By John Helmer in Moscow

In outer space, as everyone knows, the absence of the force of gravity produces the appearance of weightlessness. Everything floats away.

The markets have decided that Russia is now without gravity; its equities are without weight, and at risk of floating away. Late last year, the RTS, the principal stock market index, starting decoupling from the price of the principal Russian export, oil, as the latter started to plummet. The emerging market investment funds, which have also moved with oil and Russia’s other exportable commodities, also decoupled from commodity prices and the RTS. Since the start of January, the RTS and the oil marker have been in negative correlation. That means that even if the oil price goes up, Russian share prices go down. This is the equivalent of outer space.

It is no surprise, therefore, that everyone in the Russian market is gasping for an oxygen-mask, and a safety belt.

President Dmitry Medvedev and Prime Minister Vladimir Putin believe they are the constitutionally elected heads of government, and imagine their government is the air supply and safety-belt of the state. Those officials aligned with them — Deputy Prime Minister Igor Shuvalov with Medvedev, Deputy Prime Minister Igor Sechin with Putin — like to think that, although elected by noone to nothing, they too are the safety-belts, and pilots, of the state. Watch them closely — the more carefully Shuvalov brushes at his coiffure, and Sechin draws his face into a scowl, the more you can be certain they think they are in charge of Russia’s mass, motion, weight, air supply.

Without a banking and state audit system accountable to parliament, without a parliament accountable to the voters, and with regional governors and mayors appointed, not elected, where else can the force of gravity be located? If not with them, then all of Russia has indeed decoupled, and equity is in danger of valuelessness.


By John Helmer in Moscow

In the Kingdom of Russian fertilizers, there has been the Power and the Glory of hugely profitable export margins and high-flying share prices. But there is only one Will which can be done.

Prime Minister Vladimir Putin visited Acron’s Novgorod chemicals plant last Sunday, January 25, and he appeared to give his personal blessing to a string of costly financial and industrial blunders by Vyacheslav Kantor, the Geneva-based founder and controlling shareholder of the company. Putin was accompanied by Deputy Prime Minister Igor Sechin, who is currently reviewing several plans to consolidate Russian mining companies, including the principal potash and phosphate producers.

At the Acron plant, Putin is quoted by Bloomberg as saying: “The owners of this enterprise not only keep jobs in quite difficult conditions, they also develop the social sphere. Owners of the enterprise are not poor people. If those who deal with real production also have a feeling of social responsibility, we will support such people.”

The list of Acron’s supervisory board and senior management, and the disclosure of shareholders, do not include Kantor, who owns almost 72% of the company. But it isn’t difficult to determine how much of Acron’s profit, and Kantor’s wealth, derives from what can be termed “real production”. An experienced kabbalist might be needed, however, to interpret why substantially more “real” producers in the fertilizer sector than Acron have failed to qualified for Putin’s nod.

Kantor’s company Acron (ticker AKRM:RM) is Russia’s leading producer of complex fertilizers. These are a combination of the three basic chemical nutrients for plant growth — nitrogen, potassium, and phosphorous; or a combination of urea, phosphate, and potash, referred to by the acronym NPK. Nitrogenous fertilizers are derived from natural gas; potash and phosphates are mined. Acron mixes the ingredients and trades the NPK product in higher volumes than any other fertilizer producer in Russia, earning a higher margin on the spot price than the individual fertilizers which comprise it. But Acron doesn’t produce — that’s real production — the feedstocks which comprise the product it sells. It has bought licences to start mining the real stuff. But it is years away from that — and if what Kantor told Putin is the truth, Acron has no hope of ever getting there.


By John Helmer in Moscow

Jonathan Oppenheimer, the embattled heir to Nicky Oppenheimer and to the struggling De Beers group, and Vagit Alekperov, chief executive and controlling shareholder of LUKoil, one of Russia’s leading oil producers, have started fighting again over the disputed Grib pipe; also known as the Verkhotina project in the northwestern Russian region of Arkhangelsk.

