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| Norilsk on Energy Spinoff |
Norilsk Nickel, the country's biggest mining company, said Wednesday that it would consider spinning off electricity assets after shareholders blocked a prior plan last year.
Management will study the proposals this week when chairman Vladimir Potanin and chief executive Vladimir Strzhalkovsky visit the company's main production site in the city of Norilsk, the company said. The board will also discuss the company's strategy and industrial safety.
Bloomberg
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| Novolipetsk Seeks $2Bln |
Novolipetsk Steel is seeking to borrow $2 billion from banks to finance the purchase of assets in the United States, according to a banker with knowledge of the plan.
The one-year loan will pay 1 percentage point more than the London interbank offered rate, or Libor, for the first four months, according to the banker, who declined to be identified before the deal is complete. It will pay 1.875 percentage points for the next four months and 2.75 percentage points thereafter.
Merrill Lynch, Deutsche Bank and Societe Generale are arranging the loan, which will be offered to other lenders in late September or early October, according to the banker.
Bloomberg
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| Mechel Guns for German Metals Deal |
Mechel, the country's biggest coking coal producer, is seeking German anti-monopoly approval to acquire indirect control of metals trader HBL Holding, the German Federal Cartel Office said Tuesday.
The terms of the deal were not disclosed, but an analyst said Mechel would likely pay 80 million to 85 million euros ($116 million to $124 million) if it acquired 100 percent of the trader.
Mechel, which is also Russia's sixth-largest steelmaker, lost one-third of its market capitalization in July after Prime Minister Vladimir Putin attacked it for selling abroad cheaper than domestically.
Mechel and HBL Holding declined to comment. A source close to the deal said negotiations were under way.
"We received documents from Mechel on August 28," said Silke Kaul, a spokeswoman for the anti-monopoly body. She said the step was required of all companies in merger deals in Germany, regardless of the market share they take.
"We will be checking through the end of the month whether the deal may cause any competition problems," Kaul said. "We may also ask for another two months to check the finer details of the merger."
HBL Holding includes eight trading firms and several service centers, according to the company's web site. The private metals trader provides services to more than 9,000 clients.
Mechel sells the specialized steel that it produces in Russia to Europe through its affiliate Mechel-Trading. The company exports its products to Germany, France, Italy and several other European countries.
A source in Mechel-Trading's Lichtenstein office said he was not aware of the German deal but that it would be a boon for his company.
"Should we get control in a local trader, we would certainly get more customers," the source said on condition of anonymity. "We will get local experience and knowledge, as well as more people to sell our products."
Dmitry Baranov, a chief analyst at Finam Management, said HBL Holding might be worth 78 million to 80 million euros, although Mechel might be ready to pay a premium for a quicker deal.
"Getting a share of a European company will help Mechel … reduce the risk of the local traders refusing to sell Mechel's products after what happened this summer," Baranov said.
"The government may change the rules of the game at any moment, as Mechel's crisis showed, so buying the German metals trader may be a part of the company's strategy to make itself less vulnerable."
The Moscow Times
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| Mechel Cuts Domestic Price |
Mechel has lowered prices on coking coal by 15 percent for several domestic companies, in line with orders from the Federal Anti-Monopoly Service, Interfax reported Monday.
Magnitogorsk Iron & Steel Works spokeswoman Yelena Azovtseva said the company had signed delivery deals with Mechel at the lowered price with a fixed delivery volume through the end of the year, the news agency reported. An industry source said a similar deal had been signed with Novolipetsk Steel, Interfax reported.
The Moscow Times
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| Australian Uranium Deal at Risk |
CANBERRA, Australia -- Australia said Monday that it was reconsidering a deal to sell nuclear fuel to Moscow after Russia's military incursion into Georgia.
Australia's previous conservative government agreed in September to expand a small-scale 1990 deal to sell uranium to Russia on the condition that it was not sold on to Iran.
"When considering ratification, the government will take into account not just the merits of the agreement, but recent and ongoing events in Georgia," Foreign Minister Stephen Smith told the parliament.
Former Prime Minister John Howard, signing the treaty with then-President Vladimir Putin at a meeting of Asia-Pacific leaders in Sydney, had said "stringent" controls would ensure that the uranium was not used in weapons.
