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Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 433,491 346,520 310,000 16
GNI per capita
 US $ 2,610 2,140 1,750 97
Ranking is given out of 208 nations - (data from the World Bank)

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 state". 

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 companies.

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 May 17. 

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.

Anti-Western tone
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, however.

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 impends.

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 supplies. 

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 a precedent". 

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. 

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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.

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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 reported. 
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 web site.

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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 as saying.
"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 said.
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 Kazakstan."
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 block.

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 cent).

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 28th.
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 agreement. 
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 reported.
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. 

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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 Condoleezza Rice.
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.

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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 Agency reported.
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.

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