1. Recently, President Medvedev urged Russian oligarchs to pay their “moral debt”? What does this mean in concrete terms?

Moral debt in Russia is a case of the three monkeys who see, hear, and speak no evil.

In theory, the Russian President means that men who seized most of Russia’s natural resource wealth more than a decade ago by a combination of corrupt and fraudulent means, and then generated vast fortunes abroad by manipulating Russia’s weak tax and capital controls, have an enormous debt to repay to the state and the economy. In practice, Medvedev does not intend to name names, let alone take any action to collect that debt, whether moral or fiscal.

Indeed, Medvedev is going to unusual lengths to protect one of the oligarchs, Oleg Deripaska, from having to honour the loan obligations he has to Russia’s state banks, as well as to a group of more than 70 commercial banks, some Russian, most foreign. If anyone in Russia carries the largest moral, as well as money debt today, it is Deripaska. Consider then why Medvedev said, at a regional conference in Irkutsk on February 20, in Deripaska’s presence: “I fully agree with what Oleg Vladimirovich [Deripaska] said about situations when the crisis leads to settling scores… There should be no situations when different structures’ rivalry can lead to the collapse of an entire group of companies…Such actions should get adequate reaction from the state. For that purpose we have one serious institution, the government of the Russian Federation … There are situations when power must be used.”

In case anyone was in doubt that Medvedev meant to reach up, and put his arm around Deripaska, he repeated the message at a Kremlin meeting on March 17. On that occasion, the president was meeting with Mikhail Fridman, controlling shareholder of the Alfa Bank group. Alfa, to whom Deripaska is overdue in repaying between $650 million and $1 billion, has led the commercial banks in launching court action in Moscow, and also in Jersey (where Deripaska registers some of his companies). Medvedev the lawyer appeared to be telling Fridman the banker: “We cannot sacrifice entire companies with many thousands of staff to meet the ambitions of certain credit organizations.”

It is one thing for a politician not to mean what he says, or to mean different things to different audiences. It is quite another thing for a politician to say things he has no power to do, with the purpose of intending to do in secret what he would not dare acknowledge in public.



By John Helmer in Moscow

The announcement from Mechel on March 26 that it has agreed with its bankers on a 51-day extension of time to repay or refinance a $1.5 billion loan, which fell due on March 20, has exposed a grave failure of arithmetic in the marketplace. And that’s not all.

Headlined by Bloomberg and Reuters as a two-month extension, and repeated by rote in client bulletins from the principal Moscow brokerage and investment houses, the new loan payment deadline, which New York-listed Mechel reported to the Securities and Exchange Commission, is May 15. That was just 51 days away from the signing of the new agreement — not 60 or 61, as two months usually add up to. The nervousness of the banks in setting the short deadline seems to have been obscured by the unwillingness of the market-makers and media to take out their fingers and thumbs, and check the official release from Mechel itself.

That said: “On March, 25, 2009, following negotiations with the banking syndicate which provided Mechel a one-year loan for the Oriel Resources Ltd. (United Kingdom) acquisition, an agreement for a two month payment term extension was reached. The new payment date is May 15, 2009. The prolongation period will be used to complete negotiations with the bank participants of the syndicate aiming at refinancing the bridge loan with long term instruments.”

As has been reported in the archive, Oriel is a chrome miner and refiner. Since the takeover a year ago, it has been included in Mechel’s ferroalloy division, supplying chrome to Mechel’s specialty steel diivision for the production of nickel and chrome-plated products.



By John Helmer in Moscow

Far Eastern Shipping Company (Fesco) has released through a wire service a set of unaudited financial estimates for the full year 2008. The release was unusual, analysts said, and appears timed to counteract the impact of a downgrade by the Moody’s rating agency in Moscow on Thursday.

Despite better than expected revenues, as well as the earnings figure Ebitda, the shipping, ports and rail group has acknowledged a heavy writedown in the value of its fleet. In a note to clients and investors, Troika transportation analyst, Kirill Kazanli, says “the group’s bottom line is expected to range between breakeven and net loss of around $1 mln.” Fesco’s controlling shareholder Sergei Generalov, the executive chairman, issued a public statement confirming the possibility of this bottom-line loss for the year.

The company has not released a financial report for the year on its website, and spokesmen for the company refuse to answer questions about the calculation of the vessel writedown, which appears to have been taken in the fourth quarter of 2008.

