RUSSIA CAPTURES BUMPER HAUL OF PIRATES

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By John Helmer in Moscow

The Russian government now leads the international naval powers’ tablewith 29 pirates under arrest, 14 more than the number being held by France, which has taken an estimated 71 Somalis in all; sent 11 to prison in Kenya; killed 4; and returned the rest to the Somali shore. The US has shot 3, and is currently holding one for trial in New York. On the Somali side, the pirates are estimated to be holding at least 16 vessels and about 270 seafarers.

Anatoly Serdyukov, the Russian Defence Minister, told a Moscowtelevision news programme on Wednesday afternmoon that “in the nearest time we will make a decision on what to do with pirates.” Russian naval interrogators are handling the pirates for the time being. Serdyukov added that the Russian Navy’s patrol of waters of the Gulf of Aden and Horn of Africa will continue.

The heavy destroyer, Admiral Panteleev, which is designed primarily for anti-submarine warfare, captured the Somali pirates,their vessel, and weapons on Tuesday evening, 15 miles off the Somali coast. How exactly this was done has not been disclosed. The Panteelev had deployed against the pirates after they attacked the Russian tanker, NS Commander, a 105,000-dwt vessel built for Novrossiysk Shipping Company in South Korea in 2006. The Commander was manned by a crew of 23 Russians.

The Russian Navy had despatched its anti-piracy patrol to the Horn of Africa last year, following the pirate capture of an Israeli-owned, Belize-registered vessel, the Faina, which was carrying Soviet-made tanks, air-defence weapons, and other arms intended for Kenya, and then possibly the southern Sudan. Most of the crew were Ukrainian; the master of the vessel and 2 crew memberswere Russian, and the master was reported to have died during the hostage-taking.

Russian tankercrews have also been taken for ransom off the west African coast.
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FOR K + S, WHEN IT DOESN’T RAIN, IT STILL POURS — GERMANS SLIP POTASH INTO CHINA TO UNDERCUT THE MARKET

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By John Helmer in Moscow

In the global marketplace for potash — one of the vital nutrients for plant growth, food production, and fertilizer fortune — noone is sharper at spotting a bargain than China. That’s because Chinese farmers, and the state fertilizer distributors, comprise the world’s largest consumers and importers of potash. And more than that, when the Chinese fix their annual contract price for potash imports, they set the marker for counterparts in India, southeast Asia, and Brazil, the next biggest potash markets, to follow.

During the last few years, China’s demand has been supplied by several sources , including Canpotex of North America, representing Canadian and US mining companies such as Potash Corporation; the Belarusian Potash Corporation (BPC), representing potash mined in Belarus and Russia; and Israel Chemicals Ltd. (ICL). During the past four years of farm potash supply hunger, and commodity price boom, the China market grew steadily, and so did potash prices.

But that’s history now. In the last half of 2008, the crash of all commodity prices and the shortage of farm credit have led most producers of potash to curtail their production dramatically, and prevent the accumulation of unsold stocks. In the first quarter of 2009, the Russian producer Uralkali, for example, cut its production of potash from 1.3 million tonnes to 459,000 tonnes, a reduction of 63%. Potash Corporation, the world’s largest potash producer in Saskatchewan, has reported that in the same period it cut sales volumes to North American customers by 86%, and to the rest of the world by 78%.

But it’s spring in China; and after an unusually rainless winter, farmers preparing to plant must have more potash than usual to improve their yields out of the dry ground. This is also the time that China’s big-volume buyers usually meet with the major producers and suppliers to fix the volume of deliveries of imported potash for another six to twelve months. But if the China National Agricultural Means of Production Corporation (CNAMPGC), the China National Chemical Construction Company (CNCCC), and Sinopec — the three major Chinese import buyers – keep their pens in their pockets, and their contract orders off the table, what exactly is happening?
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RAPID RELIEF OF JAPAN’S GAS PAIN — GAZPROM STARTS TO BUILD A GLOBAL LNG MARKET

