of the global rough diamonds market after De Beers, is reconsidering its international market strategy, and correcting several misstatements by its newly appointed chief executive, Sergei Vybornov.

Veteran international representative for Alrosa, Sergei Uhlin, announced in Amsterdam last week that the company has no intention of withdrawing its European Court of Justice case against a ruling by the European Commission to cancel Alrosa’s diamond trade with De Beers at the end of next year. Uhlin added that, not only is Alrosa confident of winning its appeal; but that if it wins, and the EC trade order is revoked, Alrosa will not necessarily decide to renew its trade with De Beers. “We are challenging our rights in principle, regardless of what we’re going to do,” Uhlin is quoted as saying. A spokesman for the company told Mineweb that Uhlin’s remarks have been correctly reported, and reflect company strategy.
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by John Helmer - Tuesday, July 3rd, 2007
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By John Helmer in Moscow

The world’s largest potash miner, Russia’s Uralkali, reports recovery of growth, as commodity prices jump.

Uralkali, the world’s largest potash exporter, is recovering momentum in a global market that is likely to see the Russian miner challenge its Canadian peers for earnings growth, profitability, and share valuation.

“Despite difficulties in 2006, Uralkali isn’t not going back on its growth strategy,” board chairman and controlling shareholder, Dmitry Ribolovlev, told the annual meeting of shareholders last week. “On the contrary, we plan to accelerate the building of new capacities and modernisation of the existing ones. This is dictated by the situation in the market. The demand for potash fertilizers continues to grow everywhere, and for the foreseeable future this trend will continue. Having made good our losses from last year, we should swiftly increase our mining capacity.”
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by John Helmer - Thursday, June 28th, 2007
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By John Helmer in Moscow

President Vladimir Putin signed this week a decree allowing a limited association of Russia’s state controlled shipping companies, Sovcomflot and Novorossiysk Shipping Company (Novoship). Promoted as a merger of the two, Putin’s brief decree, a text of which has been released publicly, puts a stop to a market selloff, which has been bitterly contested by shipping company managers, board members, and Kremlin aides for three years.

“In the context of consolidation of the two companies a tanker company is being created that will be certainly ranked among the world’s five top tanker firms,” announced Sergei Frank, chief executive of Sovcomflot, according to a Kremlin release of a meeting he had with Putin on Wednesday. The text of Putin’s brief remarks indicate the ambiguity of the decree, which creates a single shareholding structure for the two tanker fleets, but also preserves their separate operations.
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by John Helmer - Thursday, June 21st, 2007
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By John Helmer in Moscow

If you recall Enron executive Jeffrey Skilling’s Hypothetical Future Value (HFV) system of accounting, one might find some parallels in Polyus Gold’s share marketing program.

The man who invented the accounting system for promoting the value of a share today, for what it will be worth in the future, when he will have sold out, is well-known.

Jeffrey Skilling called the system Hypothetical Future Value (HFV). Skilling used to be the chief executive of Enron Corporation. He is serving a 24-year sentence in Minnesota for conviction on 19 counts of fraud and other crimes. He was fined $45 million, and he spent $40 million on his legal defense. His HFV for the year 2028, when he is eligible for release, is zero.
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by John Helmer - Tuesday, June 19th, 2007
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