The diamonds at stake, unmined below the surface, were estimated a year ago to be worth $9.7 billion. Until the start of January, Oppenheimer and Alekperov were almost equal partners in a joint venture, signed last April, to develop a mine at Verkhotina. Now they are adversaries again, as Oppenheimer reshuffles his crew for a fight; and Alekperov signals that he is engaging a French company to start independent drilling at the minesite.

Oppenheimer has appointed one of his closest associates in the company to the board of Archangel Diamond Corporation (ADC). The announcement of Tony Guthrie to the ADC board was issued by ADC on January 23.

ADC’s Toronto listed share (ticker TSXV:AAD) lifted from 5 Canadian cents to 6.5 cents on the news. The Candian junior, controlled by De Beers, is the only foreign mining company ever to find, and try developing a diamond mine in Russia.

The ADC release is curt, giving no reasons for the shakeup of its board. “Archangel Diamond Corporation … has announced the resignation of Mr. Bruce Cleaver as Chairman of the Board and a director of the Corporation and Mr. Jonathan Dickman as a director of the Corporation. The Board expresses its appreciation for their services to the Corporation. Mr. Robert Shirriff, a current director of Archangel, has been appointed Chairman of the Board in place of Mr Cleaver. The Board has appointed Mr. Tony Guthrie and Mr. Steven Thomas to the Board to fill the vacancies created. Mr. Guthrie is a mining engineer and senior manager with De Beers Group Services in Johannesburg. Mr. Thomas is Chief Financial Officer of De Beers Canada in Toronto and is also Chief Financial Officer of Archangel.”


By John Helmer in Moscow

Premature ejaculation is not usually an event which gentlemen call a public meeting to disclose. At least, not unless they are selling a cure.

The announcement this week in Moscow by Tye Burt and Yevgeny Ivanov, chief executives of Kinross Gold (KGC:US) and Polyus Gold (PLZL:RU), that they have signed a preliminary undertaking to think of doing a feasibility study in eighteen months’ time of the Nezhdaninskoye goldmine in Russia’s fareast is puzzling for its circumlocution, and its lack of specificity. According to the Polyus Gold announcement, the two companies “have concluded Memorandum of understanding on the possible joint development of Nezhdaninskoye hard-rock gold deposit located in the Sakha Republic (Yakutia)….within the time frame of 18 months the companies are planning to jointly prepare a Feasibility Study for the industrial development of the Nezhdaninskoye deposit.” Thereafter, another pair of conditionals — “upon completion of the Feasibility Study and, if warranted by its results, the parties will review the possibility to enter into a joint venture agreement for developing the Nezhdaninskoye deposit.”

Kinross has so far omitted to refer to Nezhdaninskoye, and Burt is not usually so coy. What is more, he already knows at least as much about Nezhdaninskoye as Ivanov. For this is one of the most carefully studied and valued gold deposits in Russia. First discovered in the Soviet period, and mined from 1975, it was thoroughly appraised in the early 1990s by David Deuchar, then technical director for Anglo American. The company decided the technical problems of the deposit raised costs above Anglo’s threshold of profitability, at the gold price prevailing at the time.

The mining rights subsequently went to Celtic Resources in its Irish phase. Then taken over by the West Australian Kevin Foo, all the detail the market might want for the deposit was issued in London, when Celtic was listed on the Alternative Investment Market (AIM). Although mining had been mothballed, and Celtic produced no gold for sale from the mine, Nezhdaninskoye performed as Celtic’s principal value- driver in the stock market, representing about 90% of its asset inventory. According to Celtic’s pre-feasibility studies and JORC count, Nezhhdaninskoye held 14 million oz of gold, with a prospective production rate of 450,000 oz per annum.


By John Helmer in Moscow

Once upon a time, in not so ancient Greece, a crooked banker had the idea of hedging the consequences of his crimes by buying a popular newspaper, and also a popular football team.

