Books on Russia
Update No: 317 (30/05/07)
Putin's last State of the Nation address
Russian President Vladimir Putin delivered what was by law his final address on
the state of the nation before parliament on April 27th, mixing ambitious
spending projects with warnings about foreign intervention in Russia's
sovereignty. The president's eighth - and constitutionally last - address to the
State Duma and Federation Council opened with a moment of silence to Putin's
predecessor, Boris Yeltsin, and ended with a nod to his successor, a
controversial topic in Russia.
Putin's 80% popularity ratings have led to many calls for a constitutional
amendment allowing the president a third term in 2008, but the president has
demurred. The speech saw the president enforce this point by saying that the
"next state of the nation address will be done by another head of
Yet there remained a question mark over who that could be. The two names most
commonly mentioned as successors are Putin's two first deputy prime ministers,
Dmitry Medvedev and Sergei Ivanov. Neither has declared his candidacy, however.
Russian media noted Putin's final address, which was televised across the vast
country, was devoted almost equally to the causes the two first deputy premiers
have been handed.
Putin began by introducing a number of social works projects financed by the
overflowing state coffers of the country that, Putin noted, became the world's
number one oil producer in 2006. Medvedev has been charged with overseeing
social works projects.
The second half of Putin's speech was given over to the engine of Russia's
economic growth during Putin's tenure: government-controlled companies. These
include in the natural resources sector, and defence. Ivanov, previously defence
minister, has been named to head state-controlled aircraft and shipbuilding
Among the large number of spending projects Putin outlined for the first time
were a $200mn national presidential library named after Yeltsin that will become
"the information kernel for the entire library system of the country"
and "regional centres of the presidential library".
Additionally, Putin suggested using money from the sales of Yukos assets to
create a $10bn government fund for resettling people in dilapidated housing and
renovating their buildings. Oil company Yukos went bankrupt after a Russian
court said its founders owed $25bn in taxes, charges critics call political.
Putin touched on pensions for retirees, saying that by 2009 pensions should rise
at least 65% on average. He pledged the government would match all voluntary
payments made to retirement funds.
Putin then turned to projects associated more with Ivanov. He called for a
"second electrification of Russia", similar to the one conducted by
Lenin in the 1920s, demanding some $500bn to increase Russia's electricity
potential by two-thirds by 2020. Additional proposals flowed to
government-controlled shipbuilding and nanotechnology agencies, with the latter
expected to receive some $7bn in funding.
Shortly after the speech, Putin's Prime Minister, Mikhail Fradkov, said he
ordered his ministers to put together projects addressing Putin's proposals by
A project for the 2008-10 budget, he added in remarks run by Interfax, was
already passed on April 26th to account for Putin's new proposals.
Outside of the oil and gas-fuelled spending projects, Putin adopted a tough
tone regarding the West, which has become a common topic for Russian politicians
in recent months.
The president called for a moratorium on the landmark 1990 Treaty on
Conventional Forces in Europe, which set limits to the number of Nato and Soviet
troops on European soil. An adviser, Arkady Dvorkovich, later told Russian news
agencies Russia would only leave the agreement if the other signatories didn't
show understanding of its conditions. Those conditions remained unclear,
Putin also denounced unnamed parties that, as he said, do not like Russia's
"stable, gradual development". Ominously he said: "The stream of
money from overseas, used for direct intervention in our internal affairs is
rising." Putin added that people using "democratic slogans" were
attempting to colonise Russia, and that a law against "extremism"
needed to be passed. NGOs have come under close scrutiny in Russia, where
officials fear foreign governments are using them to foment revolution within
the country. Putin pledged approximately $20mn for NGOs.
But as a man who has fought for his vision of Russia, Putin ended his final
annual address to parliament by saying: "Our country will only occupy a
worthy place in the world and we will only be able to preserve our statehood and
sovereignty if our citizens see, feel, and are certain all efforts of the state
are directed at the defence of their deepest interests - improving their lives
and raising their position and security."