The last financial report, audited by Moore Stephens, was issued for the six months to June 30 last, and posted on November 28. This identifies Raffeisen and ING as the biggest lenders to Fesco for fleet additions. With Citibank and Unicredit (Italy), these banks take up about 66% of the Fesco loan book.

As ships lose their market value, banks which have made loans for their purchase and which hold the vessels as collateral for repayment are likely to raise cash or margin calls from the borrower, or seek additional security. When asked whether it has considered margin-calls on Fesco loans, Raffeisen asked for a written letter of request, and then refused to reply. Unicredit and Citibank refused to talk about loan terms, margin-calls or vessel valuation policy.



By John Helmer in Moscow

In 1930, at the start of the Great Depression, a story was published in the US with the purpose of convincing children that if they worked hard, they would be rewarded. That idea being none too original, it turns out that the tale of the small anthropomorphic locomotive, who pulls a heavy line of freight-wagons over a mountain-top, was cribbed from a publication a quarter of a century before.

If your mother read it aloud to you as a youngster, you’ll remember the best parts. The first was at the shunting yard when the bigger locomotives refuse the job, and the little one chants: “I think I can. I think I can. I think can.” With tantalizing tension as he slows on the up-grade, he manages the feat, and then celebrates as he runs downhill: “I thought I could. I thought I could. I thought I could.”

High River Gold (HRG:CN) is the Toronto-listed junior who’s lived to tell this tale. Only the children in the market don’t appear to have heard it, yet.

With four operating gold mines in Russia and Burkina Faso, tw and two mine projects in development, HRG has currently attributable production of about 300,000 ounces per annum, and is cashflow positive. Attributable gold reserves were estimated in February by Dan Hrushewsky, HRG’s investment relations director, at 2.2 million oz, with silver reserves at 5.2 million oz. A subsequent release from the company on March 17 reported a MICON expert audit of gold reserves at the Zun-Holba and Irokinda mines (Buryat region of southeastern Siberia). Altogether, counting the Bissa gold project in Burkino Faso and the Prognoz silver project (Sakha region of fareastern Siberia), and converting silver reserves into gold equivalent, HRG’s gold equivalent reserves and resources, on the Canadian NI 43-101 basis, add up to 6.1 million oz.

A recent international investment bank valuation of HRG estimates it at almost $770 million. The current market capitalization, however, is C$112 million (US$91 million). This compares with Russian peer Polyus Gold (PLZL:LI) at $9.1 billion; Polymetal (PMTL:LI), $2.2 billion; Peter Hambro Mining (POG:LI), $686 million; and Highland Gold (HGM:LI), $203 million.



By John Helmer in Moscow

Russia’s steelmakers have a better chance to lift output and revenues on a recovery in export demand, especially in the China market, than on reviving domestic demand for steel. This forecast, issued in a steel sector report of March 24 by Troika Dialog investment bank in Moscow, flatly contradicts the consensus of Russian steel analysts a year ago. At that time, they told investors they were certain Kremlin spending on public works would sustain demand for steel for domestic construction and infrastructure, and so buffer the domestic steel industry against external shocks.

What a canard that turns out to be.

“Now that demand for steel is falling,” the new Troika report claims, “international trade is going to decline dramatically as well, but we think that Russian players are well positioned to claw back at market share thanks to the cost advantage, and hence protect export volumes from falling massively…On the domestic front… we expect demand to drop by around 40% in 2009 from its peak 2007 level…At the same time, we do not entertain illusions about a possible positive impact from the government economic stimulus program, which seems to be growing smaller by the day.”

The report predicts that the protectionist option may also grow in importance, as Russian mills and pipemakers apply to the Trade Ministry in Moscow for domestic injury or anti-dumping relief, primarily to keep out Chinese steel imports. “Russian producers could partly offset the drop in demand by squeezing out imports, which averaged 13% of Russian consumption last year (the same as during the entire previous decade), but this might be difficult without official support. The Russian government took the first step in January, imposing import duties on certain types of long products and pipes ranging from 15-20%, thoughthis may not be enough to put a barrier in the way of imports.”



By John Helmer in Moscow

For weeks, Alrosa, Russia’s diamond mining challenger to De Beers, has been waiting for the appearance of a miracle to keep the mines producing at last year’s volumes, and avoid layoffs and financial damage to the fareastern region of Sakha, where Alrosa is the chief income generator.