But the risk hedges didn’t work quite as he intended. The banker was indicted and jailed in his homeland; then escaped prison; and flew for asylum to the United States. He might have succeeded in securing safe haven there, for US officials wanted to give him asylum in return for his support of a Greek putsch they were planning. Instead, he was arrested before there was time for them to act. He spent three years in a US prison fighting extradition; and then a decade in prison at home. The government he tried so hard to attack survived him, and was re-elected.

That was an inauspicious debut for the idea of purchasing an asylum hedge through pop media and football teams.

The modus operandi – football team minus media – has been tested with greater success by the Russian, Roman Abramovich, in the United Kingdom. He hasn’t applied for asylum in London, where his team plays, but then he hasn’t needed to. A Russian state bank, chaired by the Russian Prime Minister, is lending his over-leveraged enterprises bailout money, and noone accuses Abramovich of indictable offences. Noone dares to.

Alisher Usmanov, another Russian who has bought a stake in an English football team, owns a newspaper in Moscow, and has also avoided the necessity of applying for asylum outside his homeland. His name appears in the civil court papers of a US court case involving a diamond mine, but he too is not guilty of anything.

Let’s be clear – just because a wealthy Russian buys pop assets in foreign lands doesn’t mean he’s guilty of anything. Except, possibly, of poor commercial judgement.


By John Helmer in Moscow

When it comes to the heroics of the free press, London reporters and their proprietors prefer to tell of chests bared and bloody corpses on foreign streets, preferably in places designated by Her Majesty’s Secret Service as enemy country. Moscow, for example.

In the City of London, by contrast, the spectacle of reporters putting on their blinders and dropping their shorts for money, or the fear of it, is not even anti-heroic, but the kind of reality show that can’t win awards in the light entertainment or comedy categories.

Take, for example, the recent sale and purchase of the London Evening Standard for the price of one English pound by Alexander Lebedev. The seller was the Harmsworth family, which has run out of ready cash. The fourth Viscount Rothermere inherited a peerage that was his progenitor’s reward for publishing newspapers that entertained politicians just before World War 1, and who subsequently promoted reporting that was good for his real estate, commercial, and sexual interests in the fascist states of Hungary and Germany. The cash the current viscount has explained he doesn’t have is estimated at ₤1 million per month, which the Standard is said to have been losing over the past year.

Lebedev is reported in the London papers (and reports himself on his personal website) as a former lieutenant-colonel of the KGB, whose job as a spy once posted in London required him to read, clip and file the newspapers.

The Financial Times reported the transaction, noting that Lebedev was buying through a special purpose vehicle (SPV) he had set up in December for his son Yevgeny to run. Called Evening Press Ltd., in which a Rothermere company retains a 24.9% stake, the new company is, according to the Guardian, “a shell”. According to the Financial Times, it has a “£40m equity value”. Financial reporters should know how to count, but it isn’t clear how the SPV can be worth so much if 75.1% of its only asset is currently worth ₤1.


By John Helmer in Moscow

It was the the 19th century German politician Otto von Bismarck, who famously claimed that politics is the art of the possible — before he sent his armies to invade westwards.

To judge the outcome of this month’s “gas war”, initially between Russia and Ukraine, but then involving many of the East European states as well, Russia’s prime minister Vladimir Putin and his Ukrainian counterpart, Yulia Tymoshenko, have devised the politics of the impossible, thereby warming Ukrainian stoves for less cost, while earning Gazprom, Russia’s principal enterprise, more profit.

The details are being studied in Beijing by Chinese bank and oil negotiators, who have not yet to agree with Rosneft for supply guarantees and an oil-price and loan repayment formula to regulate the next decade of Russian deliveries of crude oil to northern China.

A purported text of the gas agreement, signed on January 19 by Gazprom and Naftogas Ukrainy, has been released to the press in Kiev, but Gazprom officials refuse to answer questions about the terms of the new contract. Denis Ignatiev, the spokesman for the company’s foreign relations, told 21st Century Business Herald that he cannot add comment or clarification to the official Gazprom statement, released at the time of the contract signing in Moscow, in front of Putin and Tymoshenko.

