MOSCOW (Mineweb.com) — What is it that is drawing Russians like Victor Vekselberg and Alisher Usmanov to South Africa?

In Russian villages, the peasants used to say that where there’s honey, there will always be flies. By that, they mean flies, not bees – raiders, not producers. For Vekselberg, manganese is the honey; for Usmanov, vanadium; both produce alloys vital to the production of steel. To those who have signed joint-venture or buy-sell agreements with the two Russians, and also those who have not, but have seen them descend on their assets nonetheless, Vekselberg and Usmanov are agile predators, whose drive is in their nasal instincts, and whose wings are their protection.

Mineweb has already told the story of Vekselberg’s fly-over pursuit of manganese in the South African Kalahari , cheered on in Pretoria by the deputy minister of minerals and energy, Lulu Xingwana, and recently endorsed by President Thabo Mbeki. He has appointed Vekselberg as a member of his board of international mining advisors.

Mbeki’s advisors did not warn him of Vekselberg’s latest legal problems: the first, a clash in Kiev six months ago over a mystery $25 million down-payment that was paid, then forfeited, for the Ukraine’s Nikopol manganese ferroalloy plant; the second, recent Russian court hearings and a London arbitration over contract violations in the trading of shares of Russia’s principal titanium plant.

In Kiev, Vekselberg met his match in the person of then prime minister Yulia Timoshenko, and her local steelmaking supporters. Nikopol, the largest ferro-manganese producer in the world, and the most important source of the alloy to the Russian steel industry, is going back to the Ukrainian government to sell to Ukrainian bidders. In the more recent titanium case, Vekselberg has been swatted by Vyacheslav Bresht, the entrepreneur who introduced the concept of Russian racketeering to the US courts, winning control thereby of VSMPO-Avisma, the dominant titanium producer for the international aerospace industry.

Vekselberg’s troubles in the US courts are about to become even worse, as the man whose oilfield he “stole” almost a decade ago, emerging victorious from the US federal appeals court, gets ready to press Vekselberg and his associates into sworn testimony, and trial.

On the ground, at the Kalahari manganese field, locals tell stories of helicopter landings of men from Vekselberg’s Renova group, who drop in to sniff their turf, and discuss management arrangements with locals, if any are interested. In Gabon, the Kalahari’s African rival in the production of manganese, there is talk of more helicopter landings, Renova concessions for manganese, and more promises. Asked what they are doing in Gabon, Renova’s leadership has told Mineweb in Moscow that they “prefer not to answer that question.”

As metallurgists express its value, the purpose of cornering the world market in manganese, as Vekselberg has been trying to do, is to dictate its price, and hence its profit margin, to those who cannot do without it. The consumption of manganese is vital to steel production, directly at the pig-iron stage of manufacture, and indirectly, when the ore is upgraded to ferroalloys and metal. According to the US Geological Survey, “manganese has no satisfactory substitute in its major applications.” According to the court record, and also his family’s gossip, Vekselberg has made a career out of dictating price terms, and he gets very sore-headed when someone else out-manoeuvres him on price and margin.

Vekselberg’s Russian assets are a group of aluminium smelters, alumina refineries, and bauxite mines. Apart from pending claims in the Russian courts against the smelter Vekselberg allegedly arranged to steal, the underlying value of these assets depends on the Russian government’s attitude towards the price of electricity, and of the gas used to generate it. If the state decides not to subsidize the price of these inputs for up to 20 years ahead, Vekselberg’s assets cannot make a profit, and he cannot borrow the project finance to develop them. Vekselberg’s big Russian problem, therefore – one he is unlikely to advise President Mbeki at their next advisory council session — is that the state owned utilities, UES and Gazprom, may decide to share in the profit of the assets by taking equity in them, rather than granting Vekselberg the right to take the profit for himself. That would be quite a fly-swat, and Vekselberg’s Russian advisors do not hide their concern.

To hedge against this risk, Vekselberg should convert his Russian cash profit into non-Russian assets offshore. If those assets can then be used to produce cheaply, and export expensively into Russia, Vekselberg may be able to preserve the upperhand against his government.