This speech offers clues to Putin's rule of Russia all right. We can interpret
it with the help of the following breviary
The Wolf test of Putin
A most interesting article came out in The Guardian on April 24th, called
'Fascist America, in ten easy steps.' It argues that; "from Hitler to
Pinochet and beyond, history shows there are certain steps that any would-be
dictator must take to destroy constitutional freedoms...... George Bush and his
administration seem to be taking them all."
Well so does Putin and his. Here they are:-
1) Invoke a terrifying internal and external enemy
2) Create a gulag
3) Develop a thug caste
4) Set up an internal surveillance system
5) Harass citizens' groups
6) Engage in arbitrary detention and release
7) Target key individuals
8) Control the press
9) Dissent equals treason
10) Suspend the rule of law
Putin is much further advanced in this agenda than Bush. But then he has a far
more promising country in that regard in Russia.
To take the points in order:-
1) He came to power with this idea uppermost - the Chechen terrorists, linked to
global ones. He inherited the idea from Yeltsin, but gave it a new twist, or
rather the KGB did, who almost certainly were responsible for the series of
bombings in September 1999 that set off the Second Chechen War and wafted Putin
into the presidency.
Bush was to have the perpetrators of 9:11, linked to al-Qaeda, which has defined
his own presidency, Afghanistan, Iraq, et al. The Israelis have the Palestinians
linked to Hamas and Hizbullah, which enjoins pounding the Lebanon. Veritably we
live in the age of the predatory victim, bent on exterminating the existential
enemy within and without.
It was, indeed, a type of politics practised by Hitler. As he saw the essence of
politics: "The art of leadership consists of consolidating the attention of
the people against a single adversary and taking care that nothing will split up
this attention....the leader of genius must have the ability to make different
opponents appear as if they belonged to one category."(Adolf Hitler, Mein
Kampf, tr by James Murphy, Hurst and Blackett, London, p 110, 1938).
2), 3) and 4) Putin had no need to create a gulag; he inherited one. Khrushchev
did not shut all of it down; it increased under Brezhnev to decline with
Gorbachev and Yeltsin, but not to disappear. Putin inherited a thug caste too in
the FSB, successor, which he indeed headed, an equivalent in the armed forces,
as well as a well-developed internal surveillance system.
5) It was his own initiative, however, to start harassing the citizens' groups
that the Yeltsin regime had tolerated. They are internal minions of a second
enemy outside, the West.
6) The Chechen War has involved any amount of arbitrary detention and not so
much release. Tens of thousands have disappeared. Galtieri and Pinochet would be
envious of how Putin escapes world censure here.
7) There is nothing Putin likes better than targeting individuals, errant
oligarchs (Berezovsky and Gusinsky into exile, Khodorkovsky and Lebedev into
prison) or human rights campaigners. It is well known what happens to
journalists who pry too much in Russia.
8) Control of the press and media is now highly effective, backed up by the
recent injunction to be positive, not negative in news coverage from now on. Too
much bad news is ventilated about Russia in the Kremlin's view, notably by the
BBC, the British Bullshitting Corporation as it is called by them with typical
crudity; Goebbels would have heartily agreed.
9) Dissent always meant treason in the USSR. Yeltsin permitted a modicum of it;
Putin none at all.
10) The rule of law has never been established in Russia. Putin has a particular
disdain for it, obviously ordering the dissolution of Yukos from on high, as
Khordorkovsky must be ruefully be reflecting in his Siberian hellhole.
Foreign investors are becoming wary of Russia accordingly. Even the largest
energy concerns are finding the going tough there. A new national autarchy
Putin has the KGB mind-set to a tee. He told his former KGB colleagues in St
Petersburg the other day: "Well, comrades, we have seized power." His
use of the old appellation was jocular of course. But no less true for that.
Such is modern Russia, an atavistic state.
Of course it is impossible to turn the clock all the way back; but Putin and his
chums are doing their best. Fascism with a human face is about it.
The state is supreme in Russia; the individual is nothing, bar the top man. Even
he is prisoner of the system.