The Russian position is focused on defining the price of gas at Ukraine’s eastern frontier; establishing a formula for quarterly adjustments to this price for the remainder of this year; fixing the volumes of new gas to be delivered to Ukrainian consumers and to European customers for the quarter, and for the year; and to exclude commercial intermediaries upstream, between Gazprom and Naftogas, while allowing them downstream, between Naftogas and end-users in Ukraine.


By John Helmer in Moscow

Noone, least of all Dmitry Pumpyansky, should be faulted for not anticipating exactly when the oil and gas bubble would burst. But what can be said of Pumpyansky’s calculation that he had at least two more years of defying gravity, and no hedge against the risk that he might be wrong?

Pumpyansky, who turns 45 years of age shortly, is the figure who managed the creation of TMK, Russia’s largest alliance of steel pipemills (ticker TMKS:LI), out of murky origins, and with associates who are now best left unnamed. His acumen is undoubted; so was his good fortune. Between October 2006 and November 2006, TMK jumped in price from $4 billion, when Pumpyansky arranged to buy out his Russian partners, Sergei Popov and Andrei Melnichenko, to $7 billion, which was the market capitalization of the company at its London initial placement offering (IPO). In the twenty months that followed to June 2008, TMK doubled its value to $9.4 billion.

By then Pumpyansky, the number-3 pipemaker in the world after Tenaris (Argentina, TS:US) and Vallourec (France, VK:FP), had set his sights on matching, besting, buying out, or swapping his stake into one of the other two. For that he needed to become bigger, and more international. And for that he needed to borrow money. The idea was impeccable; the timing was off. According to a new report issued in Moscow today by Troika Dialog, a Russian investment bank, Pumyansky led TMK into a serious miscalculation of financial and trade risks. These have placed the company today in dependence on favour from the Kremlin — favour which Pumpyansky has been unable to demonstrate on the way up.

Pumpyansky individually, or with others, controls 77% of TMK’s stock; 23% is the currently estimated free float. Market capitalization of TMK today is $720 million. Yesterday it was $835 million. Tenaris is currently at $12 billion and rising; Vallourec, $4 billion, and also on the up. From the banking point of view, it is difficult to catch a falling star, and put it into your pocket.



Share Price Chart 3M: NMTP

By John Helmer in Moscow

The wave of bad news that has been expected to hit, and keep on hitting Novorossiysk, Russia’s leading outlet on the Black Sea — weakening rouble, falling cargo volumes in and out, dwindling revenues –struck first in November. But it seems it didn’t return to strike the port in December.

Oddly, investor sentiment towards the port, the only Russian seaport publicly listed in Europe (NMTP:RU, NCSP:LI), was blowing fair when the port prospects were foul; and has reversed itself since January 1.

Novorossiysk is the largest sea-port operator in Russia by total cargo turnover – it accounts for 18% of total sea cargo operations in Russia. It is one of the top-10 seaports in Europe by volume, and one of the top-3 for oil shipments. All the company’s terminals are located in Novorossiysk, except for one container terminal, which operates in the Kaliningrad region on the Baltic Sea.

The latest throughput figures for Novorossiysk port as a whole show that the impact of the global financial crisis struck heaviest in November. After registering cargo volume of 101 million tonnes for the 11-month period to November 30, up 1% on the same period of 2007, the port then reported that November cargo volume fell 15%, compared to October. Among the worst affected of the port terminals and stevedoring companies was NUTEP, which belongs to the National Container Company; it reports a drop in turnover of 33% month to month, despite an overall gain in container movement in November at other terminals of the port of 29%.

Cargoes most affected by the November downturn at Novorossiysk were ores, down 100%; nonferrous metals, down 41%; sugar, down 29%; mineral fertilizers, down 26%; grain, down 17%; and crude oil — the dominant cargo for export through Novorossiysk — down 16%.


By John Helmer in Moscow

Russian oligarchs are famously bad as bird-fanciers.