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By John Helmer in Moscow

Russia’s maiden LNG terminal became operational in late 2008, after years of controversy over seismic and ground contamination onshore; threats to whale habitats at sea and tax evasion claims in Moscow. Gazprom, Russia’s dominant gas producer and monopoly exporter, now has shareholding control of the project operator, Sakhalin Energy, replacing Royal Dutch Shell. On March 29, the first LNG cargo was loaded aboard a tanker at Prigorodnoye port, on Aniva Bay, with 145,000 cubic metres of LNG bound for the Sodegaura terminal in Tokyo Bay, and for end-users, Tokyo Gas and Tokyo Electric. When the two planned production trains of the project reach full capacity in a year’s time, the Sakhalin LNG terminal will ship 9.6 million tonnes of LNG each year. Japan will take roughly two-thirds of the LNG from Sakhalin; South Korea will take most of the remainder.

As the world’s largest exporter of natural gas by pipeline, Gazprom has made no secret of its ambition to increase its share of the global LNG market, and improve the netback margins it may earn from exported gas sales. A recent Gazprom management review pointed out that LNG earns spot-price premiums compared to fixed-price long-term natural gas supply contracts that form the bulk of Gazprom’s sales revenues. But LNG projects are capital- and engineering-intensive, and take from 5 to 10 years to start. For these reasons, Gazprom concedes that it has run into capital-raising problems for the Shtokman field, in the Barents Sea; and these in turn are delaying a clutch of schemes for gasification and shipment of LNG from northwestern Russia.

Total of France, one of the Shtokman field developers with Gazprom, had been saying that it envisaged four LNG plants to be built as Shtokman’s output capacity ramps up; the first of these was intended for a start date of 2014.

According to Gazprom’s plan for entering the US and Canadian LNG markets, first announced in 2005, this first northwestern gasification plant and loading terminal was intended for Primorsk, near St. Petersburg, on the Gulf of Finland; its capacity was for 7.2 million tonnes per annum. A Gazprom analysis in 2005 claimed that “the most promising market in terms of LNG supplies is the USA where… LNG imports will grow tenfold (from 18 to 180 bcm/y) .” ConocoPhillips and Chevron agreed to study marketing plans for shipments to the US with Gazprom. The Russian company also negotiated potential supply deals with the Canadian LNG terminals being built in Quebec.
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CAT IN A SACK, PIG IN A POKE — MECHEL’S BLUESTONE COAL DEAL DRAWS FIRE

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By John Helmer in Moscow

Confirmation this week by Mechel of its takeover of the West Virginia coal producer, Bluestone, has drawn fire from Moscow bank and brokerage analysts, who claim the price paid exceeds the value of the deal.

The Mechel announcement was issued on April 22, confirming details of a transaction which first commenced late in 2008, when Mechel made a cash down-payment, first reported at $425 million. An issue of about 80 million preferential shares, completed in March, was the second payment stage of the transaction. Although undisclosed to shareholders or to the US Secutiries and Exchange Commission, which regulates US-listed Mechel, the early reports indicated a valuation of Bluestone, owned by James Justice, of about $870 million. The share issue, it was speculated before this week, would amount to a 19% dilution for current shareholders.

Negotiations to finalize the deal appear to have continued between Justice of Bluestone and Igor Zyuzin, Mechel’s controlling shareholder and chief executive. According to the new release of the “definitive agreement”, Mechel says “”the aggregate merger consideration is $436 million paid in cash (including $36 million interest paid), approximately 83.3 million preferred shares, plus the assumption of approximately $132 million of net debt”.