Russia throws it weight around
Moscow has a far more assertive policy abroad under Putin than under
Yeltsin. Even current EU members feel abandoned by the union: there is a growing
sense in the three Baltic countries, Poland and Hungary that the EU is allowing
them to be squeezed by Russia, particularly on energy policy. Of course, EU
membership gives these countries a greater sense of security. But the EU's old
members have encouraged an enormous sense of disappointment by ignoring its new
members' security concerns in favour of preserving their own ties with Russia,
particularly in cutting energy deals that they think will assure them of
Other post-Soviet countries are also experiencing internal pressure to re-orient
themselves towards Russia and they too feel abandoned by the EU. Georgia and
Moldova both face secessionist minded, Russian-dominated enclaves that are to a
large extent controlled from Moscow - Abkhasia and South Ossetia in Georgia and
Transdnistria in Moldova. Both countries suffer from Russian trade embargoes on
their most important export products - wine and foodstuffs.
Moldova appears set to cave in to Russia's pressure, partly to attract
desperately needed inward investment at a time when little aid has come from the
west, particularly the EU. Indeed, like Ukraine, Moldova and Georgia have been
left without any clear signals from the EU that they will have the prospect of
membership at some point in the future.
Russia is also flexing its muscles over the question of Kosovo's future, raising
objections in the United Nations security council to the UN's plan for
independence and openly supporting Serbia's quest to maintain its supremacy over
Kosovo. Russia argues that independence for Kosovo may "create a
precedent" - a veiled threat to mobilise its secessionist proxies, not only
in Georgia and Moldova, but also in Ukraine's Crimea region.
Moreover, Russia is hinting at the many worries within EU countries about
potential demands for self-rule, by, for example, the Basques in Spain, the
Turks in northern Cyprus, and the large Hungarian minorities in Romania and
Slovakia. All of these countries are now acting with great hesitation in the
debate about Kosovo, clearly influenced by Russian warnings about "setting
But this argument overlooks the fundamental difference between Kosovo and the
situation in all other areas with large national minorities. Whereas Kosovo was
part of a federation, the former Republic of Yugoslavia, the EU's other
potential trouble spots are all parts of unitary nation states. Thus,
independence for Kosovo in no way creates a "precedent".
Of course, Russia knows this. But, by using its energy resources and recovered
confidence to fuel instability and discord, it is seeking to expand its sphere
of interest - an outcome that can be averted only by a unanimous and determined
EU response. Unfortunately, instead of reaching out to endangered nations like
Ukraine, the EU beacon remains dark and its leaders silent.
Rosoboronexport chief backs Avtovaz, Gaz possible JV
Russian state arms trader Rosoboronexport head Sergei Chemezov has said that the
amalgamation of major Russian auto manufacturers AvtoVAZ and GAZ would be
correct politically, New Europe reported.
"Amalgamation of AvtoVAZ and GAZ would be correct politically. We have held
talks with Deripaska, but no common ground has been found thus far,"
Interfax quoted Chemezov as telling journalists in Moscow on April 28.
Technological cooperation between the companies is not possible so far, he said.
The companies remain interested in cooperation in making components, he added
"We are experiencing problems with the production of castings, stampings
and plastics for the automobile industry," Chemezov said.
He also said that AvtoVAZ continues implementing a program to dispose of
non-core assets to ensure that enterprises making components provide AvtoVAZ and
other manufacturers with quality products.
After Rosoboronexport managers took up the management of AvtoVAZ in 2005 rumours
circulated that the leading Russian auto manufacturers AvtoVAZ, GAZ and KAMAZ
could be amalgamated into one holding company. Representatives of these
companies confirmed interest in technological cooperation, arguing that they
could jointly launch projects to make auto components. But no progress has been
reported in the talks since then.
S7 Airlines inks deal to purchase 10 Boeing 737s
Russia's S7 Airlines struck a deal with US plane maker Boeing on April 26 to
purchase 10 of the Chicago-based company's 737-800 long-range aircraft, Russian
news agencies reported.
The planes' market price stands at US$705 million, Interfax News Agency said,
and the delivery cycle for the aircraft is to begin in 2010. The contract also
includes an option for the purchase of 10 additional planes, the news agency
S7, formerly known as Sibir Airlines, said the Boeings would become part of a
soon-to-be-created charter subsidiary.