As corporate takeover tacticians, when times were good, they were reluctant to share their premiums in buy-sell transactions. Not for them, the proverbial wisdom that what is good for the goose is good for the gander. Taking the latter bird’s position, they preferred to believe that what might be bad for the goose should be especially advantageous for the gander.

In the short history of Russian business tactics, it has often turned out that way. But now that times have turned bad, and the oligarchs have burdened their public companies with debt they cannot repay, while putting their own assets out of reach, they prefer to believe that what is bad for the gander should be even worse for the goose.

This explains the curious contradictions in a carefully arranged public statement by one of Russia’s largest steelmakers on January 20, Alexander Abramov of Evraz. While begging the international stock markets and his bankers to treat him gently, promising a swift revival of profits, and rapid rise in asset equity value, he issued an aggressive ultimatum to Beijing and Singapore. Unless China’s DeLong and Best Decade Holdings agree to slash their asking price for their steelmill, Evraz will walk away from its year-old takeover offer.

Abramov, chief executive of Evraz, described in a Moscow newspaper statement today [January 20] that last year’s agreement by Evraz to take over DeLong Holdings is conditional on renegotiation of the asset price. Asked if Evraz will go ahead with the takeover, Abramov said: “Yes, but we will have to agree on a different price Why overpay? Do not expect irrational behavior from us. We have positive greed in that sense.”


By John Helmer in Moscow

There can’t be too many young children, who were still awake when the Ukrainian gas pantomine finished its traditional January run on Monday evening in Moscow. The problem was that those presiding at the curtain-fall, the Prime Ministers of Russia and Ukraine, and the heads of their respective gas companies, couldn’t deliver lines that, despite all their earlier run-throughs, would satisfy a simple-minded grown-up.

As the Kremlin clock was edging past 6:30 pm, on Monday, Gazprom officials were saying they could not confirm the precise terms of the agreement on resumption of gas deliveries to Ukraine, which had been announced by Prime Ministers Vladimir Putin and Yulia Tymoshenko after their meetings on Saturday and Sunday. All that Gazprom was able to say was that negotiations were still continuing between Gazprom and its Ukrainian counterparty, Naftogaz Ukrainy; that the pricing and delivery terms had not been signed; and that deliveries would not resume until the signatures hit the paper.

Seven minutes later, the flags were up, the pens were wet, contract papers were flourished, and Putin and Tymoshenko announced something very big. Russia and Ukraine, they said, had agreed on a 10-year gas supply from now until the year 2019. What will happen for the next three months, however, remained almost as foggy as before. Only now everyone will be able to peer through the murk with their gas-fires blazing. How and who will pay the new bill, and what exactly it will come to, is no better known now than before this gas stoppage began.

If there had been any other outcome, this wouldn’t be the great old panto Russian-Ukrainian gas relations have always been.


By John Helmer in Moscow

It is commonplace for foxes to take chickens where they find them. It is rare for the fox to stay on, and appoint himself chief executive of the hen-house. It is unprecedented for the fox to sell the bird carcasses for a premium to the poulterer.

From inside the coop, blood and feathers are now flying at one of the world’s largest miners of bauxite, and producers of alumina and aluminium — United Company Rusal. After failing in the autumn to persuade Chinese investors to rescue the company, Oleg Deripaska, the controlling shareholder, is close to handing over his control stake to the Kremlin on highly lucrative terms — for himself.

Unexpectedly on Sunday, Rusal announced on its website that Deripaska has replaced Alexander Bulygin, his veteran administrator and loyal friend, as the chief executive of UC Rusal. Bulygin has been demoted into a non-executive role, supervising the board of one of Deripaska’s many sub-holdings, En+.

The company announcement cites Deripaska as saying: “Alexander Bulygin has headed RUSAL for more than five years. Under his management the company, which was the largest Russian aluminium producer, became the leader of the world’s aluminium industry, a truly global company with diversified and one of the most competitive operations in the global metal and mining sector. I am confident that Alexander’s experience in consolidating assets and executing large deals will be applied in full in his new role.”