Additional terms disclosed set out a more complex valuation of Bluestone, and substantially more to be paid for its acquisition by Mechel over the next five years. An analysis of the transaction by Uralsib Bank indicates that “if the value of the market value plus dividends paid in the next five years is less than $1585 million in five years’ time, Mechel will make a top up cash payment on the fifth anniversary of the deal. Finally, Mechel will pay an additional $3.04/ton for every ton of proven coal reserves in excess of 458 mln tons. Mechel’s expectation is that reserves could be 730 mln tons, implying that an additional $828 mln will be paid when the reserves are proven.”
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WHERE DID THE RUSAL FORTUNE OF OLEG DERIPASKA DISAPPEAR TO, PART-1: NOT IN AFRICA, WHERE AFRICAN GOVERNMENTS CHARGE THAT RUSAL UNDERPAID FOR ASSETS, OR DIDN’T PAY AT ALL

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Deripaska’s cashflow chart

By John Helmer in Moscow

Clark’s Nutcracker is the name of a bird, a member of the crow family, and one of the most famous in the world for a feat of intelligence few human beings, even certified public accountants, can match.

Ornithologists have observed that this fellow can remember hundreds of locations where he has stashed away food. A relative, the American Scrub-jay, is on record as being able to steal from the caches of other birds, and re-hide its own, once it suspects they have been spotted by other birds. If only the problem of tracking down the money of United Company Rusal, and its controlling shareholder Oleg Deripaska, was ornithological, then locating it for repayment to creditors would require no more than banding the wrists or ankles of Deripaska, and a handful of his lawyers and accountants.

So far, however, Deripaska has managed to do a Clark, and give his creditors the bird.

This presents an urgent problem for at least 70 international banks, and several Russian ones, which are owed large sums of money by Rusal, and which neither the company, nor Deripaska’s personal holding Basic Element, acknowledges it can repay – at least, not any time soon. Deripaska holds 56.8% of Rusal, and 100% of Basic Element. Depending on how the sums are calculated, and whether they include interest, penalties, and lawsuit contingency provisions, as well as loan principal, Deripaska and his companies currently owe between $20 and $30 billion. That’s the biggest debt stash in Russia. And in the world, perhaps only Bernard Madoff is charged with owing more. According to an official statement this week from Olga Zinovyeva, first deputy general director of Basic Element, Rusal owes $16.8 billion, while the Basic Element holding is obligated for about $3 billion in non-aluminium business debts.
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NOW YOU SEE MY GOLD ASSETS, NOW YOU DON’T – MIKHAIL PROKHOROV AND POLYUS GOLD ARE TARGET OF FIRST-EVER FSA ACTION

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By John Helmer in Moscow

For the first time since Russian goldminer listings began on the London Stock Exchange more than a decade ago, Russian shareholders have taken a major Russian goldminer to the UK regulator, alleging asset stripping and share value dilution, along with the charge that no justice is possible in the Russian courts. At the heart of the complaint filing is the sale of shares at what is alleged to have been ten times less than their fair value, and the valuation of gold reserves transferred at many muliples below book. The gold in question includes part of the most celebrated vein of unmined gold in Russia – the fabled Sukhoi Log deposit, in the southeastern Siberian region of Irkutsk.

A Moscow-based holding, Westway Alliance Corporation, with an 8% shareholding in the Irkutsk region goldminer Lenzoloto (“Lena [River] Gold”), filed its claim with the Financial Services Authority (FSA) on January 29.

The corporate targets identified in the complaint are the AIM-listed Polyus Gold (PLZL:RU, PLZL:LI), its management, and controlling shareholder, Mikhail Prokhorov. The FSA told Westway in March that an investigation has commenced. However, the FSA declines to respond publicly to questions about the case. The agency also warns complainants that its charter allows it to dispose of a complaint without informing anyone, unless the outcome is a disciplinary action posted on the FSA’s website. In 2007, the FSA says it issued just one disciplinary order or enforcement notice; in 2008, there were 8; and in 2009 so far, 2.

