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| Norilsk Cited in Pollution Inquiry |
An official who granted Norilsk Nickel a permit to emit polluting gases is being investigated over possible abuse of office and causing the state 1 billion rubles ($40 million) in damages, the Investigative Committee of the Prosecutor's General's Office said Monday.
News of the investigation comes just days after United Company RusAl, which holds a stake of 25 percent plus two shares in Norilsk, strongly criticized the miner over its environmental record and said it would fund a feasibility study to clean up Norilsk Nickel's smelters.
A deputy department head of the Natural Resources and Environment Ministry's technical watchdog "illegally granted Norilsk Nickel permits on the pollution of the atmosphere," Investigative Committee spokesman Vladimir Markin said by telephone. He added that a criminal investigation had been opened against the official, whose name he did not disclose.
"The official granted the permits to Norilsk Nickel in January, while he was acting head of department during his boss' vacation," Markin said. "He actually had no authority to grant those permits. As a result the miner paid only about 200,000 rubles for excessive pollution, while it had to pay about five times more."
"We only got the information from our colleagues in the Krasnoyarsk region today," Markin said, adding, "We are now investigating the motives of the official."
Norilsk spokeswoman Maria Uvarova expressed surprise at the investigation Monday. "Norilsk Nickel works in accordance with the law and gets all its permits legally," she said by telephone.
No one at the Natural Resources and Environment Ministry's watchdog, the Federal Service for Environmental, Technological and Atomic Inspection, answered calls on Monday.
In its criticism of Norilsk, RusAl said in an Aug. 12 open letter that "neither we nor the state environmental authorities see any result" in the company's efforts to improve its environmental performance.
RusAl said the information in its letter had been obtained from the government, Greenpeace and the Blacksmith Institute, a U.S.-based nongovernmental organization that put the city of Norilsk on a list of the world's 10 most polluted places.
Norilsk's newly appointed CEO, Vladimir Strzhalkovsky, rejected the criticism Friday, accusing RusAl of "knowingly or unknowingly using information that does not correspond to reality in an attempt to portray the situation as catastrophic."
Billionaire Oleg Deripaska, the majority owner of RusAl, has been at loggerheads with Norilsk chairman Vladimir Potanin, whose Interros holds a 29 percent stake in Norilsk, over the miner's merger plans and performance.
Nikolai Sosnovsky, a metals and mining analyst at UralSib, did not rule out a connection between RusAl's environmental criticisms and the case against the watchdog's official.
"There have been precedents in Russia when competitors or business partners tried to pressure each other through regulatory bodies, including environmental ones," Sosnovsky said.
Norilsk's shares on MICEX fell 1.5 percent Monday to 4,909.30 rubles, as nickel prices on the London Metal Exchange fell 2.4 percent to $18,250 per ton, Bloomberg reported.
The Moscow Times
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| Polymetal reports net profit for H1 2008 |
The net profit of Polymetal under RAS amounted to RUB 0.894m (approx. USD 0.368m) in the first half of 2008 compared to net loss of RUB 15.1m (approx. USD 0.62m) in the corresponding period a year earlier, Russia's largest silver producer reported in a statement today. The company attributes the receipt of net profit to the payment of interest on earlier extended loans.
Sales revenue stood at RUB 8.673m (approx. USD 0.357m), which is 64 percent less than in January-June 2007. The decrease in sales revenue is liked to a decline in liabilities of Polymetal's subsidiaries. As a result, the company provided less guaranties. Gross profit shrank 63 percent to RUB 8.7m (approx. USD 0.358m).
Polymetal hiked gold production 20 percent to 136,000 ounces, while silver production went up 11 percent to 8.8m ounces.
RBC-News
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| Norilsk Hires Ex-Banker |
Norilsk Nickel, Russia's largest mining company, hired former HSBC banker Adrian Coates to advise on strategy and potential acquisitions.
Coates has worked on initial public offerings for Billiton and Vedanta Resources and advised Mittal Steel on its acquisition of Arcelor, Norilsk said Friday in an e-mailed statement.
Bloomberg
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| 3 Killed in Evraz Coal Mining Accident |
Three miners died Sunday in an accident at a Siberian coal mine owned by Evraz Group, the country's largest steelmaker by domestic volume, the company and the Emergency Situations Ministry said.
The accident occurred at around 8:45 a.m. local time at Mine No. 12 in Kiselyovsk, in the Kemerovo region, the ministry said. An investigation is under way to establish the cause.