In the case of ferromanganese, Russia cannot supply itself, and thus its strategic steelmaking enterprises are dependent on imports. In Soviet days, these were firmly under control in Georgia and the Ukraine. Today, Russia’s principal steelmaker Evraz – owned by Vekselberg’s sometime partner, Alexander Abramov – refuses to reveal where it buys its supplies from, terming the information a commercial secret. Other domestic steel and pipemakers say the same thing. But Russian trade statistics indicate that at least 85% of ferromanganese imports are Ukrainian. Poland contributes the next largest volume. The steelmakers estimate that the tonnage of manganese they need is equal to about 0.5% of their steel output, in 2004, Russian production was 54 million tons, and so the manganese requirement was about 2.7 million tons. For Russian steel output to expand, imports of ferromanganese must also grow. That’s what deposits in South Africa, and maybe Gabon, are for.

Vanadium is also an alloy for hardening steel. Most of the world’s reserves are in China, but South African reserves are almost as large, and SA mines produce more than their Chinese counterparts. Last year, about 18,000 tons were mined in SA, making 42% of the world total. China comes next with 14,500 tons, and Russia is third with 9,000 tons. As an alloy for steel, there are substitutes, such as manganese, titanium, tungsten, and columbium. But there is no substitute for vanadium in the titanium alloyed metal which the aerospace industry requires for its engines, and other sensitive components.

Russia’s principal source of vanadium is the iron-ore deposit known as Kachkanarsky. At present, that is controlled by Abramov and the Evraz group. The former owners of the combine are in court in the US, charging that they were robbed of the asset. Usmanov controls two of the largest iron-ore mines in Russia – Lebedinsky and Mikhailovsky – and also two steel mills, Nosta and Oskol.

Usmanov is a raider on his own behalf, and also on the behalf of others. His original moves into iron-ore and steel assets were directed by the Gazprom group, who converted mine and plant debts owed for fuel supply to Gazprom, into equity controlled by Gazprominvestholding and other companies. It was Usmanov’s job to manage the holding, and run the mines and plants. He did not own the controlling stakes by himself, at least not at the start. When Alexei Miller, an appointee of President Vladimir Putin, replaced the Gazprom leadership of Rem Vyakhirev, Usmanov faced the risk of losing control of the assets. He survived, and went on to take over the Nosta steelmill, whose previous owners had tried murdering each other, before they gave way to a man reputed to be employed by high-ranking federal police officers. Usmanov renamed the asset Ural Steel.

There is hardly a stone which Usmanov has lifted that Mineweb readers have not had the chance to measure. That is until this week, when Usmanov announced that his Metalloinvest group – for which he and a partner paid nearly $2 billion a year ago – is proposing to bid for Anglo American’s 79% stake in Highveld Steel & Vanadium Corporation. According to Usmanov’s spokesman, “We confirm our interest [in Highveld] and [confirm that Usmanov] was included in the short-list.”

For those readers, who remember that Usmanov once portrayed his raid to seize a diamond-mining licence in northwestern Russia as a patriotic service to keep the Oppenheimer family from Russia’s national treasure, Usmanov’s offer to carry a very large suitcase of case over the threshold built by Ernest Oppenheimer will be amusing.

De Beers is currently pursuing Usmanov through the courts of the US and Sweden for defrauding its company, Archangel Diamond Corporation, of the right to mine the diamonds it had discovered in 1996 at the Grib pipe, in Arkhangelsk region. Usmanov no longer defends what he did, saying only that he has sold out his interest to another partner, Vagit Alekperov, controlling shareholder of LUKoil, Russia’s leading commercial oil producer.

If Usmanov wants to follow Vekselberg on to Mbeki’s advisory board, he may find SA officials whose attitude towards De Beers is quite similar. But for the Oppenheimers, as well as for the Anglo American and Highveld boards, the important issue today isn not Usmanov’s wit or patriotism, but whether his suitcase has all the cash he promises.