The website also claimed that Deripaska “was already the CEO of RUSAL for a three year period after the company was established in 2000. In the following years he took an active part in the company’s development as a member of the Board of Directors. Now his role as CEO will be focused on providing for the sustainable development of the company under the conditions of the global financial crisis and implementing a series of crisis management measures.”


By John Helmer in Moscow

Market speculation in Moscow turned sharply negative for Uralkali, Russia’s dominant potash producer, on Wednesday this week, as the share price was slashed 8% to $1.67 on the Russian Trading System (RTS). This followed a modest drift upward in international trading of the shares, while the RTS was closed for the long Russian New Year holiday.

The pressure on Uralkali stems from the failure of high Russian government officials to release the results of a commission of inquiry into fault, penalties, and costs of the two-year old collapse of Uralkali’s Mine-1 at Berezniki, in Perm region. The commission, which was initiated on October 29, has already missed several announced release deadlines during December.

Initial government investigations of the Mine-1 subsidence in October 2006 ruled that the loss of the mine and its potash reserves was force majeure.

The Ministry of Natural Resources said Thursday the current commission “is still working”, and it declined to say when it would finish. Yevgeny Anoshin, spokesman for the investigating organ, the Federal Environmental, Engineering, and Nuclear Inspection Service (Rostekhnadzor), told FW: “the commission is still processing data. The decision will not be made before the end of January.” He did not explain the reason for the delay of another month. This is significant because industry sources in Moscow do not believe the commission has uncovered fresh technical data that were unavailable to the first commission of inquiry, or to the December 26 session of the commission, when officials last met to review the decision materials.

The issue for the commission, according to these sources, is what are the full costs of the Mine-1 loss, and who should be liable to pay them.



By John Helmer in Moscow

After Far Eastern Shipping Company (Fesco), Russia’s dry-cargo fleet leader, lost 22% off its share price in the past week, Moscow investment bank Renaissance Capital has issued an investment warning that the plummeting rate for container shipping between Asia and Europe “creates a major headwind for FESCO”.

Fesco (ticker FESH:RU), based in Moscow and Vladivostok, is the most important of the Russian commercial fleets serving the Sino-Russian, Asian and Pacific dry-cargo routes.

According to the Rencap report, written by maritime analyst Paul Roger, rates now being quoted in Hong Kong for shipping some container types from Asia to Europe have hit zero. Much of Fesco’s shipping line income is directly affected by this rate movement.

Separately, National Container Company (NCC), the largest of Russia’s container terminal companies, half-owned by Fesco, reports today there was a collapse of container volumes at its three terminals in the European part of Russia during December. The First Container Terminal (FCT) of St.Petersburg, the largest in the country, reports that for the month, the terminal handled a total of 86,944 Teu [twenty-foot equivalent units], down almost 3% compared to December 2007. But refrigerated container movements at the terminal, in which Russian food imports are transported, fell by 30%, compared to December 2007, to just 7,603 Teu.

The results were much worse for NCC’s terminals on the Black Sea. At Novorossiysk, NCC’s terminal reports a drop of 21% in Teu volume in December last, compared to a year earlier. Despite months of growth early in the year, the Ilychevsk terminal, on the Ukrainian coast of the Black Sea, reports that it handled 48% less container volume in December, compared to 2007.


By John Helmer in Moscow

Roman Abramovich’s holding company Millhouse has obliged two of its Russian steelmaking partners, Alexander Abramov and Alexander Frolov, to buy an indirect stake of 9.99% in Highland Gold Mining. No explanation for the move has been issued, either by Highland Gold, or by Millhouse; or by Abramov and Frolov, who made their acquisition through a private company called Tremadon.

No details of the transaction value have been disclosed.

Highland Gold (ticker HGM:LN) told Minesite through spokesman Dmitry Yakushkin that there has been “an indirect change. Practically, this doesn’t concern [our] company.” He said Abramov’s and Frolov’s company had bought a 9.99% stake in Highland Gold from Primerod, the company through which Abramovich’s holding controls its 32% stake in Highland. This is the largest stake in the AIM-listed mining company, which has suffered an 85% loss in its market value over the past year; it is now worth less than $180 million. According to Yakushkin, “the pie-chart [of shareholders] remains the same. Millhouse still has 32%.”