Officials could not say whether production would be affected.
"There was an accident. Three people died," a ministry spokesman said. "Over 70 people were inside the mine at the time of the accident. All the rest have been moved out to the surface."
The ministry official said there had been "a breach of the technological process with methane involved," but he did not confirm an explosion.
"An investigation is being carried out to find out the reasons."
A spokesman for Evraz confirmed that three miners had died in an accident at the mine.
Evraz acquired full ownership of the mine in March 2005. Mine No. 12 produced 893,000 tons of coal in 2007, including over 667,000 tons of coking coal used in the steel industry, Evraz said on its web site.
The Moscow Times
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| Chemezov Considers Norilsk As Partner in Udokan Venture |
Russian Technologies is considering Norilsk Nickel as a new partner in its consortium with Metalloinvest, which is bidding to develop the giant Udokan copper deposit, Sergei Chemezov, head of the state corporation, said Friday.
The announcement comes after Norilsk chairman Vladimir Potanin said earlier this month that he was pulling the miner out of a solo bid for Udokan.
But to team up with Russian Technologies, Norilsk would have to hand over all its other copper assets to the potential joint venture, Chemezov said.
"If Norilsk Nickel's board takes the decision to include all the copper mines that they have on their books, then we would be ready to consider a potential partnership," Chemezov said at a news conference, Interfax reported.
A Norilsk spokeswoman was not immediately available for comment Friday.
Chemezov denied that Russian Technologies had held talks with Oleg Deripaska's Basic Element holding, which is behind another bid for the Udokan mine — and had not signed an agreement with Basic Element similar to its pact with Metalloinvest.
In July, Russian Technologies and Metalloinvest, half-owned by billionaire Alisher Usmanov, agreed to set up a joint venture on the basis of Udokan. Russian Technologies is thought to have a 25 percent stake in the potential venture, which is open to other partners.
Metalloinvest is currently behind one of three remaining bids for the Chita region deposit, which will be auctioned off Sept. 14. The starting price for the license is 4.5 billion rubles ($183 million), and the winning bidder will get a license for 20 years for the deposit, estimated to be capable of producing 15 percent of the country's annual copper output.
Another bid is from a consortium that includes Urals Mining and Metal Company, the country's second-biggest copper producer, and state-run Russian Railways. Billionaire Mikhail Prokhorov's Onexim Group has already pulled out of the race over a shareholder conflict of interest.
The Moscow Times
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| Norilsk Rejects Criticism by RusAl |
Norilsk Nickel, the world's biggest producer of nickel and palladium, rejected criticism of its environmental record by Oleg Deripaska's United Company RusAl, saying its second-largest shareholder misconstrued data.
RusAl "knowingly or unknowingly used information that doesn't correspond to reality in an attempt to portray the situation as 'catastrophic,'" Norilsk chief executive Vladimir Strzhalkovsky said in an open letter to his RusAl counterpart, Alexander Bulygin, a copy of which was e-mailed to reporters Friday.
RusAl, the world's largest aluminum producer, said Tuesday in an open letter to Strzhalkovsky that it was ready to prepare and fund a feasibility study to clean up the Russian smelters of Norilsk Nickel. RusAl owns 25 percent of the company.
"Regarding the alleged investments to modernize Norilsk facilities, which are indeed explained on the company's web site, neither we nor the state environmental authorities see any result,'' RusAl said Friday in a statement.
The information RusAl cited in its letter came from the government, Greenpeace and the Blacksmith Institute, a New York-based nongovernmental organization that rated the town of Norilsk as one of the world's 10 most polluted places last year, RusAl said.
The Moscow Times
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| Russia's technology corporation and Metalloinvest team up |
he Russian state technology corporation and Metalloinvest holding have prepared the feasibility study for the development of the Udokan copper deposit, head of the corporation Sergei Chemezov told journalists today. He did not reveal the cost, noting that the information would become public soon, adding that the corporation would cooperate with Metalloinvest if the latter won the tender.
The tender will be held on September 17, 2008, and the license for the development of the deposit will be granted for 20 years.
RBC-News
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| RusAl Demands New Norilsk Board |
United Company RusAl, the world's largest aluminum producer, on Thursday demanded the re-election of the board of Norilsk Nickel, saying it believed it to be controlled by a rival shareholder.