Westway told Minesite that between 2003 and 2006, Polyus took over the gold-producing and exploration assets of Lenzoloto at one price; then devalued them for transfer to Polyus; raised their value to achieve a significantly greater capital value for Polyus; and thereby deprived Westway as a minority shareholder in Lenzoloto of the substantial difference in value. Calculated on the basis of under-valued or reserves allegedly lost to Lenzoloto, Westway’s claim targets an amount estimated at $526 million; of that, its 8% stake should represent a claim to about $42 million.

In 2007, when Westway filed its initial claim in the Irkutsk regional arbitration court, the case was dismissed on a technicality. This was that, at the time of filing, and in the court papers, Westway failed to provide proof that it was the owner of Lenzoloto shares, although at the time the record of title indicated a nominee shareholder.
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MEDVEDEV VISIT TO CAP RUSSIAN HONEST-BROKER BLITZ IN AFRICA

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By John Helmer in Moscow

President Dmitry Medvedev will make his first visit to Africa in June, with stops planned in Egypt, Nigeria, and Angola. The disclosure of the Russian President’s first Africa trip was made in an interview with Business Day by Mikhail Margelov, the chairman of the Foreign Affairs Committee of the Federation Council, the upper house of the Russian parliament. Since December last, Margelov has been Medvedev’s special representative for Sudan, and the Kremlin’s first roving troubleshooter for Africa.

“Russia is back in Africa,” Margelov had said on arrival in Khartoum in January. Since then he has also toured the Darfur region, and met with Arab mediators in Cairo, Beirut, and Qatar to help bolster international efforts in the Sudanese conflict.

Margelov told Business Day that he recently held talks in Moscow with Awad Ahmed Al-Jazz, a special emissary from the Sudanese President Omar al-Bashir.

Russia is able to play the “honest broker role” in the Sudan, Margelov said, because Russia does not carry the burden of the colonial ties of the UK; the multi-billion dollar investment stakes of China; or the ideological positions of the US. Margelov said he is trying to build a balanced approach, and gather information from all of the Sudanese political factions. He said he has already held talks with Minni Arcua Minawi, a former rebel and leader of one of the Sudanese Liberation Army factions, who signed the Abuja peace settlement of 2006.

Margelov told Business Day he expects to meet other Sudanese opposition groups and neighbouring governments in Chad, Uganda, and Kenya, probably after Medvedev’s visit to the region.
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ALROSA’S DIAMOND FUTURE SUDDENLY VERY VERY SLIGHTLY INCLUDED

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By John Helmer in Moscow

If the senior management of Alrosa, the world’s number-2 diamond miner, mounted the review platform above Lenin’s tomb in Red Square, and stood in line for a two-hour military review, the goings-on inside the corporate executive suite wouldn’t be any clearer. But the body language might signal whether the company’s boss, Sergei Vybornov, is out of line, terminally.

But without that, all that can be read into an announcement from last Friday’s session of the Executive Board, is that the company management had an important visitor on Friday, and that after he had left, all that could be announced was uncertain.

Alrosa, the Russian diamond miner, is to reduce its dollarised production target for this year by 15.9%, according to the company’s record of an Executive Board meeting, held at Mirny, in the Sakha republic, on Friday.

The future of CEO Sergei Vybornov is also being considered by the company board, according to sources, who have told Polished Prices that Vybornov has agreed to step down once a replacement has been found for him. The board has also agreed, according to these sources, that Sakha President, Vyacheslav Shtirov, will not be Vybornov’s replacement.

The board’s new communique says nothing explicitly about the long-running feud between Vybornov and Shtirov. However, it notes that the Executive Board, a senior management body, included Shtirov in its deliberations on Friday. This is unusual. Shtirov is formally a member of the company’s Supervisory Board, equivalent to a corporate board of directors, which includes members nominated by the shareholders, and is chaired by federal Finance Minister, Alexei Kudrin. The last Supervisory Board meeting was held on December 30. The last public notice of an Executive Board meeting, convened on December 12, did not include Shtirov.
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FLOOD WARNING FROM SWITZERLAND!!! — RUSSIAN STEEL SURGE THREATENS THE WORLD!!!