Millhouse also controls the Evraz steel and coal and iron-ore mining group, Russia’s largest steelmaker. Last month, Abramovich forced changes in the Evraz board resulting in the demotion of Frolov, who was replaced as board chairman by Abramov. This followed a severe loss of market confidence in Evraz’s capacity to refinance its foreign loans, and an emergency bailout from the state VEB bank to save Evraz from forfeiting US steelmill assets to its banks. Evraz has also been funded by the Kremlin to pay its Russian tax bill.


By John Helmer in Moscow

With a 17-line announcement the Toronto-listed Archangel Diamond Corporation (ADC), a De Beers-affiliated company, has cancelled its agreement to mine diamonds in the Arkhangelsk region of northwestern Russia. Almost twenty years of exploration and mining effort, including the first major diamond discovery in western Russia for a century, have been abandoned.

ADC shares (ticker AAD:CN) dropped 32% in Toronto trading on Monday, following the disclosure, and are now priced at 9 Canadian cents.

A press release from ADC claims the company has withdrawn from the Russian project, because the Russian government has failed to meet deal implementation deadlines, which expired during the holiday period.

The ADC announcement says that “in connection with its proposed acquisition of a 49.99% equity interest in OAO Arkhangelskoe Geologodobychnoe Predpriyatie (“AGD”) from OAO LUKOIL(“LUKOIL”) (the “Transaction”) described in the Corporation’s news release dated April 16, 2008, Archangel has exercised its rights to terminate and has terminated the Share Purchase Agreement (“SPA”) between LUKOIL, the Corporation and De Beers Societe Anonyme dated April 15 2008… because two conditions precedent to the SPA have not been fulfilled by the long stop date of December 31 2008…The Board of Archangel is now considering future options for the Corporation including financing options and a potential resumption of the litigation currently suspended.”


By John Helmer in Moscow

Oleg Mitvol, Russia’s well-known mining regulator and gadfly to Aim-traded stock values, has filed a half-dozen lawsuits in Moscow, challenging the terms of his removal from his functions. And he appears to have Deputy Prime Minister Igor Sechin on his side.

The legal and political moves follow months of effort by Vladimir Kirillov, who as the new chief of Russia’s mine licence inspectorate, Rosprirodnadzor, has tried to fire Mitvol, his independent deputy. In the annals of the federal Ministry of Natural Resources, Mitvol’s resistance is unique, as is the apparent reluctance of the minister, Yury Trutnev, a former provincial governor backed by the LUKoil oil company, to intervene in the contest of wills, and in the conflict beneath the surface of Russia’s use-or-lose resource licensing policy.

Way back on 18th June, the state newsagency Itar-Tass reported that Mitvol had been “stripped of his water, forest, and ecological supervision powers, which have constituted most of his competences”. This was the first sign of an apparent official decision, following informal efforts from new boss Kirillov, dating back to last February, to press Mitvol to resign. An anonymous source was cited by Itar-Tass for its information. It was also reported that “according to the source, the Rosprirodnadzor chief, Vladimir Kirillov, has no intention of submitting a motion to the government, in the shape of Natural Resources Minister Yuri Trutnev, for re-appointing Mitvol as his deputy.” Itar-Tass quoted Mitvol as saying: “As far as I know, in a future staff list, yet to be authorized, the position of a fourth deputy, that is, of yours truly, is absent.” So at least there was some agreement on that score.

Then in July, Mitvol was forced to vacate his office at the Ministry of Natural Resources, and lost his secretaries. He remained contactable only on his personal mobile telephone, and he had lost access to his official files and to the ministry’s licence and reserves database. At the time, a spokesman for the ministry confirmed that Mitvol was no longer in his office.


By John Helmer in Moscow

With the end of the year 2008, the last of the legendary diamond cartel deals has sunk back into the murk from which it originated when Cecil Rhodes created his African Diamond Syndicate in 1873.