That miracle is a secretive government agent called Gokhran. Legally a branch of the Ministry of Finance, it has a history going back three hundred years to the time when Tsar Peter the Great decided he needed something more formal than bodyguards and hobnailed chests in which to keep his treasure.

During the 1990s, Gokhran played a key role in releasing, as well as withholding Soviet-era stocks of rough diamonds, plus platinum and palladium. The result created several diamond fortunes in Tel Aviv and San Francisco; the speculative spikes in the price of the platinum group metals were the foundation on which several celebrated Johannesburg mansions and Eastern Cape beach villas were erected.

Today, much depleted in valuables, compared to fifteen years ago, Gokhran is rebuilding its strategic significance in the international diamond market. This is because it has the potential, with Russian state funding, to buy up Russian rough diamond production. Unlike the other global diamond miners, which are halting mine operations, slowing mills, and laying off miners and prospectors, the alliance between state-owned Alrosa and state-funded Gokhran has the potential to make an enormous Russian grab of global diamond market share — and keep it.

That is what Alrosa, with a 25% share of the market, is waiting for. But will Godot, I mean Gokhran arrive in time? On Thursday last [March 19], it seemed so. Russian government ministers agreed then to make a substantial increase in budget money for Gokhran to buy Alrosa’s mine output this year. It is far from clear, however, what proportion of the production will not be bought by Gokhran; and what cuts to the mine output plan Alrosa management may now be obliged to make, if any.



By John Helmer in Moscow

Denmark-based fleet operator Norden has hit United Company Rusal, the Russian aluminium monopoly controlled by Oleg Deripaska, with claims for shipping contract violations since last September. The liabilities total $98.3 million. Court documents break publicly for the first time the code of silence which usually covers Russian commodity trades, the cargo owners and the shippers.

Norden chief executive Carsten Mortensen refuses to say if London arbitration to enforce Norden’s contracts has already commenced.

US court records from the southern federal district of New York show, however, that Norden is charging a Jersey-registered Rusal trading company with breaking contracts for the shipment of 2.6 million tonnes of Queensland bauxite from the port of Weipa to Porto Vesme, the alumina refinery port in Sardinia. The tariff agreed was $64.64 per tonne, making a gross charge of $167 million. For this year, the contracts specify 15 shipments of 300,000 tonnes.

Rusal, one of the leading primary aluminium, alumina and bauxite producers in the world, has said in the past that all shipping data are company secrets; the company itself is privately owned and publishes no financial reports. Trade data are kept secret, because of the complex tolling and tax schemes which Rusal uses in Russia, and in its international operations. The Australian government keeps bauxite export data confidential.

According to the US court documents, Norden went into the New York federal district court in February to attach Rusal bank funds to secure payment, in the event the London arbitration awards Norden its claim. On February 10, US judge Richard Berman ordered 15 US and international banks, including Nordea of Finland, to freeze Rusal accounts up to $93.8 million in cash value.



Starting in the third quarter of last year, United Company Rusal started cancelling shipping contracts for cargoes of bauxite between Australia and Sardinia. On February 4, 2009, Norden, a Danish company with whom Rusal had a long-term contract for vessel delivery of its bauxite, filed suit in the federal US Court in New York, seeking the freeze and attachment of almost $100 million in cash which the company was believed to have on deposit in banks in the New York area. The bank accounts and money were ordered frozen by a court order on February 10. The legal proceedings for contract claims will now be heard in an arbitration court in London.

The freeze order obtained by Norden was the largest secured to date by a creditor against the Rusal group, which is now facing debt claims from more than 70 foreign banks and at least half a dozen Russian banks.

For readers with a special interest in these matters, here is Norden’s US complaint:
Norden A/S v Rusal Trading International Limited

And here is the freeze order that followed:
US court order of attachment against Rusal Trading International Limited



By John Helmer in Moscow

Prime Minister Vladimir Putin has put his signature on one of the strangest mining prospector’s pay-sheets ever drafted in the history of mining.

According to the prevailingRussian law, now one year old, if a miner does not qualify as Russian, and if what he discovers is big and valuable enough, he must hand over what he’s found to the state, which may then auction it to the highest domestic bidder. In compensation, Putin’s formula, according to a decree he signed on March 10, will provide reimbursement of prospecting expenses, plus a finder’s fee ranging from 25% to 50% of these expenses, depending on how inhospitable the territory that has been explored.