But lawmakers considering whether the treaty should enter into force said Monday that Putin, now prime minister, was unlikely to abide by the terms of a treaty and safeguards for the use of Australian uranium in Russia's civilian nuclear industry.
"I don't know if you've looked on the TV into Vladimir Putin's eyes. He is one tough son of a gun, and I don't think that he cares about what we think," said Kelvin Thomson, committee chairman from the center-left Labor government.
"Recently he's taken South Ossetia and another province off Georgia, and there's no real comeback over that," Thomson said.
The Moscow Times
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| Evraz mulls interim dividend |
Evraz Group's Board of Directors has recommended that a dividend of $8.25 per common share, or $2.75 per GDR, be paid for the first half of 2008, the Russian mining and metals holding said in a statement today. The record date has been set for September 18, and the dividend is to be paid by December 18.
RBC-News
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| Evraz Expands Profit On High Steel Prices |
Evraz Group, Russia's biggest steelmaker by market value, announced an 82 percent jump in first-quarter net income to $2 billion because of strong pricing, acquisitions and an improved sales mix, the company said in a statement Friday.
"This is the result of soaring steel prices, which were partly caused by the shortage of raw materials for steelmaking, and our acquisition of new assets," Evraz chief executive Alexander Frolov said during a conference call.
Evraz, which is part-owned by billionaire Roman Abramovich, is almost fully supplied with its own coking coal and iron ore, used for making steel.
The results were higher than expected, analysts said.
"We believe the steel prices will be at the same high level in the next one to two years," Evraz chief financial officer Pavel Tatyanin told reporters in the conference call. "We don't feel the affect of the financial crisis on our company."
Prices for steel have grown 45 percent to 50 percent over the last year, and semifinished and construction steel products have become 60 percent to 70 percent more expensive over the same period.
Russian prices for galvanized steel sheet currently go up to an average of about 38,000 rubles ($1,570) per ton, while girder is priced at about 40,000 rubles per ton and reinforcing bar, or rebar, goes for around 37,000 rubles.
Evraz has redirected almost all of its exports to the domestic and CIS markets to meet growing local demand, the company said in an e-mailed statement. The revenue from Russian and CIS construction products sales grew 51.5 percent to $2.1 billion, up from $1.4 billion in the first quarter of 2007. Overall sales revenues in Russia increased by 53.6 percent to $4.2 billion, the company said.
High global steel prices helped Evraz's non-Russian sales to double to $6.4 billion from $3.2 billion in the first half of the year. The main factor driving revenue growth outside Russia was a strong pricing environment and additional sales volumes from new acquisitions, Evraz said in the statement.
Since December, Evraz has paid more than $5 billion for assets in the United States, Canada and Ukraine.
Tatyanin said Friday that Evraz hoped to secure the approval of Chinese regulators this month for a deal to increase its stake in China's Delong Holdings to 75 percent. Evraz is to pay $860 million for the stake.
"Evraz is benefiting strongly from its strategy of mergers and acquisitions growth in high value-added steel products and its vertical integration into iron ore, coking coal and scrap," UniCredit Aton said in a note to investors Friday, giving a "buy" recommendation for Evraz shares and a 12-month target price of $115.
Evraz Global Depositary Receipts rose in London $3.10, or 4.3 percent, to close at $75.50, after earlier jumping 6.4 percent.
Magnitogorsk Iron & Steel Works, Russia's third-largest steelmaker, boosted its net profit 19 percent to $1.03 billion and Novolipetsk Steel, the country's fourth-largest steelmaker, boosted net profit 44 percent to $1.53 billion in the first half. Severstal is due to release its first-half results Thursday.
The Moscow Times
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| Norilsk to Pay $2Bln in Buyback |
Norilsk Nickel's board voted Friday to spend up to $2 billion buying back 4 percent of its stock, a decision opposed by one-quarter owner United Company RusAl as it wrestles for a greater say in the miner.
Norilsk said it would buy back up to 7.95 million of its own shares at 6,167 rubles ($253.80) each, a 27 percent premium to its Friday close of 4,855 rubles, in a bid to reinvigorate a share price that has fallen by one-third since May.
