MOSCOW (Mineweb.com) – When we last left our Great White Hunters, the Anglo American chief executive and two of his companions, they had arrived in Moscow for two days of meetings, Monday and today. Like the legendary Allan Quatermain himself, they were intent on covering their tracks, while manoeuvering into position for their prey. But back at base camp, no-one claimed to know what exactly the hunting party of Tony Trahar, Barry Davison, and Philip Baum were after in Russia.
A spokesman for Trahar in Johannesburg said the trip to Moscow was “a general courtesy visit to discuss paper and pulp.” But the ranking Russian official whom the group met on Monday, Minister of Natural Resources, Yury Trutnev, is primarily concerned with sub-soil mining projects. On Friday, a statement from his office reported that Anglo American wanted to discuss possible exploration in the country, and cooperation with domestic companies. Coal appeared to be the target, according to press reports of the ministry release. Following the Monday meeting, however, Trutnev was quoted in a ministry announcement as focusing on other minerals Proposed or pending amendments to Russia’s mining legislation, Trutnev reportedly said, “will make the sphere of natural resources’ use more attractive tc foreign investors”. He noted that the competition is intense, especially in the oil and gas sector. As for timber processing, Trutnev claimed the new timber: code “will raise the investment appeal of timber-processing enteprises for foreign companies.”
So far, there has been no public mention of Anglo American’s largest investment in Russia, the Mondi division’s investment of over $300 million in the Syktyvkar Forest Enterprise (SLPK), a paper and cardboard producer which was taken over in stages over several years. Based in the northwestern region of Komi, SLPK’s output of paper and cardboard accounts for 40 percent of Russia’s total production of office paper; 9 percent of paper for the country’s newspaper industry; and about 40 percent of cardboard production. In Russia SLPK’s Snegourochka (“Snow Maiden”) brand is acknowledged to be one of the best office-paper trademarks.
Mondi Europe’s strategy for investment into Eastern Europe started with a single paper mill in Austria producing 215,000 tons of paper products in 1995. Mondi then expanded into Hungary, Slovakia, Isreael, and Russia. The Syktyvkar plant has been an extremely lucrative one for Anglo American, as well as for Trahar, who came into the chief executive’s suite from the paper and pulp sector.
The success has attracted Russian raiders. Anglo American has acknowledged that Oleg Deripaska, the aluminium oligarch who has made aggressive takeover bids for other Russian paper, packaging and pulp mills, has been a threat to Syktyvkar. However, Deripaska is no longer a threat, Anglo American now believes. According to the company spokesperson in London, Kate Aindow, Trahar’s visit to Moscow was “in connexion with our paper and pulp interests.” She acknowledged that no-one from that division of the company was accompanying Trahar, and that Davison and Baum have different supervisory roles on the Anglo executive board. Asked if the group was meeting Deripaska, or other Russian paper and pulp producers, Aindow said she “genuinely does not know who they are meeting.” Rick Witt, Anglo’s newly-appointed Moscow representative, an American from the oil equipment sector, declined to respond to a request for the group’s meetings in Moscow.
Deripaska’s Basic Element holding was categorical that it has not met with the Anglo American group. A source at Him Pulp, which manages Kotlass Pulp & Paper, said the same thing. A year ago, llim’s controlling shareholder had been unable to fight or buy off a Deripaska raid, and offered to sell instead to Anglo American, in the hope that it might ride to the rescue. Victor Khristenko, the minister of industry and energy whose ministry supervises the downstream industry, also confirmed that he had not met with Trahar.
A source close to Anglo American believes it is unlikely that Anglo’s strategy in Russia will increase the concentration the group currently has in the paper and pulp sector. Diversification into minerals, including precious metals, is more likely, the source said. AngloGold Ashanti has already bought a $30 million shareholding stake in the UK-listed junior, Trans-Siberian Gold, and has plans to develop mines in the Krasnoyarsk and Kamchatka regiohs. AngloGold has been a regular visitor to Moscow this year, and has been doing due diligence on the mine assets and exploration prospects of at least two major Russian goldminers. No-one from AngloGold was accompanying Trahar in Moscow this week.
Sources at Anglo American acknowledge that the group wants to sell the chrome division of Samancor, which is jointly owned with BHP Billiton; Anglo’s stake is 40 percent; BHP Billiton’s is 60 percent. The sources also claim that the manganese division of Samancor, which may be worth at least $1 billion, is not for sale.
Russian oligarch, Victor Vekselberg, has reportedly been talking to Anglo during the year, both directly on two visits he has made to South Africa; and through his new dealmaker, Brian Gilbertson. Vekselberg was in Johannesburg early in November, but none of his spokesmen nor Gilbertson will confirm with whom he met. Gilbertson heads SUAL, which is primarily a domestic bauxite, alumina and aluminium producer, seeking to diversify (offshore if foreign investors can be found to finance the move. Vekselberg’s holding company Renova is ostensibly a separate company, or group of companies; and although it has no mining experience, and operates no mining projects directly, it has engaged Mark Bouzuk, a former aluminium trader, to negotiate for mining investments in South Africa (SA).
Bouzuk makes plain in an interview that he cannot speak for either Renova or SUAL, Gilbertson or Vekselberg. His company has been contracted by Renova, he says, to develop a South African base, but he himself is not a Renova executive. Clarifying some Russian media reports, which he described as having misquoted him or misunderstood remarks he made last week to the Russian news agency Interfax, Bouzuk said: “we are not interested in Samancor chrome. It is too early to talk about Samancor manganese. Is it for sale?”
For the time being, according to Bouzuk, he has negotiated memoranda of understanding and contracts with several black-owned or empowered companies in SA, with the objective of their partnering Renova in joint mining ventures in SA. The target of these discussions, Bouzuk confirmed, is manganese in the Northern Cape province. He said that lie knows nothing about any presentations of a manganese project to President Thabo Mbeki, or to senior SA government officials. Indeed, he added, his local partner companies have yet to apply for mining licences, or to receive them. He added that he cannot disclose the identities of the SA partner companies at this stage. “We have contracts, but we are not ready to disclose the names,’ he said. When asked if he or Renova were meeting with Trahar in Moscow, Bouzuk replied; “As far as I know, no.” At SUAL headquarters, Gilbertson referred the question to Renova.
Renova’s office in Moscow is headed by Alexander Zarubin. His spokesman said: “As for today, I can confirm that there were no meetings of Renova officials or Viktor Vekselberg personally with anyone from Anglo American.”