There’s also a catch — the expense reimbursement, and the premium, cover only those costs for exploring, finding, and proving the deposit which the state takes back. Thus, the unlucky prospector has to be really lucky to hit paydirt with a single drill-core, otherwise Putin will slam the pay-window down on his fingers. A prospector might count himself more fortunate if he should find much less than the state, or his Russian rivals, would like to acquire.

In practice, the Putinformula encourages the very schemes which Oleg Mitvol, Russia’s mining regulator until he was ousted last year, attacked as boosting London-listed share prices, instead of investing in mining as such. It remains to be seen whether the formula proves to be El Dorado for consolidators of junior assets and M&A speculators.

A year ago, the Russian parliament enactednew legislation setting out a list of 42 strategic sectors and metals, and also thresholds for mineable reserves of oil, gas, copper and gold that identified such deposits as “strategic”. The purpose was to protect the national resource base from takeover by cash-rich internationals. After several years of argument over the thresholds, the new legislation fixed the foreign exclusion limit for oil at 70 million tonnes (490 million barrels); gas at 50 billion cubic metres; gold at 50 tonnes (1.6 million ounces); and copper at 500,000 tonnes. A zero threshold was fixed for the mining of uranium, diamonds, quartz, cobalt, nickel, platinum group metals, beryllium, and lithium.



By John Helmer in Moscow

The Moscow and New York stock markets appear to have been taken unawares by the disclosure that Igor Zyuzin’s steel and coal-mining group Mechel is in court over an unpaid demand by BNP Paribas for $60 million. The share price of the fifth-ranked Russian steelmaker rose 1.3% in Wednesday’s Moscow market trading, and 10% in subsequent trading in New York. However, there is no sign that Mechel has informed the US Securities & Exchange Commission (SEC) of the material change in the company’s financial position and asset value, stemming from the court action in Geneva.

This is the second instance in as many months when Mechel has failed to notify the US regulator and US shareholders of material changes. The first, reported by CRU Steel News on February 26, exposed Zyuzin’s acquisition of the West Virginia-based Bluestone Coal for a cash down-payment of $425 million, and the issue of 80 million Mechel preference shares. As one analyst reported what happened at the time, “the money simply disappeared from Mechel’s balance-sheet, without an explanation.”

Zyuzin’s spokesman Ilya Zhitomirsky has refused to clarify the circumstances of the Bluestone Coal deal. He is also refusing to answer questions about the BNP Paribas claim.

Zyuzin is generally believed in the Russian market to have overpaid for previous mining acquisitions — of coking coal deposits in the Sakha region in January 2005, and again in October 2007, for a combined total of $2.7 billion; and of Oriel Resources, a chrome miner and refiner, in March 2008 for $1.5 billion. Following the Oriel deal, transacted at a 90% premium to the prevailing market price, Mechel’s share price dropped 3%.

Today, Thursday, a note from Alfa Bank confirms that Mechel’s trouble with BNP Paribas is connected to this week’s March 20 deadline for repayment of a $1.5 billion loan. That was issued last year to finance Zyuzin’s premium-priced acquisition of Oriel, whose assets are located in Kazakhstan and Russia. According to the report by Alfa steel analyst Barry Ehrlich, Mechel “had a low cash balance at the beginning of the year, we estimate, and then obtained a three-year $1 bln credit line from Gazprombank in February.” Referring to the BNP Paribas debt, Ehrlich said: “We believe this conflict may be related. We also believe that negotiations with the Oriel Resources loan syndicate are still ongoing.”



By John Helmer in Moscow

Sometimes it can happen that men of steel have a soft underbelly. It’s to protect that that they wear armour-plate.

The release this week of group financial results for Severstal, the third ranked Russian steelmaker owned by Alexei Mordashov, exposes the high cost, and poor judgement perhaps, of Mordashov’s purchases of US steelmaking and coal assets last year.

According to Uralsib Bank steel analyst Michael Kavanagh, “the consensus [is] that Mordashov bought the US assets as a hedge against losing the Russian assets. However, bear in mind that the Russian steel operations are subsidising all other assets. With hindsight, all acquisitions made in the last two years will look expensive. Acquisitions should be judged over time and through the cycle. However, it does look like they [Severstal] over-paid in the context of today’s market.”