Highveld acknowledged this week that it has drawn up a list of bidders, but it is not identifying them. Usmanov has declared himself instead, and is the fourth to do so. The others include the Mitta! group; the Indian steelmaker Tata; and the Kermas ferroalloy group, according to its London-based Croatian director, Danko Konchar. Kermas is connected to Russia through ownership of ferrochrome plants, but its principal business is largely hidden. Last year, Kermas arranged SA bank finance to buy Samancor Chrome for more than $430 million.

Usmanov’s spokesman was asked if he is intending to bid for Highveld alone or with partners. With the price of vanadium expected to stabilize this year, after the record burst in 2005, and Highveld announcing double profits for 2005, the value of the company is reputed to be between $1 billion and $1.6 billion. Usmanov’s bid is thus likely to cost him not less than $1 billion.

Usmanov’s power as the largest iron-ore producer in Russia does not generate free cash, or leveraging, equal to that figure, especially since this is not the only international billion-dollar offer for assets Usmanov is circulating in the international marketplace at the moment.

Bank sources report that, ever since he took over Metalloinvest’s Russian assets a year ago, Usmanov has been seeking long-term, large-scale foreign financing. In the deal to acquire Mikhailovsky, part of the cost was shouldered by Usmanov’s partner, Vassily Anisimov; he had sold his aluminium smelters to Vekselberg for about $500 million several years ago. Usmanov was probably obliged to provide about $500 million himself, and the remainder of the $2 billion purchase price was financed by the state-controlled Russian banking system, which agreed to take shares for security. International banks, with which Usmanov has been in negotiation, are reluctant to accept similar pledges. Also, Usmanov cannot be certain that his Gazprom friends, and the state banks, might still do to him what he and they once did to others – call in the debt, and replace him as the equity owner. It is, therefore, for the same tactical and strategic reasons that are driving Vekselberg into offshore manganese, that Usmanov is keen to move into Highveld vanadium. Funding the takeover is Usmanov’s immediate target.

His first attempt at creating an offshore asset base for himself was a failure in one sense, but a success in another. The largest source of Usmanov’s cash offer for Mikhailovsky last year was the proceeds of his raid on the Anglo-Dutch steelmaker Corus. Buying Corus shares when they were at historic lows, Usmanov’s Cyprus vehicle Gallagher acquired a stake of almost 14%. The Financial Times obliged by reporting Usmanov as Corus’s saviour, promoting his bid for a seat on the Corus board; a deal to supply semi-fabricated steel or iron-ore to Corus plants; and other demands.

But Corus did due diligence on the Russian, and rebuffed him. When Boris Ivanishvili, owner of Metalloinvest and Mikhailovsky, told Usmanov that he was not prepared to enter into a holding partnership with him, and demanded cash instead, Usmanov had to find it. He sold out of Corus at $614 million, realizing more than $300 million in pure profit. Oleg Deripaska, the aluminium oligarch, was briefly Usmanov’s partner in the takeover of the Nosta steelmill, but he also asked Usmanov to buy him out with cash.

In more recent days, Usmanov (and partners in an entity called OEMK-lnvest) paid $400 million to Vladimir Lisin’s steelmill Novolipetsk to buy back a 12% stake which the steelmaker had held in the Lebedinsky iron-ore plant to assure their iron-ore supplies to the mill. At the same time, Usmanov sold to Lisin a 25% stake in another iron-ore producer, KMA-Ruda . Lisin was restructuring to sell off minority stakes and gain majority control of KMA-Ruda. Usmanov, it can be calculated, had to raise about $350 million for the combined deal.

if Usmanov is bringing a suitcase to Highveld, he must find new cash to fill it. That is not how flies usually think of approaching the honey-pot.


By John Helmer, Moscow

The Ukraine war is splitting the communist parties of Europe between those taking the US side, and those on the Russian side.

In an unusual public criticism of the Greek Communist Party (KKE) and of smaller communist parties in Europe which have endorsed the Greek criticism of Russia for waging an “imperialist” war against the Ukraine, the Russian Communist Party (KPRF) has responded this week with a 3,300-word declaration:  “The military conflict in Ukraine,” the party said, “cannot be described as an imperialist war, as our comrades would argue. It is essentially a national liberation war of the people of Donbass. From Russia’s point of view it is a struggle against an external threat to national security and against Fascism.”