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By John Helmer in Moscow

A report issued this week warns that Russian steelmills may try to export their way out of the current global economic crisis, exploiting their low-cost power and raw material advantages, and creating a potential glut in global steel supplies for another twelve months or longer. Steel analysts from the Swiss bank UBS produced the report on April 8.

“We see a severe looming export threat from Russia and its neighbors for several reasons”, UBS claims to clients. “The ruble has devalued ~30% vs the US dollar and domestic demand has fallen sharply with energy’s slump. The CIS are among the lowest cost producers and are running at ~65% capacity utilization. Exports are a great solution to their woes, and their prices are very competitive with global mills given low freight costs. We believe the worst-case scenario of a global mkt share battle is emerging.”

Included in the analysis of an export surge is steel from the Ukraine, Kazakhstan, and Belarus. “The CIS is a major global steel exporter, particularly to both the US and Europe. We believe the region has the capacity, motivation, and low costs to be a sizable export force in 2009. UBS estimates capacity utilization in the region is about 65% but generally weak domestic markets and balance sheets are motivating producers to try to return to full utilization…We estimate 50-60M tonnes available for export on an annualized basis, which eclipses recent Chinese exports at a run rate of 12-15M tonnes, and approximates the maximum annual exports from China of 52M tonnes in 2007.”
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EASTER BUNNY STRIKE — MECHEL HIT BY SHAREHOLDER LAWSUIT IN NEW YORK AS CLASS ACTION ADVERTISING STARTS

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By John Helmer in Moscow

Mechel today confirmed reports that the company is the target of a shareholder lawsuit, alleging that the company and its controlling shareholder, Igor Zyuzin, have failed to disclose material information affecting Mechel’s share price to the market.

Before news of the lawsuit filed Wednesday reached the market, Mechel’s share rose 10% on the day to $5.38. It has risen 20% over the past week, and 68% over the previous month. The steel, coal, and ferroalloy group’s current market capitalization is $2.2 billion.

In a report released Monday on Russian prospects in the global steel environment, Rob Edwards, Renaissance Capital’s steel analyst, said: “We have cut our target price for Mechel from $13/share to $9/share, reflecting current market conditions and 2009 uncertainties. We think Mechel represents the most attractive play on a risk/reward basis in the Russian metals and mining sector for investors seeking maximum upside potential among riskier names.”

Wire services reported overnight that the new lawsuit names Mechel and Zyuzin as co-defendants. The plaintiff is reported to be Dean Frederick, a Mechel shareholder. However, the lawfirm initiating the claim, Coughlin Stoia Geller Rudman and Robbins, is believed to be pursuing a class action, on behalf of a much larger group of minority shareholders of the New York Stock Exchange (NYSE) and US-regulated Russian steelmaker. The lawfirm, which has offices throughout the US, lists 39 pending class-action cases involving securities market claims. The Mechel filing is not yet listed on the law firm’s website.

Coughlin Stoia’s website reports that it is currently investigating the Bernard Madoff securities fraud “on behalf of large institutional and individual clients”, and advertises for shareholders who believe they may have been hurt by securities fraud to make contact.
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CURTAIN UP, CURTAIN DOWN — THE PUGACHEV & JUDY SHOW AT ST PETE’S SHIPYARDS

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By John Helmer in Moscow

As the curtain goes up this week on Russia’s newest shipbuilding company, the 100% state-owned United Shipbuilding Corporation (USC), maritime sources say the curtain may be coming down on St. Petersburg yard, Baltic Plant (“Baltiysky Zavod”).

