MOSCOW, July 29 (RIA Novosti)
Summa Capital to mine zinc, lead in Novaya Zemlya / Strzhalkovsky, Rosturism head, to lead Norilsk Nickel soon / Russians chuckle at vegetarians, do not understand them / Usmanov's Gallagher Holdings buys 27% stake in Strike Resources / Russia, China to use ruble and yuan in mutual settlements
Kommersant
Summa Capital to mine zinc, lead in Novaya Zemlya
The First Mining Company, controlled by Summa Capital Ltd. of Ziyavudin Magomedov, will ask the Russian mineral regulator, Rosnedra, for a development license for the Pavlovskoye lead and zinc deposit in Novaya Zemlya, said Konstantin Koshkin, vice president of Summa Capital.
He said the company had compiled the necessary documents and was claiming the development license because it had discovered the deposit.
The former owners of the First Mining Company, which Summa Capital has controlled since 2006, failed to complete the procedure for getting the license. Koshkin said the decision to obtain the license was part of Summa Capital's strategy of becoming more active in that project.
The First Mining Company received the exploration license for the Yuzhny (Southern) Island of the Novaya Zemlya archipelago in 1995 and discovered the Pavlovskoye deposit in 2001. Its proven reserves include 1.97 million metric tons of zinc, 453,000 tons of lead, and 672 tons of silver. The Natural Resources Ministry has approved the combined zinc and lead resources of the deposit at 21.4 million metric tons.
The company failed to get the development license because it had not been coordinated with the Defense Ministry, Ilya Mikhalchuk, governor of the Arkhangelsk Region, wrote in his July 11 letter to Prime Minister Vladimir Putin.
The company needs Defense Ministry permission because Novaya Zemlya is a testing range.
Mikhalchuk has asked Putin to "support the regional administration and instruct the ministries of defense and natural resources to issue permits for the resumption of exploration and also exploration and production licenses" to the company.
A reply letter from the Government Office says that the two ministries have been instructed to consider the request and "inform the author of the letter about their decision."
The implementation of the project will cost as much as $600 million, Koshkin said. In three years, the company will be ready to produce 515,000 metric tons of zinc concentrate (zinc content 56%) and 141,000 metric tons of lead concentrate (lead content 49%).
According to the First Mining Company, Russia is short of zinc now.
"The Chelyabinsk Zinc Plant, the country's main zinc producer, has to import zinc concentrate," Boris Zubarev, head of the mining company, writes in a letter to Mikhalchuk.
Vladimir Zhukov of Lehman Brothers said the plant's strategy provides for developing own resources.
Sergei Donskoi from Troika Dialog said the shortage of zinc and lead is not dramatic.
Analysts also say that prices of zinc and lead have fallen by nearly 50% since last year, but Summa Capital claims the project will nevertheless be profitable because they had calculated revenues based on new prices.
Another advantage of this project is that the reserves can be mined by open-pit method and transported by sea, which is relatively cheap.
Summa Capital Ltd. comprises Summa Telecom, the First Mining Company, Siberian Non-Ferrous Metals, oil logistics assets in the Primorsk commercial seaport, content provider Agregat Media, and Summa TV.
Vedomosti
Strzhalkovsky, Rosturism head, to lead Norilsk Nickel soon
On July 7, the Norilsk Nickel board of directors elected Sergei Batekhin, from Interros, the company's director general. On July 21, Batekhin appeared in his office. But on August 8, the board is to meet again to discuss a new director general. Batekhin is expected to be replaced with Vladimir Strzhalkovsky, head of the state tourist agency Rosturism, said a source close to Interros.
A source close to the other Norilsk Nickel shareholder confirmed the information.
The Interros spokesman confirmed that Vladimir Potanin as chairman of the Norilsk Nickel board had made such an offer to Strzhalkovsky on behalf of the company, but declined to comment further.
At a time when the state shows an increasing interest in private business, to have a strong lobbyist on a company board is a must, a source close to Interros said. "The appointment of Strzhalkovsky will calm investors down, show them that the situation in the company is under control," the source told Vedomosti.
Such an idea, according to the source, was first mooted in the spring, and several candidates were considered, including Natural Resources Minister Yury Trutnev. But the final choice fell on Strzhalkovsky, an experienced state-employed administrator. "Industrial experience was of no account in this case," the source said.
As early as last week, the source close to Interros warned of the possible appointment of some influential "statesman" as Norilsk Nickel chief executive. According to the source, such an appointment was approved by the country's leadership and was to show the other shareholder of the company - UC RusAl - that Interros was the one to make key decisions in Norilsk Nickel.