By contrast, the Russian communists have not bothered to send advice, or air public criticism of the Cypriot communists and their party, the Progressive Party of Working People (AKEL). On March 2, AKEL issued a communiqué “condemn[ing] Russia’s invasion of Ukraine and calls for an immediate ceasefire and the withdrawal of the Russian troops from Ukrainian territories….[and] stresses that the Russian Federation’s action in recognising the Donetsk and Luhansk regions constitutes a violation of the principle of the territorial integrity of states.”

 To the KPRF in Moscow the Cypriots are below contempt; the Greeks are a fraction above it.

A Greek-Cypriot veteran of Cypriot politics and unaffiliated academic explains: “The Cypriot communists do not allow themselves to suffer for what they profess to believe. Actually, they are a misnomer. They are the American party of the left in Cyprus, just as [President Nikos] Anastasiades is the American party of the right.” As for the Greek left, Alexis Tsipras of Syriza – with 85 seats of the Greek parliament’s 300, the leading party of the opposition – the KKE (with 15 seats), and Yanis Varoufakis of MeRA25 (9 seats), the source adds: “The communists are irrelevant in Europe and in the US, except in the very narrow context of Greek party politics.”



By John Helmer, Moscow

The war plan of the US and the European allies is destroying the Russian market for traditional French perfumes, the profits of the French and American conglomerates which own the best-known brands, the bonuses of their managers, and the dividends of their shareholders. The odour  of these losses is too strong for artificial fresheners.

Givaudan, the Swiss-based world leader in production and supply of fragrances, oils and other beauty product ingredients, has long regarded the Russian market as potentially its largest in Europe; it is one of the fastest growing contributors to Givaudan’s profit worldwide. In the recovery from the pandemic of Givaudan’s Fragrance and Beauty division – it accounts for almost half the company’s total sales — the group reported “excellent double-digit growth in 2021, demonstrating strong consumer demand for these product categories.”    Until this year, Givaudan reveals in its latest financial report, the growth rate for Russian demand was double-digit – much faster than the  6.3% sales growth in Europe overall; faster growth than in Germany, Belgium and Spain.    

Between February 2014, when the coup in Kiev started the US war against Russia, and last December, when the Russian non-aggression treaties with the US and NATO were rejected,   Givaudan’s share price jumped three and a half times – from 1,380 Swiss francs to 4,792 francs; from a company with a market capitalisation of 12.7 billion francs ($12.7 billion) to a value of 44.2 billion francs ($44.2 billion). Since the fighting began in eastern Ukraine this year until now, Givaudan has lost 24% of that value – that’s $10 billion.  

The largest of Givaudan’s shareholders is Bill Gates. With his 14%, plus the 10% controlled by Black Rock of New York and MFS of Boston, the US has effective control over the company.

Now, according to the US war sanctions, trade with Russia and the required payment systems have been closed down, alongside the bans on the importation of the leading European perfumes. So in place of the French perfumers, instead of Givaudan, the Russian industry is reorganizing for its future growth with its own perfume brands manufactured from raw materials produced in Crimea and other regions, or supplied by India and China. Givaudan, L’Oréal (Lancome, Yves Saint Laurent), Kering (Balenciaga, Gucci), LVMH (Dior, Guerlain, Givenchy), Chanel, Estée Lauder, Clarins – they have all cut off their noses to spite the Russian face.



By Nikolai Storozhenko, introduced and translated by John Helmer, Moscow

This week President Joseph Biden stopped at an Illinois farm to say he’s going to help the  Ukraine ship 20 million tonnes of wheat and corn out of storage into export, thereby relieving  grain shortages in the international markets and lowering bread prices around the world.  Biden was trying to play a hand in which his cards have already been clipped. By Biden.  

The first Washington-Kiev war plan for eastern Ukraine has already lost about 40% of the Ukrainian wheat fields, 50% of the barley, and all of the grain export ports. Their second war plan to hold the western region defence lines with mobile armour, tanks, and artillery  now risks the loss of the corn and rapeseed crop as well as the export route for trucks to Romania and Moldova. What will be saved in western Ukraine will be unable to grow enough to feed its own people. They will be forced to import US wheat, as well as US guns and the money to pay for both.