With 25 per cent of the company's business coming from charter flights,
commercial director Yevgeny Klyucharev told Interfax a separate subsidiary, S7
Charter, would be created by year's end.
The deal came as good news for Boeing, which lost a bid to equip Russia's flag
carrier, Aeroflot, with over 20 jets to competitor Airbus earlier this year. The
government, which owns a stake in Airbus parent EADS, had refused to sign off on
the Boeing deal.
Founded in 1992, Sibir is Russia's second-largest airline and one of the world's
50-biggest airlines, making 40,000 flights in 2006, according to the company's
Gazprom agrees on terms of Karachaganak gas supplies
Russia's Gazprom has reached a final agreement with its Kazak partners on the
terms of a joint venture on the premises of the Orenburg gas refinery, Gazprom
CEO, Alexei Miller, said in Astana on May 10th.
"We have reached a very important agreement on the terms of buying Kazak
gas from the Karachaganak field. This is vital for setting up a joint venture on
the premises of the Orenburg gas refinery," Interfax News Agency quoted him
"The establishment of price parameters is the key point of the
negotiations," Miller said. "We have fully coordinated the terms of
the creation of the joint venture and the project's operation," he said.
He refused to specify the gas price and said that the press should wait for the
signing of the relevant agreement.
Gazprom and its Kazak partners "have agreed on the entire formula - gas
production in Kazakstan, and refining and sales on third markets," Miller
As for a prospective Trans-Caspian gas pipeline crossing the Caspian Sea and
bypassing Russia, Miller said, "This is a question of not solely Russia and
The Russian president is about to hold negotiations with Turkmenistan, Miller
said. "It seems that gas transportation routes will be discussed within the
framework of these projects," he added.
Kazak President Nursultan Nazarbayev said at Astana negotiations with Russian
President Vladimir Putin that "the transportation of hydrocarbons across
Russia is his country's priority," Miller said.
Rosneft pays US$6.4 billion for YUKOS' last major assets
A subsidiary of Russian state-controlled oil company Rosneft bought a major
Russian oil producer and three refineries for US$6.4 billion at auction on May
10, sweeping up some of the last remaining large assets of fallen oil major
YUKOS, Deutsche-Presse-Agentur (dpa) reported.
Neft Aktiv, a little-known company that represented Rosneft at the auction in
YUKOS' central Moscow headquarters, scooped up Samaraneftegaz, which produces
about 200,000 barrels per day, and three refineries that are also near the Volga
River city of Samara. The government-owned oil firm's only competitor was the
unknown company Versar. The auction was a final blow for the oil assets of YUKOS,
once the country's biggest oil producer. Auctions on May 10 and May 11 were
expected to see the bankrupt firm's filling stations and Moscow offices hit the
Rosneft pays US$ 6.8bn for YUKOS' Siberian assets
Rosneft, Russia's government-owned oil company, paid US$6.82 billion at an
auction on May 3rd for Siberian oil producer Tomskneft and other assets formerly
belonging to Mikhail Khodorkovsky's bankrupt YUKOS.
The purchase of Tomskneft, which had YUKOS' largest oil producer of late, is
expected to make Rosneft Russia's leading oil producer with some 2 million
barrels per day, surpassing the privately-held LUKoil.
Also included in the purchase were the East Siberian Oil Company, the Angarsk
Petrochemicals company and the Achinsk refinery, all based in Eastern Siberia.
"We in the company are convinced the acquired East Siberian assets
represent a new step in the development of Rosneft," Vladimir Voyeboda,
Interfax quoted a company spokesman as saying.
The auction brings YUKOS, which before founder Khodorkovsky's arrest on charges
of tax fraud in 2003 was Russia's biggest oil firm, one step closer to oblivion.
Rosneft's sole opponent in the auction was a little-known firm called Unitex,
which Moscow-based Vedomosti speculated could be tied to Gazprom, Russia's
mammoth natural gas monopoly.