Baltic is owned by the United Industrial Corporation (UIC) of Sergei Pugachev, who also owns Northern Shipyard (“Severnaya Verf”) in St. Petersburg. For some time Pugachev has been hoping to consolidate the Baltic works on the territory of Northern, and then dispose of the Baltic yard’s land for real estate development. The city government of St. Petersburg, which holds a golden share in Baltic, is vetoing that idea for the moment. But Baltic currently owes an estimated Rb4.5 billion ($132 million), and its newbuild order-book and current cashflow are running down. State shipyard officials, who announced the formal chartering of USC on April 7, have been contemplating a takeover of Northern, if Pugachev lowers his price. Baltic, they say, hasn’t been part of their plan.

The Baltic yard, Russia’s main producer of icebreakers, submarines, and tankers, seemed a better prospect in 2004, when it was owned by the ICT group, a St. Petersburg-based partnership headed by Alexander Nesis. It had been Nesis’s ambition, hesaid at the time, to leverage his 18% stake in Northern, and with Kremlin backing, to merge the two yards under ICT’s control.

A year earlier,when Nesis announced his bid to acquire the rest of Northern from its then owner Boris Kuzyk, a former advisor to the Yeltsin administration, he claimed: “there are several players on the Russian [shipbuilding] market, who are not strong enough, and for whom it is difficult to compete with the main competitors – foreign companies. The weaker Russian producers should not compete against each other, but should concentrate their resources. This will help solve the problem of pre-financing in developing their products. We want to establish situation of an absolute technological advantage, when noone else besides the holding will be able to fulfill the contract.”

At one stage in the conflict, sensitive documents were leaked that revealed serious supply, standard, and contract violations in Northern’s performance of a top-secret contract to build destroyers for the Chinese Navy.
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YURY TRUTNEV IS NO DRONE — THE MINING MINISTER WITH THE MOSTEST DIGS DEEP POCKET

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By John Helmer in Moscow

Yury Trutnev, the Russian minister in charge of Russia’s oil and mineral licences, is the top-earning member of Prime Minister Vladimir Putin’s cabinet for another year, according to official income data just released.

For 2008, Trutnev has declared earnings of Rb369.94 million, equivalent now to $10.9 million. Presiding at the ministry headquarters, a stone’s throw from the lions’ cage at the Moscow Zoo, Trutnev was first appointed to his federal job in March 2004. He has been well fed since then. In 2005, according to Trutnev’s report to the government, his earnings totaled Rb211.4 million (then $7.9 million). That was double his first official earnings report for 2004, and almost eighteen times more than the next-placed official, Minister of Transport, Igor Levitin, who reported 2005 income of Rb12 million ($446,482). In 2005, Trutnev’s income was four times larger than the incomes of all the other cabinet ministers combined. In 2008, his pocket is forty-two times deeper than Putin’s and President Dmitry Medvedev’s combined; it is 4.2 times larger than the combined earnings of his cabinet colleagues.

Trutnev’s name in Russian refers to the short-lived bee , whose only work in the hive is to fertilize the queen bee, before he dies. By association, the Russian word “truten” — literally, a drone — has come to mean someone who lives at another’s expense.

There is nothing unlawful about Trutnev’s income, his spokesman has explained, for it represesents deferred earnings from a company he used to own. This was called EKS, a privately owned concern which says it trades in food and runs supermarkets in the central Russian region of Perm, Trutnev’s birthplace. Trutnev, according to his ministry, sold out of EKS in 2006, and has been receiving instalments from the deal since then.

According to the official biography Trutnev posted on a personal website, he was born into a family of oil-industry workers in Perm. He graduated from university as a mining engineer, and after a brief spell working on oilfields, he returned to Perm to work as an administrator of the local sports organization. He was well-known in sports circles as a contestant and instructor in various forms of wrestling and oriental martial arts. As the Soviet Union crumbled, he and his fellow sportsmen went into business together, creating EKS to import Swiss foodstuffs, pharmaceuticals and other goods on order from the region. Russian press estimates suggest that by the mid-1990s, this had made him a comfortable fortune, and he moved into politics, first as a municipal councilman in Perm city, then mayor, and finally, in the year 2000, governor, replacing the incumbent who fallen out of favour with the Kremlin.
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SA STEEL TARGETED BY RUSSIAN MILL FACING DEFAULT

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By John Helmer in Moscow

South Africa’s Columbus Stainless Pty Ltd, the country’s only producer of stainless steel, has been targeted for anti-dumping action by a Russian steelmaker, who is himself under pressure of a foreign bank default, and takeover interest from the state.