Biden told his audience that on the Delaware farms he used to represent in the US Senate “there are more chickens than there are Americans.”  Blaming the Russians is the other card Biden has left.  



By John Helmer, Moscow

The problem with living in exile is the meaning of the word. If you’re in exile, you mean you are forever looking backwards, in geography as well as in time. You’re not only out of place; you’re out of time — yesterday’s man.

Ovid, the Roman poet who was sent into exile from Rome by Caesar Augustus, for offences neither Augustus nor Ovid revealed, never stopped looking back to Rome. His exile, as Ovid described it, was “a barbarous coast, inured to rapine/stalked ever by bloodshed, murder, war.” In such a place or state, he said, “writing a poem you can read to no one is like dancing in the dark.”

The word itself, exsilium in Roman law, was the sentence of loss of citizenship as an alternative to loss of life, capital punishment. It meant being compelled to live outside Rome at a location decided by the emperor. The penalty took several degrees of isolation and severity. In Ovid’s case, he was ordered by Augustus to be shipped to the northeastern limit of the Roman empire,  the Black Sea town called Tomis; it is now Constanta, Romania. Ovid’s last books, Tristia (“Sorrows”) and Epistulae ex Ponto (“Black Sea Letters”), were written from this exile, which began when he was 50 years old, in 8 AD, and ended when he died in Tomis nine years year later, in 17 AD.  

In my case I’ve been driven into exile more than once. The current one is lasting the longest. This is the one from Moscow, which began with my expulsion by the Foreign Ministry on September 28, 2010.  The official sentence is Article 27(1) of the law No. 114-FZ — “necessary for the purposes of defence capability or security of the state, or public order, or protection of health of the population.” The reason, a foreign ministry official told an immigration service official when they didn’t know they were being overheard, was: “Helmer writes bad things about Russia.”



By John Helmer, Moscow

Antonio Guterres is the Secretary-General of the United Nations (UN), who attempted last month  to arrange the escape from Russian capture of Ukrainian soldiers and NATO commanders,  knowing they had committed war crimes. He was asked to explain; he refuses.   

Trevor Cadieu is a Canadian lieutenant-general who was appointed the chief of staff and head of the Canadian Armed Forces last August; was stopped in September; retired from the Army this past April, and went to the Ukraine, where he is in hiding. From whom he is hiding – Canadians or Russians – where he is hiding, and what he will say to explain are questions Cadieu isn’t answering, yet.



By John Helmer, Moscow

Antonio Guterres, the United Nations Secretary-General, is refusing this week to answer questions on the role he played in the recent attempt by US, British, Canadian and other foreign combatants to escape the bunkers under the Azovstal plant, using the human shield of civilians trying to evacuate.

In Guterres’s meeting with President Vladimir Putin at the Kremlin on April 26 (lead image), Putin warned Guterres he had been “misled” in his efforts. “The simplest thing”, Putin told Guterres in the recorded part of their meeting, “for military personnel or members of the nationalist battalions is to release the civilians. It is a crime to keep civilians, if there are any there, as human shields.”  

This war crime has been recognized since 1977 by the UN in Protocol 1 of the Geneva Convention.  In US law for US soldiers and state officials, planning to employ or actually using human shields is a war crime to be prosecuted under 10 US Code Section 950t.  

Instead, Guterres ignored the Kremlin warning and the war crime law, and authorized UN officials, together with Red Cross officials,  to conceal what Guterres himself knew of the foreign military group trying to escape. Overnight from New York, Guterres has refused to say what he knew of the military escape operation, and what he had done to distinguish, or conceal the differences between the civilians and combatants in the evacuation plan over the weekend of April 30-May 1.May.



By Vlad Shlepchenko, introduced & translated by John Helmer, Moscow

The more western politicians announce pledges of fresh weapons for the Ukraine, the more Russian military analysts explain what options their official sources are considering to destroy the arms before they reach the eastern front, and to neutralize Poland’s role as the NATO  hub for resupply and reinforcement of the last-ditch holdout of western Ukraine.