Forced three years ago by a ruling of the European Commission (EC) to halt trading of rough diamonds, De Beers and Russia’s diamond miner Alrosa have wound up a series of trading agreements that date back — most of them secret, some open — for almost 50 years. Although the EC ruling was subsequently overruled by the European Court of Justice, De Beers and Alrosa decided separately that their best interests would be served if, from now on, they produce and trade competitively. From January 1, Alrosa will no longer sell and export a fixed quantity or value of rough diamonds each year to De Beers.

At peak, in the 1990s, De Beers was buying more than a billion dollars’ worth of Russian rough from Alrosa through official channels, and doing profitably on the leakage, or unofficial trade, as well.

Before January is out, it will also be clear whether the Russians have decided to roll up De Beers’s coattails, and oust Archangel Diamond Corporation (ADC), a De Beers-controlled Canadian subsidiary, from its position as co-owner and operator of the newest of Russia’s diamond mines in the Arkhangelsk region of northwest Russia.

Does this mean that the Russians believe that Alrosa, which accounts for about one-quarter of the global supply of mined diamonds, is better positioned to weather the market-wide collapse of diamond value than De Beers, which controls about 40% of diamond output? Because Alrosa is backed by Russian state financing, treasury guarantees, and the capacity of the state stockpile to absorb Alrosa’s diamonds until they can be sold, the answer is a tentative yes. Therein lies the potential for a revolution in international diamond clout.


By John Helmer in Moscow

Alrosa, Russia’s state-owned diamond miner, has reported that rough sales this year have slipped by 1.1%, and will slip by ten times that margin in 2009.

Alrosa, a wholly state owned shareholding company controlled by the federal government, does not issue production and financial results by the half-year or quarter. It also does not disclose conventional production data by diamond weight (carats). Like-for-like comparisons by carat, mine source, and year are also not available. Instead, production results are cited in ore tonnage excavated, and in US dollar value terms for diamonds recovered, making precise volume comparisons impossible. Announcements of result data are timed arbitrarily, and executives do not respond to detailed questions.

In the latest press release posted on the Alrosa website, rough sales by Alrosa, excluding its share of sales of production from the Catoca mine in Angola, are reported as totaling $2.76 billion. This was reported in a Russian news agency citation from Alrosa CEO Sergei Vybornov as a decline of 1.1% on the 2007 level. It is also down on the sales projection by the board three months ago of $2.85 billion.

The information provided in the Alrosa Annual Report for 2007 is unclear. In Vybornov’s report to shareholders at the opening of the report, and in the sales section of the report, Alrosa’s rough sales revenues were given for the year as totaling $2.79 billion; this comprised $2.13 billion for Alrosa’s wholly owned mines in Sakha; and $663.1 million in sales from the Nyurba mine, whose equity is equally divided between Alrosa and the Sakha regional government. The figure for the main mines was reported as falling 4.3% from the 2006 result, while the Nyurba figure was rising by 3.8% on 2006.


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.



By Margarita Menshikova, translated by John Helmer, Moscow

On the day before Good Friday (Orthodox), Russian Defence Minister Sergei Shoigu reported at the Kremlin to President Vladimir Putin that at Mariupol,  inside the Azovstal steel works, about two thousand troops remain underground, including foreigners. Putin issued the following order: “There is no need to penetrate these catacombs and crawl under these industrial facilities. Seal off the industrial zone completely.”  

Four days earlier on April 17, the Defence Ministry spokesman Major-General Igor Konashenkov told the press that “up to four hundred foreign mercenaries were trapped [at Azovstal]… Most of them are citizens of European countries, as well as Canada. We have already reported earlier that radio conversations between militants in Mariupol are conducted in six foreign languages”  

Today, an unusually detailed report by the Moscow internet broadcaster Tsargrad was published to signal the strategic significance and political value of the NATO officers in their command bunker under Azovstal.


Copyright © 2007-2017 Dances With Bears

Copyright © 2007-2017 Dances With Bears

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