According to Severstal’s financial report for 2008, issued last week with auditor’s notes by KPMG, a total of $1.54 billion has been written off against 2008 operating profits, slashing the pre-tax profit figure by almost 50%. The comparable writeoff loss for 2007 was $28.9 million; $57.8 million in 2006.

Mordashov is quoted in the company’s press release, accompanying the financial report, as claiming that a healthy 44% increase in the group’s 2008 revenues (to $22.4 billion) was “due to strong demand in the first nine months of the year, a favourable price environment and the consolidation of our assets in North America.” Mordashov was coy when it came to explaining the unprecedented loss of asset value. The public statement says: “There was an exceptional drop in the demand for steel in Q4 2008. This, combined with valuation adjustments of $411 million on inventories to NRV and a $1,540 million of impairment of non-current assets, contributed to a net loss of $1,208 million in the last quarter.”

Nowhere in Mordashov’s public statement is there any mention that most of this “impairment” was caused by the loss of value of the American assets Mordashov has recently purchased. All that he could find to say about the performance of these assets was how much better they are doing than before he paid premiums to take them over a year ago; and also how successful the company’s lawyers have been in claiming insurance and contract violation pay-outs.



By John Helmer in Moscow

Steelworkers at the Zlatoust steel mill, which is owned by Vadim Varshavsky’s Estar group, have won an unprecedented claim for wages cut by the company, following a local court ruling and a 5-day hunger strike. It is the first known case of a successful protest action by Russian steelworkers since capacity reductions, furnace shutdowns, and layoffs began last October. Zlatoust produces specialty steels for auto, military, toolmaking and other applications; before the crisis, output was running at about 40,000 tonnes per month.

The steelworkers’ success coincides with an ongoing negotiation between Varshavsky’s managers and the state-owned Vnesheconombank (VEB) to refinance Estar’s loans. Some of these loans support Varshavsky’s acquisitions of Alpha Steel in Wales; and the Istil group, with a mini-mill in Donetsk, Ukraine; and another in construction in the UAE. According to a source at Estar, there have been no layoffs in the UK at the re-named Mir Steel plant.

Local press reports indicate, and Estar sources confirm, that 16 steelworkers from the Zlatoust plant, in the Chelyabinsk region of central Russia, suspended a hunger strike on the weekend, after the Zlatoust mill director confirmed by letter that a claim for an initial Rb6.7 million ($186,111) in back pay for October through December would now be paid. The protest organizer, Alexander Negrebetskikh, was reported as saying: “Estar agreed to pay 30 percent of the sum they owe the workers by March 18. We are suspending the hunger strike, but if they don’t pay [the rermainder of the pay claim] we will resume.” The total backpay claim amounts to almost Rb40 million ($1.1 million, repayable over six months).

An Estar source told CRU Steel News “the delay in wages was not actually a delay. Currently, the amount of orders [for the mill’s products] has declined by fourfold. So Estar has moved its workers to a shorter week of 3 to 4 days. The payment for the idle period was two-thirds of the regular wage. The workers appealed to the local court, and demanded the full wage to be paid. They won the court ruling, so now Estar will compensate this money.” A schedule for repayment has been agreed, starting from March 18.



By John Helmer in Moscow

Despite a blackout of news from Archangel Diamond Corporation (AAD:CN), the Canadian mining junior will seek US court orders to oblige two key Russian executives to give testimony on oath in ADC’s claim that it has been unlawfully deprived of its stake in the multi-billion dollar Grib diamond pipe, in northwestern Russia.

The threats of a US court order to testify, and of legal sanctions for possible evasion of the subpoena or perjury, have been the most powerful weapons ADC has held in its decade-long attempt to recover its mining rights from the Russians named in the court claims. It has taken that long for the US courts to consider whether to exercise jurisdiction over the Russians — the ruling could come very soon.

Before diamond values crashed last year, De Beers had estimated the Grib deposit to contain 74 million recoverable carats, worth about $8.2 billion. It is the largest diamond mine ever discovered by a foreign mining company in Russia. Despite technical mining difficulties, the project is believed to have significantly better profitability prospects than new DeBeers projects in Canada, where book values have been heavily written down.