Unitex made the first bid, at 166.3 million rubles, or US$6.45 billion, and
Rosneft won the auction, which took place at YUKOS' Moscow headquarters, 35 bids
later. Rosneft's shares rose some 1.5 percent on Moscow's MICEX exchange soon
after the auction.
The state-owned company has grown dramatically as a result of former YUKOS
assets, including the heavily discounted Yuganskneftegaz, a massive production
unit in West Siberia it won at auction in 2004.
Rosneft's good fortunes led to a US$10 billion IPO last July, and the company
has expressed an interest to continue growing.
But analysts say Gazprom may want some of the YUKOS assets as well. The
monopoly, which has agreed to buy YUKOS property bought by Italy's Eni and Enel
last month, is said to be wary of legal action as a result of direct purchases
at auction of YUKOS assets.
YUKOS declared bankruptcy last August, more than a year after Khodorkovsky and
his partner Platon Lebedev were sentenced to eight-year jail terms by a Russian
court for owing US$30 billion in taxes.
Supporters of the pair say the charges were government revenge for
Khodorkovsky's political ambitions.
With over 20 billion barrels of oil equivalent reserves, Rosneft says it has the
world's largest among public companies. It produced about 85 million tonnes of
the fuel last year.
Russia's nuclear sector to be transformed into holding company
Russian President Vladimir Putin signed a decree recently on the establishment
of the state-run company Atomenergoprom, or the Nuclear Power Industry Complex,
which will incorporate all enterprises related to this industry, from those
extracting and enriching uranium to those building nuclear power plants and
equipment and also those operating them, New Europe reported.
Under the decree, Atomenergoprom is to be set up by July 1, 2007. The shares of
companies which will form Atomenergoprom are to be transferred to its charter
capital by August 1, and the shares of companies to be set up through their
transformation into joint-stock companies from federal unitary enterprises are
to be added to Atomenergoprom's charter capital by December 1. Thus,
Atomenergoprom's establishment should be completed by 2008 a Federal Atomic
Energy Agency Rosatom said. In the first stage, Atomenergoprom is to incorporate
state stakes in 34 companies, the largest of them being TVEL, Techsnabexport,
Atomredmetzoloto (100 per cent each) and the Kaluga Turbine Plant (25.1 per
Enel confirms interest in OGK-5, OGK-4
Italy's Enel has confirmed its interest in two Russian wholesale generating
companies - OGK-4 and OGK-5. Enel is looking at investment in OGK-5 and OGK-4,
Enel Business Development Unit Director Andrea Brentan said at the Russian
Economic Forum in London, Interfax News Agency reported.
A source said on April 23rd, Enel was one of the companies interested in
acquiring OGK-4 additional shares. The newspaper Repubblica said the Italian
company planned to bid for a blocking stake in OGK-5, owned by RAO UES Russia.
OGK-5 includes the Konakovsky, Reftinsky, Sredneuralsky and Nevinnomysky power
stations with combined capacity of 87,000 megawatts. In the fall of 2006, OGK-5
was the first of the Russian generating companies to make an IPO, selling 14.4
per cent of shares for US$459 million. The RAO stake in the company dropped to
75.03 per cent. The RAO board decided on February 9 that 25.03 per cent of OGK-5
would be sold as one lot at auction with a starting price of 24.7 billion
roubles. The auction is to be held on June 6th and bids will be accepted to May
Enel did not participate in the OGK-5 IPO: RAO limited the size of the stake
that could be acquired by one investor and Enel is not interested in minority
stakes. Management methods are very important to the company, Brentan said.
"We want to see how we can influence strategic decisions," he said.
Yuzhno-Khylchuyuskoye field launch at end of 2007
Russian oil company LUKoil is planning to put the Yuzhno-Khylchuyuskoye field in
the Timan-Pechora oil province into operation by the end of 2007, LUKoil
President Vagit Alekperov said while presenting the company's financial report
for 2006 in London on April 24th, New Europe reported.