“I would like to note,” Defense Minister Sergei Shoigu, repeated yesterday, “that any transport of the North Atlantic Alliance that arrived on the territory of the country with weapons or material means for the needs of the Ukrainian armed forces is considered by us as a legitimate target for destruction”.  He means the Ukraine border is the red line.



By Lucy Komisar,  New York*

Here’s a story the New York Times has just missed.

US politicians and media pundits are promoting the targeting of “enablers” of Russian oligarchs who stash their money in offshore accounts. A Times article of March 11   highlighted Michael Matlin, CEO of Concord Management as such an “enabler.” But the newspaper missed serious corruption Matlin was involved in. Maybe that’s because Matlin cheated Russia, and also because the Matlin story exposes the William Browder/Sergei Magnitsky hoax aimed at Russia.



By John Helmer, Moscow

In 1939 a little known writer in Moscow named Sigizmund Khrzhizhanovsky published his idea that the Americans, then the Germans would convert human hatred into a new source of energy powering everything which had been dependent until then on coal, gas, and oil.

Called yellow coal, this invention originated with Professor Leker at Harvard University. It was applied, first to running municipal trams, then to army weapons, and finally to cheap electrification of everything from domestic homes and office buildings to factory production lines. In Russian leker means a quack doctor.

The Harvard professor’s idea was to concentrate the neuro-muscular energy people produce when they hate each other.  Generated as bile (yellow), accumulated and concentrated into kinetic spite in machines called myeloabsorberators, Krzhizhanovsky called this globalization process the bilification of society.



By John Helmer, Moscow

In imperial history there is nothing new in cases of dementia in rulers attracting homicidal psychopaths to replace them.  It’s as natural as honey attracts bees.

When US President Woodrow Wilson was incapacitated by a stroke on October 19, 1919, he was partially paralysed and blinded, and was no longer able to feed himself, sign his name, or speak normally; he was not demented.

While his wife and the Navy officer  who was his personal physician concealed his condition, there is no evidence that either Edith Wilson or Admiral Cary Grayson were themselves clinical cases of disability, delusion,  or derangement. They were simply liars driven by the ambition to hold on to the power of the president’s office and deceive everyone who got in their way.  

The White House is always full of people like that. The 25th Amendment to the US Constitution is meant to put a damper on their homicidal tendencies.

What is unusual, probably exceptional in the current case of President Joseph Biden, not to mention the history of the United States,  is the extent of the president’s personal incapacitation; combined with the clinical evidence of psychopathology in his Secretary of State Antony Blinken;  and the delusional condition of the rivals to replace Biden, including Donald Trump and Hillary Clinton.

Like Rome during the first century AD, Washington is now in the ailing emperor-homicidal legionary phase.  But give it another century or two, and the madness, bloodshed, and lies of the characters of the moment won’t matter quite as much as their images on display in the museums of their successors craving legitimacy, or of successor powers celebrating their superiority.  

Exactly this has happened to the original Caesars, as a new book by Mary Beard, a Cambridge University professor of classics, explains. The biggest point of her book, she says, is “dynastic succession” – not only of the original Romans but of those modern rulers who acquired the Roman portraits in marble and later copies in paint, and the copies of those copies, with the idea of communicating “the idea of the direct transfer of power from ancient Romans to Franks and on to later German rulers.”

In the case she narrates of the most famous English owner of a series of the “Twelve Caesars”, King Charles I — instigator of the civil war of 1642-51 and the loser of both the war and his head – the display of his Caesars was intended to demonstrate the king’s self-serving “missing link” between his one-man rule and the ancient Romans who murdered their way to rule, and then apotheosized into immortal gods in what they hoped would be a natural death on a comfortable bed.

With the American and Russian successions due to take place in Washington and Moscow in two years’ time, Beard’s “Twelve Caesars, Images of Power from the Ancient World to the Modern”,  is just the ticket from now to then.


Copyright © 2007-2017 Dances With Bears

Copyright © 2007-2017 Dances With Bears

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