Financed by DeBeers, which holds a 59.4% stake, ADC held a conference last month with the presiding judge in the Denver, Colorado, District Court. The judge has called for the filing of third-party deposition notices, which may be signed shortly. Lawyers for ADC will not comment on the identities of those to be deposed. However, in an earlier phase of the US proceedings, 11 individuals were listed for interrogation. They included the former CEO of ADC, Timothy Haddon; Vagit Alekperov, the CEO of LUKoil, one of Russia’s leading oil companies; and Alisher Usmanov, a well-known owner of iron-ore mines and steelmills in Russia, and part-owner of the UK football club, Arsenal.

The named defendants in ADC’s claim are two Russian companies, Arkhangelskgeoldobycha (AGD), the current licence holder and miner of the diamond project; and LUKoil, the controlling shareholder of AGD. Alekperov and Usmanov are accused in ADC’s court claim of being participants in “a scheme of fraud, breach of express and implied contract, civil conspiracy, intentional interference with contract, breach of fiduciary duty, and unjust enrichment”. ADC is claiming $1.2 billion in compensatory damages for the loss of its investment and profits in the diamond project, plus triple punitive damages of $3.6 billion for the alleged racketeering conspiracy.



By John Helmer in Moscow

On February 24, at the headquarters of Russia’s state media, Prime Minister Vladimir Putin visited the offices of Russia Today, an English-language cable and satellite broadcaster. He was escorted by Svetlana Mironyuk, the head of the Russian News and Information Agency (RIA-Novosti), an administrative holding for state media; in the Russian administrative jargon, the holding is a “federal state unitary enterprise”, without shareholdings, fully funded from the state budget.

Her boss, Mikhail Seslavinsky, head of the Federal Agency for Press and Mass Communications (FARMS, aka Rospechat), wasn’t reported to be in attendance. But then Putin wasn’t visiting for long. Actually, fifteen minutes — according to Moscow News, a weekly tabloid in English, which is also funded and managed by the state from an office in the same complex, a stone’s throw from the Foreign Ministry.

Mironyuk has headed the state news agency since 2003; before that she worked for Vladimir Gusinsky’s Most media group, and survived his downfall. Her agency began before she was born, in 1941, as an information outlet for the Communist Party’s Central Committee, focusing on reporting from the war fronts. By the war’s end, it was running media outlets, including newspapers, magazines and radio stations, in more than 20 countries. The target audience had shifted from domestic to foreign.

In 1961, the two audiences were combined in a mission charter that aimed “to contribute to mutual understanding, trust and friendship among peoples in every possible way by broadly publishing accurate information about the USSR abroad and familiarizing the Soviet public with the life of the peoples of foreign countries.” During Mikhail Gorbachev’s perestroika, the charter was modified to democratize the media themselves. The Gorbachev mission statement of 1990 said the new agency was “to provide information support for the USSR’s state domestic and foreign policies and proceeding from the interests of the democratization of the mass media.” At the time, the agency was running an extraordinary number of bureaux in 120 countries.

Whether the media output was propaganda, or accurate news reporting, depended on which side of the Cold War and the Iron Curtain you were on. When the curtain came down on the Soviet Union, according to Mironyuk’s agency website, “the main criteria of RIA Novosti’s information services were the combination of promptness, objectiveness, authenticity and its own opinion regardless of the political situation.”



By John Helmer in Moscow

The only internationally listed Russian port company is turning out to be one of the stable revenue survivors in the shipping, trading, container, and currency storms now blowing havoc across the Black Sea. But don’t pay attention to the stock markets, the company management and Russian maritime analysts warn.

Shares of Novorossiysk Commercial Sea Port (listed as NCSP:LI in the London market, NMTP:RU in the Russian market) retreated 10% in trading on March 2; they have lost 40% since January 1. At a current share price of 60 US cents, market capitalization of the company is currently $1.2 billion. At peak in June 2008, the share price was 22 cents, and the market cap, $4.3 billion. The controlling shareholder is board chairman Alexander Ponomarenko; the Russian government holds a 20% stake; and since a London initial public offering in 2007, the free share float is between 20% and 30%.

However, share turnover has been minimal, according to a source close to the company, adding that when a Moscow investment bank stopped speculating in the shares last year, the volume of shares offered for sale has been too small to be significant. Large swings up and down in the share price are therefore dismissed by senior management of the company as lacking meaning. Whether the instability is without impact on the management, the institutional shareholders, and bank lenders to the port is another issue.