"This price drop was impacted mostly by factors that are irrelevant to the company's fundamentals," Norilsk chief executive Vladimir Strzhalkovsky, who assumed the post Aug. 8, said in a statement. He did not say what those factors were.
RusAl, majority owned by billionaire Oleg Deripaska, has been at loggerheads with Norilsk's largest single shareholder, Vladimir Potanin, over the management of the world's largest nickel miner since it bought its stake in April.
Each side has accused the other of attempting to devalue the company's stock.
Mikhail Seleznyov, a mining analyst at Deutsche Bank, said the buyback would be beneficial for minority shareholders, as neither Potanin's Interros holding nor RusAl were interested in cutting their stakes.
RusAl said it had voted against the share buyback and accused Interros of violating corporate governance standards by conducting an in absentia vote.
Norilsk, however, insisted shareholders would benefit from the buyback.
"In the last three years, the shareholders of Norilsk Nickel received more than $8 billion as a result of stock buybacks or buyouts, and in the form of dividends," Norilsk first deputy general director Alexander Popov said.
The Moscow Times
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| Severstal Expands in U.S. in $1.3Bln Deal |
Severstal will pay $1.3 billion to acquire North American coal miner PBS Coals in an all-cash deal giving it access to raw materials for its expanding network of U.S. steel mills.
Severstal, owned by billionaire Alexei Mordashov, said Friday that its mining division had agreed to pay 8.30 Canadian dollars ($7.97) per share to acquire PBS after the coal miner is folded into Canada's Penfold Capital Acquisition.
"The acquisition of PBS will help ensure that Severstal controls its operating costs by providing a guaranteed supply of metallurgical coal for our coke making operations in the U.S.," Severstal chief operating officer Gregory Mason said.
Severstal has spent more than $1.7 billion in the last year acquiring steel mills in the United States, where Russian companies with record profits to burn have snapped up about one-tenth of steel melting capacity. Coking coal and iron ore, both crucial for making steel, are in great demand as a China-led boom in steel consumption pushes prices for the raw materials to record highs.
The acquisition of PBS by its mining division, Severstal Resurs, represents the company's first venture into the raw materials sector in North America. Severstal Resurs already runs coal, iron ore and gold mines in Russia and Kazakhstan. "It's a good acquisition in that it allows Severstal to supply the needs of its North American assets," said Olga Okuneva, mining analyst at Deutsche Bank.
PBS shareholders owning a combined 66.8 percent of the company, including all its directors, have executed irrevocable lock-up agreements to sell to Severstal and a break fee of 41.9 million Canadian dollars has been agreed.
The deal, expected to close by mid-October, is conditional upon Canadian company Penfold acquiring PBS to form a publicly listed company called PBS Coals.
PBS operates six underground and six opencast mines in Pennsylvania. It produced 2.4 million tons of coal, including 1.5 million of coking coal, in the year to March 31, 2008. Total annual metallurgical coal capacity is 4 million tons.
PBS would supply Severstal's North American unit with about 40 percent of its coking coal needs, said Roman Deniskin, chief executive of Severstal Resources, the firm's mining division.
"Production of coking coal can be expected to double in the medium term," Deniskin told a conference call, without giving details of how the company would achieve this.
While the acquisition will afford Severstal greater ability to control its production costs in the United States, analysts said the company had yet to prove its ability to turn around the ailing U.S. steel assets that it has purchased. "The acquisition looks a bit expensive compared with Russian coking coal producers. But compared with North American coals, it's a bit cheaper," said Maxim Semenovykh, an analyst at Alfa Bank.
He estimated Severstal was paying about $450 per ton of raw coal capacity for PBS and compared this with $350 per ton for Raspadskaya, Russia's largest pure-play coking coal miner, and an average of $500 for U.S. coal miners.
Reunters
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| Polymetal to take out loan |
Polymetal is planning to take out a one-year loan worth $45m from ZAO UniCredit Bank, Russia's largest silver producer indicated in a statement today. The agreement to this effect was signed on Thursday. The interest rate has been set at one month LIBOR+3.25 percent for the first six months and one-month LIBOR+3.75 percent for the next six moths. Polymetal's subsidiary will act as an underwriter.
RBC-News
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