"Yuzhno-Khylchuyuskoye is the company's largest field in northern
Timano-Pechora," he said. A LUKoil-ConocoPhillips joint venture is
developing the field. Russia owns 70 per cent of the joint venture, while the US
company owns the remaining 30 per cent. The field has proven reserves of more
than 500 million barrels of oil. Some 90 wells will be drilled to develop the
field. The Yuzhno-Khylchuyuskoye field is 129 kilometres from Naryan-Mar and 80
kilometres from the village of Kharyaginsky. LUKoil and ConocoPhillips plan to
invest about US$two billion in infrastructure for this field.
LUKoil Overseas acquires 3 exploration assets in Africa
LUKoil Overseas, the operator of Russian oil major LUKoil's international
projects, has signed an agreement with American oil and gas company Vanco Energy
to acquire a 56.66 per cent share in three exploration projects on prospective
offshore blocks in the Gulf of Guinea (West Africa), the company said in a
statement, New Europe reported.
Two blocks, CI-101 and CI-401, are located offshore Cote d'Ivoire and Cape Three
Points Deep Water block is located offshore the Republic of Ghana. Like block
CI-205 (Cote d'Ivoire) acquired in 2006, all the three blocks are located in the
deepwater area of the Gulf of Guinea 50-100 kilometres from the coast and from
the geological point of view are confined to the Tano basin, where the presence
of commercial oil and gas has been proven, the statement said.
The total area of the blocks is about 15,000 square kilometres and water depth
within the blocks ranges from 200 to 3,000 metres. State petroleum companies,
PETROCI Holding (blocks CI-101 and CI-401, Cote d'Ivoire) and Ghana National
Petroleum Company (Cape Three Points Deep Water block, Ghana), are parties to
the contracts each with a 15 per cent share.
CEZ inks a partnership agreement in Russia
The most profitable Czech company, the power giant CEZ, inked a strategic
partnership agreement with Russian state- controlled power companies in Moscow
on April 27th with the aim of entering the Russian market, CEZ spokesman
Ladislav Kriz confirmed, New Europe reported.
The agreement with former Russian monopoly RAO JES and its TGK-4 subsidiary is
the first step CEZ took towards a joint enterprise with TGK-4 and thus a
presence on the growing Russian electricity market. "It is preliminary at
this point. It does not mean entering the market yet," Kriz said of the
CEZ would first work with the Russian partner in building a steam- gas unit at a
power plant 200 kilometres south of Moscow. The Czech power giant would also
take part in refurbishing its existing units.
Later plans for the joint venture would include constructing two
brown-coal-fired units at the same plant. The agreement is one of several deals
signed in Moscow during Czech President Vaclav Klaus' visit, on which he is
accompanied by dozens of Czech businessmen.
The fast-growing Central European power giant has stakes in Bulgaria, Romania
and Bosnia and is scouting the region for more electricity-related buys.
Transneft builds over 900 km of ESPO pipeline in one year
Russian pipeline operator Transneft has built more than 900 kilometres of the
East Siberia-Pacific Ocean (ESPO) oil pipeline in one year, the ESPO project
management centre, a Transneft subsidiary, said in a press release, New Europe
Transneft launched construction on the ESPO pipeline on April 28th 2006 in the
Irkutsk region town of Taishet. The construction of the pipeline sections
between Taishet-Ust-Kut and Tynda-Skovorodino are in the final stages, the
release said. Transneft will begin building the fifth and final section of a
pipeline section from the Talakanskoye field to the town of Aldan in the Sakha (Yakutia)
republic this summer. A State Environmental Expert Review was received for the
section in March 2007. The first start-up complex of the ESPO pipeline system
involves the construction of a pipeline with a capacity of 30 million tonnes of
oil from Taishet to Skovorodino, and a special port at Kozmino. The pipeline
will have total length of about 2,700 kilometres.
Russia to settle Iraqi debt without additional conditions
Russia is not putting forward any additional conditions for settling the problem
of Iraq's debts, Interfax News Agency quoted Russian Foreign Minister, Sergei
Lavrov, as saying.
"There is no linkage with any conditions except the rules of the Paris
Club," he said on May 4th after talks with US Secretary of State
Lavrov said that the mechanism used in the settlement of Iraq's debt to Russia
has been worked out in strict compliance with the rules of the Paris Club.