A London broker told Fairplay there was significant dumping of shares in the last quarter of 2008, and in January of this year, as hedge funds sold out of all their emerging market positions. More recently, he said the position for Novorossiysk port has stabilized, as the management message begins to get through. The management claims the main institutions, which bought into the company at the IPO, haven’t budget. It also claims that’s the message it is getting regularly from Morgan Stanley and other marketmakers.



By John Helmer in Moscow

The Belarusian Potash Company (BPC), the trader for Uralkali and Belaruskali, has announced it will offer a 25% discount off the spot price of potash on the Brazilian market from $1,000/tonne to $750-$765/tonne (including cost and freight, CFR). The offer is good from this month to end-May.

Brazil is one of the drivers of the spot market for potash; whither the Brazilians lead, the Chinese and Indians are bound to follow.

To date, producers have managed to defend pricing at the nominal $1,000/tonne CFR level reached in mid-summer 2008 by concerted production and supply cuts. In practice, during the grim second half of last year, only a minor share of global potash sales — maybe no more than 5% — were done at the $1,000/tonne price, while the de facto average price on the market has been at the $600 to $650/tonne level since August.

Industry analysts claim that Brazil has been hit hard by the liquidity crisis and economic slowdown, with fertilizer purchasing activity virtually coming to a halt. But in 2008, Brazil imported more potash than China, India, or the southeast Asian market altogether, and the accumulated inventories have yet to be emptied to the point where importing can start again. To do that, there is anecdotal evidence that Brazilian importers are demanding the “Carnival discount” of 50%; the price of boxes to watch the Rio Carnival’s closing pageant last month were reportedly cut to 50% of the 2008 level in dollar terms.

The BPC discount price offer is less than it seems, for the new price represents a 3% to 5% increase over the average price to Brazil for all of 2008, which was $725/tonne CFR.



By John Helmer in Moscow

Russian steel proprietors are showing their anger at negative market reports, and share price cuts, following recent disclosure of their heavy investment spending on North American assets. But there has never been a time when the future growth and profitability of Russian steelmaking has depended less on the United States — or more on decisions being taken in China. How long it will take the Kremlin to deal with this contradiction between the national interest and the self-interest of the steel oligarchs is anyone’s guess.

The outcome of the Chinese government’s new stimulus programme, and of contract negotiations between Australian, Brazilian, and South African coal and iron-ore suppliers, are being closely watched in Moscow. That’s because the Russian steelmakers believe their future depends on Chinese demand for low-priced Russian steel. If Chinese buyers do no better than a 20% to 30% cut in spot and contract prices for these raw materials, Russian steel will still be better priced for Chinese importers.

Novolipetsk Steel (NLMK), Russia’s third largest steelmaker and slab specialist, says that a recent surge of sales of its steel slabs to China may enable the company to increase mill capacity and steel output next month. But the steelmaker also warns that this increase in steel production may not prove to be sustainable, because Chinese buying depends on the relative low price of Russian steel in the current international market. This price advantage for Russian exports in the Asian market could be lost, Novolipetsk believes, if competing steel producers benefit from significantly lower iron-ore and coking coal supplies from Australia, Brazil, and elsewhere.

A report of the Novolipetsk assessment has been issued by Uralsib Bank in Moscow. “Currently”, the bank says, “the Russian steel industry and NLMK in particular have a cost advantage over those steelmakers around the world who use expensive Brazilian and Australian iron ore and Australian coking coal. This has enabled Russian steel producers (who produce more than domestic consumption) to find an attractive export market for their semi-finished and low value-added finished steel products, particularly in Asia.”


By John Helmer in Moscow

More than one worker in ten in the Russian mining and metals sector is currently out of work, or facing company-ordered reductions of work time or pay, or both.

The statistics are being gathered by the Russian Mining and Metallurgical Trade Union, which has been monitoring job and pay conditions at 240 enterprises in the sector since last October. At that time, a total of 752,409 workers were on the employment rolls. A union source said their data have been compiled up to the end of February. At this point, the union says that 14,039 have been dismissed; 66,747 have had their working hours reduced, but retain their jobs; 1,384 are on enforced furlough without pay; and 1,247 are on furlough with partial pay. In total, 83,417 production and support workers at Russia’s mines, mills and metal works have now been hit by the economic crisis; about 11%.