The source close to Interros said that Strzhalkovsky will be responsible for GR, PR, social affairs, security and personnel. Day-to-day management and strategy will be the duty of first deputy director general Batekhin, while finance, relations with investors, and the overseas network will be the concern of Alexander Popov, Norilsk Nickel deputy director general.
Strzhalkovsky has long thought of resigning as head of state tourism agency Rosturism, because his job carried no great weight, said a businessman familiar with him. Strzhalkovsky is really an influential person, says another of his acquaintances. His departure has been approved by the prime minister and the president of Russia, with both of whom "Strzhalkovsky cultivated good relations as they worked together."
"Vladimir [Strzhalkovsky] established good rapport with the current prime minister as early as their St. Petersburg period. It is no secret that they are members of the same establishment," he said.
Strzhalkovsky is an influential person, agrees an official from one of the ministries, he is a "St. Petersburg old-timer" and can get in touch with the country's leadership directly. One of Strzhalkovsky's acquaintances added that the man is on friendly terms with State Duma Speaker Boris Gryzlov and chief of staff of the Presidential Executive Office Sergei Naryshkin.
A source close to one of the Norilsk shareholders is certain that investors are unlikely to approve such a step. "Norilsk Nickel will have its work cut out to explain the meaning of the appointment to them," said Trust analyst Alexander Yakubov. However, he agrees that the news will not send the company's shares crashing today. They already fell yesterday - for another reason, though.
Nickel prices last week dropped by 10%; company production shows no growth; two owners are jockeying for top position, which makes the job of management trickier still; and in the evening continuation of the Mechel saga followed, said Oleg Vorotnitsky, Uralsib head of share sales.
Novye Izvestia
Russians chuckle at vegetarians, do not understand them
In the next few days, the 100th Vegetarian Congress will open in Dresden, Germany. Thousands of people from Europe and America, who refrain from eating meat for reasons of ideology, will attend the event.
Only a few Russian delegates will be present, though. The vegetarian movement hasn't won many followers in Russia. The latest poll by the Public Opinion Foundation (FOM) suggests that most Russians are unclear why vegetarians shun meat. Some even chuckle at the erratic "grass chewers."
The FOM poll revealed that most Russians do know what vegetarianism is. 47% of the respondents described it as refraining from meat and fish, and 29% as eating only vegetable products. Some respondents figuratively called vegetarians "grass chewers." Only 4% admitted that they don't eat meat themselves. 82% said they are neither vegetarians themselves nor have any vegetarian acquaintances. 53% think few people shun eating meat in Russia. 2% even called refraining from meat "self-torture."
Most Russians believe that vegetarians give up eating meat to save money. "People don't have enough money to buy meat, which is too expensive," 18% responded. Another 16% believe people become vegetarians to live a longer life. Some 14% think only people with serious health problems, including cholesterol, liver or gastrointestinal disorders become vegetarians. 3% of respondents think vegetarianism is a diet. Just 8% of respondents say the love of animals is the reason for refraining from meat.
The survey results upset vegetarians, as most of them are committed to protecting animal rights. It's not the first time, though. In Russia, vegetarian culture is still at an early stage of evolvement. Vegetarianism is recognized as a positive movement around the world, but in Russia people go on inventing myths about it, said Irina Novozhilova, president of the Vita Center for animal rights. Before the 1917 revolution, the vegetarian movement was very strong in Russia.
In Europe, there are dedicated shops for vegetarians and cafes where food cooked only in vegetable oil is served. In Russia, there are few options for vegetarian diners.
"When I order meat-free soup in a restaurant, they bring me chicken stock," vegetarian Olga Fedotova told Novye Izvestia. Some waiters don't understand vegetarians. I have to study the food content at the store. If we had vegetarian-only stores, we could save much time shopping. Radical vegetarians, or "vegans" who eat exclusively plant products, have it even worse. Vegans shun all dairy products and eggs and they wear no leather garments or shoes making it difficult to get both food and clothes. Even in large cities, it's difficult to find good imitation leather high boots, as synthetics are synonymous with cheap, low quality products.
Dietitians say undeveloped vegetarianism in Russia isn't all bad. If vegetarian culture were popular, there would be some challenges for young people who tend to go to extremes. They might refrain from meat and not eat food which could provide the equivalent nourishment. As a result, people could get tired more easily and become more susceptible to diseases.
Kommersant
Usmanov's Gallagher Holdings buys 27% stake in Strike Resources
On Monday, Metalloinvest (the management company of the Gazmetall holding) announced that Gallagher Holdings, a company controlled by Alisher Usmanov, was buying a blocking stake in Australia's Strike Resources Limited.