"Russia has committed to restructure the debt and even to write off a
bigger than expected part of it," he said.
He expressed hope that Iraq would abide by all the commitments it took under all
of its contracts as strictly.
MINERALS & METALS
Metalloinvest to increase presence in Australia
Alisher Usmanov's Metalloinvest holding expects to boost its value ahead of its
IPO following Usmanov's acquisition last November of 19.9 percent of Australian
mining company Mount Gibson, a Metalloinvest representative said, Interfax News
Usmanov's Gallagher Holding bought the stake in the iron ore producer for US$77
million from Britain's Cambrian Mining. Mount Gibson bought another Australian
ore producer, Aztec Resources, soon afterwards. Both companies export most of
their ore to China. Gallagher Holding's Mark Horn joined Mount Gibson's board of
directors this week.
Metalloinvest expects to hold the IPO this year, the holding's representative
said. He said the increased presence on Mount Gibson's board should bolster the
holding's value in general.The Metalloinvest holding runs CJSC Gazmetall, which
finished consolidating its Russia-based iron ore and steel making assets at the
end of last year. Gazmetall owns around 75 percent of the shares in Lebedinsky
GOK, a major iron ore producer from Russia's the Belgorod region, which owns
Metalloinvest's Mikhailovsky GOK (MGOK), a major iron ore producer from the
Kursk region. Gazmetall also owns just over 75 percent of Oskol
Electrometallurgical Combine (OEMK), a steel works from Russia's Belgorod region
which owns the Urals Steel plant from the Orenburg region. Metalloinvest and
heavy machinery company OMZ are setting a 50:50 joint venture up at the Uralmash
plant. In addition, the holding is discussing a merger between Gazmetall and
Ukrainian steel maker Industrial Union of Donbass (IUD).
FAS extends consideration of Anglogold, Polimetall deal
The Federal Antimonopoly Service (FAS) has extended for two months its
consideration of a deal for South Africa's AngloGold Ashanti and major Russian
silver producer Polimetall to set up a joint venture. FAS said additional
consideration was necessary and further information was required for a full and
objective look at the deal, New Europe reported.
The FAS has a request from Cyprus-based Amikan (Amikan Holdings Limited) on
acquiring GRK Amikan and Cyprus-based AS APK Holdings Limited about acquiring
Angarskaya Proizvodstvennaya Kompaniya (APK), which AngloGold should transfer to
the joint venture with Polimetall for geological exploration in Russia.
FAS in early April extended for two months its consideration of a request from
Cyprus-based Latrod (Latrod Enterprises Limited) on buying Yeniseiskaya Mining
and Geological Company, which holds the license to the Anenskoye gold deposit in
Krasnoyarsk territory, and Imitzoloto, which holds the license to the
Aprelkovsko-Peshkovsky ore section in Chita region, which Polimetall is to
transfer to the joint venture.
Polimetall and AngloGold established a strategic alliance in September 2006 and
planned to set up the joint-venture on a 50:50 basis by the end of January 2007.
From AngloGold the joint venture should receive GRK Amikan, which holds the
licence to the Veduga gold deposit and licenses to explore nearby areas, and
Angarskaya Proizvodstvennaya Kompaniya, with the license for the Bogunai deposit
in Krasnoyarsk territory. AngloGold is to buy these assets for US$40 million
from Britain's Trans-Siberian Gold, in which AngloGold owns 29.8 per cent.
The assets Polimetall will contribute are valued at US$16 million, so the
Russian company will transfer US$12 million in cash to AngloGold.
Polimetall has already obtained earnings from the assets it is to transfer to
the joint venture.
Polimetall posted a profit to Russian accounting standards in 2006 after losses
the previous year thanks to its transfer of Yeniseiskaya Mining and Geological
Company to Cyprus-based Osuch Investments Limited.
Polimetall acquired 500 shares in an Osuch additional share issue for US$10.2
million, the equivalent of 269.07 million roubles, by transferring 120
Yeniseiskaya Mining and Geological Company shares to Osuch with a book value of
90.781 million roubles.