The union also charges that many of the layoffs and pay cuts have been made illegally. An estimated 5,430 of those on the dismissal list, 42%, purportedly agreed to severance, but there is ample anecdotal evidence that they were forced by company managers into signing resignation papers. The union also charges that 35 companies in the sector are paying wages to 11,598 employees at a two-thirds reduced level that is not allowed under Russian labour regulations.

Layoffs of between 2,000 and 4,000 workers on the payrolls of Evraz (EVR:RU) steelmills and mines in Russia are a violation of the agreement Evraz signed with worker and regional representatives in November, a union leader told Minesite.

Lyudmila Zavzyalova, secretary of the Nizhny Tagil municipal authority, in Sverdlovsk region, told Minesite that 1,400 workers from Evraz’s lead Russian mill at Nizhny Tagil were recently listed for dismissal, and 582 workers from the nearby Vysokogorsky iron ore mine.



By John Helmer in Moscow

Sergei Vybornov, the chief executive officer of Alrosa for the past two years, is mobilizing federal government and industry support in Moscow to oppose a bid by Sakha President, Vyacheslav Shtirov, to replace him, and take over the top post at Alrosa.

Shtirov made his bid at a meeting with Prime Minister Vladimir Putin on February 25. A spokesman for Putin told PolishedPrices that Shtirov was alone with Putin at the meeting. The spokesman declined to say what the two men had discussed on the subject of the diamond industry and the future of Alrosa.

The official text from the prime ministry is in the form of a partial transcript, in which Shtirov refers to the problems of his region, but mentions Alrosa only once, diamonds once. The transcript of Shtirov’s remarks refers in some detail to the region’s oil, coal, and gold-mining developments. All Putin is recorded as saying is that while the market prices of oil, coal, metals, and diamonds are declining, the price of gold is rising. He is reported to have repeated himself on this point, while Shtirov is reported as pointing out that gold production from the region, while a healthy 18 tonnes (579,000 ounces) last year, cannot be expected to increase without fresh and costly capital investment, which the Russian banks are reluctant to finance. According to the transcript, Putin said: “We’ll solve the problem with gold mining.” Shtirov then says that he expects a solution for state guaraneteed advance funding of goldminers will be devised soon. The published transcript ends with Putin saying: “Good.”

Since sources familiar with what was discussed claim that Shtirov’s bid to leave the presidency of Sakha and retake Alrosa was the piority of discussion with the Prime Minister, they interpret Putin’s reported remark about goldmining as taken too crudely out of context to make sense; and also to be irrelevant to the decision Shtirov was asking for.



By John Helmer in Moscow

Layoffs of between 2,000 and 4,000 workers on the payrolls of Evraz steelmills and mines in Russia are a violation of the agreement Evraz signed with worker and regional representatives in November, a union leader told CRU Steel News today.

Lyudmila Zavzyalova, secretary of the Nizhny Tagil municipal authority, in Sverdlovsk region, told CRU Steel News that 1,400 workers from Evraz’s lead Russian mill at Nizhny Tagil were recently listed for dismissal, and 582 workers from the nearby Vysokogorsky ore-processing combine.

Alexander Mironov, a spokesman for the Kemerovo region branch of the Russian Mining and Metallurgical Trade Union told CRU Steel News the numbers to be laid off at Evraz’s plants and mines in his region were revealed in a company document, dated December 30. According to Mironov, the shutdown of two blast furnaces and two coke batteries at the West Siberian Metallurgical Combine (Zapsib) and Novokuznetsk Iron & Steel Works, both in Novokuznetsk city, will cost 700 and 150 jobs, respectively. Another 900 workers were targeted, according to the union official, at mines of the Evrazruda (“Evraz ore”) subsidiary.

Combining worker layoffs in the two regions makes a total of 3,732. The official payroll of the Evraz group, which is controlled by Roman Abramovich and Alexander Abramov, is not cited in the last company annual report, nor in any of the company’s references to its operations on the official website;. except for a note that 90% of the Evraz group workforce is employed in Russia; 10% in the rest of the world. According to the company’s 2007 Annual Report, labour accounts for 10% of the costs of the Russian steel division.


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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