The demand is the latest twist in the disagreement between RusAl, holder of a stake of 25 percent plus two shares in Norilsk, and Interros, the investment vehicle of Vladimir Potanin, which holds around 30 percent of the Arctic miner.
Norilsk's board is chaired by Potanin and comprises nine directors, three of whom represent RusAl. Interros also has three official representatives, although RusAl has argued that at least one of the three remaining independents is also affiliated to Potanin's company.
"RusAl believes that the current board, fully controlled by Interros, is incapable of reversing a slide in Norilsk Nickel's market value," it said.
Interros declined to comment.
Norilsk's shares closed up 6.3 percent at 4,897 rubles, outperforming a 2.9 percent rise on the MICEX Mining and Metals Index.
The Moscow Times
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| Mechel Punished With Coal Price Cuts |
Mechel must slash domestic coking coal prices and pay a "below average" fine for abusing its market position, anti-monopoly authorities said Thursday, as fears of a state attack on the company subsided.
Mechel, the country's largest producer of coal for steelmakers, lost half its market value in three trading days last month after Prime Minister Vladimir Putin twice attacked its pricing policy and sparked fears of a Kremlin-backed drive to punish the firm.
Analysts said potential lost revenues of $600 million in the second half of the year, plus a fine of up to $200 million, was a small price to pay for escaping the fate of Yukos, the once-mighty oil company destroyed by massive back tax claims.
"The chances of this most radical of outcomes has been reduced to near zero," Alfa Bank analysts said in a note.
Mechel's case has drawn special attention after Putin's public attacks erased $8 billion off the company's value and triggered a wider sell-off that dragged Russian shares to their lowest levels in nearly two years when the war in Georgia also erupted.
The Federal Anti-Monopoly Service found Mechel guilty of abusing its dominant market position and demanded that the company, owned by billionaire Igor Zyuzin, switch to long-term contracts for its coking coal supplies from 2009.
"Our demand will be for a significant reduction," anti-monopoly service head Igor Artemyev told reporters, referring to Mechel's coal prices. He did not specify the level of the reduction, which Russian media have reported could be in the region of 30 percent.
In return, Mechel would receive a below average fine, Artemyev said. Its violation carries a fine of 1 percent to 15 percent of annual revenues from sales of the commodity concerned.
The anti-monopoly service said it would rule within 10 to 20 days on the fate of Raspadskaya, Mechel's closest competitor in coking coal, and a trading unit of steelmaker Evraz Group, which are also under investigation for alleged market abuses.
The watchdog said Mechel had been penalized because it had set discriminatory conditions for some market players and refused without justification to trade with other participants.
A Mechel spokesman said the company would refrain from commenting until it received official notification of the anti-monopoly service's ruling. The service not publicly disclosed the size of the fine.
Mechel, also the country's sixth-largest steelmaker, posted 2007 revenues of $6.7 billion. Its mining segment contributed $1.8 billion, although it has not disclosed the contribution of its coking coal mines, the amount on which any fine would be based.
UralSib estimated that Mechel might face a fine of between $15 million and $220 million, while Deutsche Bank forecast a fine between $20 million and $200 million.
More damaging, said analysts, would be the loss of potential revenues incurred as a result of a reduction in coal prices.
Dmitry Smolin, mining analyst at UralSib, said Mechel could miss out on $600 million in second-half revenues.
Another analyst, UniCredit Aton's Marat Gabitov, said losses in revenue could amount to $950 million for the whole of 2008.
The ruling could have knock-on effects for the entire coking coal mining sector, which has enjoyed booming prices in the last year as a global shortage combines with runaway demand.
"Mechel is the largest coking coal miner in Russia, so all other producers will be required to follow suit," Smolin said.
"The sector will become regulated by the state, and this could lead to a negative reevaluation of the entire sector."
Mechel shares rose over 3 percent when the New York market opened, before retreating to $26.62, down 1.1 percent on the day, by 1600 GMT.
This is 27 percent below the closing price on July 23, the day before Putin launched his first public attack, but 65 percent above the low of $16.12 to which the stock plunged after his second attack July 28.
Reunters
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| EU Cuts Tariff for TMK |
The European Union reduced a tariff on steel pipes made by TMK by about one-quarter to 27.2 percent, exposing EU producers to more competition.
The EU cut the duty against TMK from 35.8 percent after concluding that the company's production costs were lower than originally assumed. The levy is meant to punish TMK for selling seamless pipes and tubes in the EU below cost.
Bloomberg
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