Metalloinvest said that the Australian company would issue an additional 27% of stock on behalf of the new shareholder, or 37.48 million new shares. The sum of the deal is $98 million, and Gallagher is purchasing securities at 2.75 Australian dollars, or with a 33% premium to the market. Farhad Moshiri, a representative of the new shareholder, will sit on the Strike's board of directors.
Strike Resources engages in no production. Its owns two iron ore fields in Peru (Apurimac and Cuzco) and the rights to one third of a power coal deposit in Indonesia through a joint venture with Orion Equities Limited (Banten), one third of a mineral sands deposit (King Sound) and 75% of an iron ore field in western Australia (Paulsen East). Its majority shareholders are: Database Systems Limited (9.2%), Citicorp Nominees Pty Limited (9.1%), HSBC Custody Nominees Limited (7.3%), ANZ Nominees Pty Limited (6.2%), and National Nominees Limited (4.8%). Its earnings in the 2007 fiscal year - $8.148 million - were obtained from sales by its divisions, investments, and project purchases. The net value of its assets is $38.8 million. Shares are traded on the Australian stock exchange.
The Metalloinvest release says that funds from the deal with Gallagher will initially be used to develop Apurimac. It says Strike's ore reserves in Peru total more than 1.2 billion tons and have an iron content of 62% to 64%. Production is expected to begin in 2009 and yield 20 million tons of ore per year. The cost of the project is $2.3 billion. Metalloinvest explains the deal by a high percentage of iron in the ore (62% to 67%) and closeness of the Chinese market, which is one of the main consumers. "The high iron content of ore and the nearness to ports means low production costs for Strike Resources," said Alexei Morozov, UBS director of analysis.
Formally, the Australian asset can increase the worth of Gazmetall ahead of the fall's IPO and a deal to sell a blocking stake in the holding to Vladimir Potanin's Interros. But for that to be realized, Strike's shares need to be transferred to Gazmetall.
At the same time, sources close to Kommersant add that Alisher Usmanov has commitments to reduce his stake in Strike Resources to 23.4%. Besides, all the businessman's investments in Australian assets have been portfolio investments. This year, for example, he resold a 20% stake in Mount Gibson at a profit.
Nezavisimaya Gazeta
Russia, China to use ruble and yuan in mutual settlements
Russia and China are considering ways to expand the use of the ruble and the yuan in their settlements, Deputy Prime Minister Igor Sechin said after his short visit to Shanghai.
Analysts say transition to local currencies in bilateral trade would boost the partners' economies, because quite a few Russian and Chinese trade and financial companies would easily abandon the U.S. dollar in their mutual settlements.
Sechin said banking services were crucial for developing the energy dialogue between Russia and China, which provides for major joint projects.
"We have agreed with our Chinese partners to expand the zone of the ruble and the yuan in mutual settlements," he said when commenting on his talks with Prime Minister Wen Jiabao and Deputy Prime Minister Wang Qishan in Beijing. "This will help ease the dependence of trade operations on external factors."
At present, the overwhelming number of contracts concerning Russian supplies to China and Chinese supplies to Russia are made in U.S. dollars. The partner companies sustain considerable transaction losses when converting national currencies into dollars.
Russian-Chinese trade increased by 40% in 2007 year on year, to $48.2 billion, and by 60% in the first five months of 2008.
Analysts say the decision is logical.
Igor Suzdaltsev, OTP Bank's chief for financial institutions, said: "It is more profitable to use the national currency of one of the partners in bilateral international trade, whereas the use of some other country's currency means they have to share their revenues with said country. Russia has lifted all limitations on foreign currency on its territory. It is a fact of life that the ruble has become a convertible currency."
He said Russian businesses could settle accounts with their Chinese partners in rubles or yuans, adding that the mechanism of doing this is rather simple. They only need to organize trade in the ruble-yuan couple (RUB/CNY) at a large trading floor, so that any bank anywhere in the world would be able to honor clients' requests for converting rubles into yuans and vice versa.
"The economic benefits of this decision for Russian and Chinese companies is apparent, as it will rule out spending on conversion of rubles and yuans into dollars and cut market and settlement risks, which is very important given the current instability of the U.S. dollar and American banks," Suzdaltsev said. "Personally, I think the ruble-yuan couple will eventually become one of the most liquid currency couples."
Alexander Razuvayev, head of Sobinbank's market analysis department, said the decision had a political element designed to demonstrate to Washington that Russia and China can play as a team against the United States.
"Prime Minister Vladimir Putin is to visit China during the 2008 Summer Olympics," Razuvayev said. "During his visit, the two countries are expected to sign economic and military political contracts, which means that the decision to expand the ruble and yuan settlements zone is a step" preparing the ground for this.
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