The Mechel specialty steel and mining group, owned by Igor Zyuzin, has lobbied the Russian government for protective duties to block imports of stainless steel. Although Mechel denies lobbying, and Russian trade ministry officials have denied preparing a new import duty penalty, the ministry has published an official notice, confirming that it has commenced an anti-dumping inquiry.

Columbus confirms that it has received official papers relating to the Russian action, but declined to comment for the time being. Acerinox of Spain has a 76% shareholding in Columbus. The rest of the shares are held equally by Samancor (which is an Anglo American and BHP Billiton Plc joint venture) and the Industrial Development Corporation of South Africa, a state enterprise. Columbus is situated in Middelburg, Mpumalanga.

Stainless steel is the 9th largest export from South Africa by value, according to statistics of the Department of Trade & Industry (DTI). However, DTI reports no sales to Russia. These appear to have been recorded as entering Russia from another country office of the Acerinox group.

Last year, there was a sharp downturn in SA exports of stainless steel to R2.8 billion worldwide ($301 million); in Rand terms, this was a 75% decline from the 2007 total of R11.4 billion ($1.7 billion).

Most of the imports which Mechel is attempting to keep out of Russia originate from China. According to the latest import statistics from the Russian Customs Committee, in 2007 SA sold 10,707 tonnes of thin stainless sheet to Russia, for a declared value of $24.5 million. China sold 24,622 tonnes at $46.2 million. In the last quarter of 2008, the Russian customs data show SA sold 3,621 tonnes for $12.6 million; China sold 6,466 tonnes for $17.4 million.
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A NEW CAUCASIAN CHALK CIRCLE — VARSHAVSKY IN TUG WITH GUTSERIYEV FAMILY OVER STEEL ASSETS

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By John Helmer in Moscow

This is a tale of how the appetite for assets comes full circle, and who gets carved up in the process.

Vadim Varshavsky, a deputy of the State Duma and member of the parliamentary Committee on Industry, used to own steel-producing assets as part of a larger coal and steel group, which he shared with his partner, Mikhail Gutseriyev, also a one-time member of the State Duma. Both have been much honoured. Varshavsky is a renowned collector of cognacs. Gutseriyev has won the Order of Friendship, the Order of the Mark of Distinction, and other orders and medals, including the Peter the Great National Prize, and the “Best Mayor of the Year” award.

Varshavsky’s philosophy of partnership is succinct. He told a Moscow newspaper in 2007: “I have a controlling stake everywhere, but in each project I have different partners”. Between 2004 and 2005, he and Gutseriyev had something some people call a falling-out; and others call a parting of the ways. The outcome was that they decided to divide their possessions, so that Gutseriyev took over coal assets, and then concentrated on the oil business. Varshavsky formed the Estar holding as a steel-only group. Exactly what happened hasn’t been told, except that Varshavsky told a Moscow newspaper not long after: “It’s a sad story. But I am not involved in any negotiations to buy his share, and have no intentions to acquire Russian Coal.”

As Varshavsky expanded his steel possessions, the borrowings of the Estar holding grew rapidly, By the middle of 2008, the debts were estimated at Rb11.7 billion (now worth $344 million). In the autumn that followed, a refinancing note issue didn’t succeed, and Varshavsky announced he would raise the required funds from Vnesheconombank (VEB), the state bailout bank chaired by Prime Minister Vladimir Putin. Sergei Shapovalov, a vice president of Estar, told CRU Steel News on March 16: “The talks with VEB are continuing. The issue [of the refinancing loan] has not been solved yet.” VEB declined to confirm the status or amount of Estar’s loan application.
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THE WHITE LADY, THE LION, AND THE CIRCUS — URALCHEM AND PHOSAGRO FIGHT TO TAKE ON PHOSPHATE MINING

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By John Helmer in Moscow

In the Russian fertilizer business, the days are gone when you could make enormous profits mixing fertilizer ingredients into sacks; loading the sacks aboard ship; and earning your profit margin between the rising export price of the sack, and the government-fixed price of its constituents in the home market.

Today, manufacturers of these mixtures, known in the fert trade as complex fertilizers or NPK, must restructure, or die. That’s in part because the export prices of nitrogenous fertilizers, phosphates and potash (NPK, with K the chemical symbol for potassium) have collapsed worldwide. In part, it’s because the Russian government has imposed export taxes to reduce the spread between external and internal prices, and cut the profit. Finally, it’s because Russian gas and other energy prices have been deregulated, and must rise towards the international level.

It is also commonsense for state administrators to reason that there is greater profit for the state, and for themselves, in regulating domestic fert supply prices to the farm sector within one or two vertically integrated fert companies, instead of the existing collection of competing gas refiners, phosphate and potash miners, and intermediary traders and distributors.

In circuses these days, the crowds pay to see the lady tame the lion. It’s been two thousand years since the Romans paid to see the lion eat the lady. Naturally, vertical integration of nitrogen-refined ammonia, phosphate and potash production into a single corporate structure makes more pleasant sense if you are on top of the incorporation, rather than on the bottom. The reason Dmitry Rybolovlev, controlling shareholder of potash miner Uralkali (URKA:LI), has been feeling so uncomfortanble for months is that he suspects the Kremlin is preparing to subordinate his company, and buy his shareholding out, in favour of the NPK producer, Acron (AKRN:LI).

Acron’s new mining unit, Salt of the Earth (real name, no joke), has been created to consolidate phosphate and potash mining licences which Acron has acquired since 2006, and which, for the time, it lacks the cash to develop. Whether it also absorbs Rybolovlev’s chunk of Uralkali remains to be seen.
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RED HAS TURNED YELLOW – THE GREEK AND CYPRIOT COMMUNISTS ARE FLYING A DIFFERENT FLAG IN THE UKRAINE WAR



By John Helmer, Moscow
  @bears_with

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.”

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IF IT SMELLS ALLURING, IT’S RUSSIAN – IN WARTIME L’ORÉAL (FRANCE) AND ESTÉE LAUDER (US) MAKE A BAD SMELL



By John Helmer, Moscow
  @bears_with

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.

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THE WAR AGAINST FOOD – WHO IS TO BLAME



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

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.  

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EXILE



By John Helmer, Moscow
  @bears_with

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.”

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IN THE FOG OF WAR THERE’S THE GUTERRES CERTAINTY AND THE CADIEU CERTAINTY – GORILLA RADIO SEES THROUGH THE COVER-UP



By John Helmer, Moscow
  @bears_with

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.

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DID UN SECRETARY-GENERAL GUTERRES COMMIT A WAR CRIME AT AZOVSTAL?

By John Helmer, Moscow
  @bears_with

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.

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THE LAST DITCH IS POLAND – RUSSIA’S PHASE-3 PLAN FOR WESTERN UKRAINE



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

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.

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THE MATLIN PLOT, THE BROWDER PLOT AND THE NEW YORK TIMES PLOT



By Lucy Komisar,  New York*
  @bears_with

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.

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YELLOW COAL, THE FUEL MADE OUT OF RACE HATRED — MAY DAY MESSAGE FROM SIGIZMUND KRZHIZHANOVSKY, 1939



By John Helmer, Moscow
  @bears_with

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.

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IS CAESARISM THE PROBLEM, THE SOLUTION, A FANCY DRESS COSTUME, OR A PROPAGANDA CARTOON?



By John Helmer, Moscow
  @bears_with

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.

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