Russia 101118 Basic Political Developments

Tycoon Prokhorov buys Kingash ore mining plant from Norilsk Nickel

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Tycoon Prokhorov buys Kingash ore mining plant from Norilsk Nickel
11:23 18/11/2010

Intergeo, a new ore mining subsidiary of Russia's Onexim Group private equity fund owned by billionaire Mikhail Prokhorov, has purchased the Kingash Ore Mining Combine from the country's largest nickel producer Norilsk Nickel, Kommersant business daily reported on Thursday.

The terms of the deal have not been disclosed.

Intergeo, which owns 12 licenses received from the division of business between Prokhorov and his former business partner Vladimir Potanin, tried to buy Kingash from Norilsk Nickel back in 2008. The company planned to swap the factory for a number of licenses for deposits geographically located in the zone of Norilsk Nickel's interest, but the parties failed to agree, the paper said.

Kingash, which is located in the south of the Krasnoyarsk region, consists of two deposits of cobalt-copper-nickel ore, Kingashskoe and Verhnekingashskoe, with total reserves amounting to 2.2 million tons of nickel according to categories B +C1+C2, one million tons of copper, 85,000 tons of cobalt, 8.6 million ounces of platinum group metals, 1.2 million ounces of gold, and 12.7 million ounces of silver, the paper said.

Kommersant quoted one of the sources familiar with the matter as saying that Intergeo planned to unify the Kingash factory with the Iysko-Tagulskaya area in Eastern Siberia which contains 9 million tons of nickel, 3.5 tons tonnes of copper and 750 tons of platinum group metals.

The united enterprise will match world-class fields, the source told the paper, adding Intergeo planned to build an ore mining and dressing plant and possibly a metallurgical factory. Total investment in the project is estimated at $2-3 billion, but the sum is preliminary, the paper said.

Kommersant also quoted a source close to Norilsk Nickel as saying Kingash completely lacked infrastructure and had a relatively low metal content in ore, but analysts consider the project viable.

Uralsib analyst Dmitry Smolin told Kommersant that only Norilsk Nickel had funds to finance such a project and therefore, after consolidation and further exploration of the fields Intergeo may sell it back, he said.

MOSCOW, November 18 (RIA Novosti)

Serbia To Sell Furniture in Russia Customs-Free, Tanjug Reports

By Misha Savic

Nov. 18 (Bloomberg) -- Serbian furniture makers will be allowed to export to Russia without customs as of January next year as part of an agreed removal of remaining trade barriers between the countries, Tanjug news agency reported, citing an official of the Serbian Chamber of Commerce.

Russia has agreed to lift its 20 percent customs tax on Serbian furniture items that are at least 51 percent made, processed or assembled in the Balkan country, the report said, quoting Vladimir Burda, the Chamber’s Secretary for the Wood Processing Industry.

To contact the reporter on this story: Misha Savic in Belgrade at

To contact the editor responsible for this story: James M. Gomez at

Last Updated: November 18, 2010 01:53 EST

Rostelecom 4G Bid Rejected by Defense Ministry, Kommersant Says

By Maria Kolesnikova

Nov. 18 (Bloomberg) -- OAO Rostelecom, Russia’s dominant long-distance phone provider, was denied approval to provide so- called 4G services by the Defense Ministry, Kommersant reported, citing an unidentified government official.

An operator affiliated with the ministry may get approval instead, the Moscow-based newspaper reported today.

Click here for web link

To contact the reporter on this story: Maria Kolesnikova at

To contact the editor responsible for this story: Brad Cook at

Last Updated: November 18, 2010 00:36 EST

Putin Pressed to Reverse Potash Ruling
18 November 2010


Acron, the country's third-largest nitrogen-fertilizer maker, has asked Prime Minister Vladimir Putin to override anti-monopoly regulators' approval of price increases of more than a third for potash used in the company's goods.

"We ask you to take measures to re-establish state regulation of the monopolistic market for potash," Acron wrote in a Nov. 9 letter to Putin, copied to Bloomberg. Dmitry Peskov, a spokesman for the prime minister, did not answer calls to his mobile phone Wednesday seeking comment.

Uralkali, the country's second-largest potash producer, will raise prices for local makers of complex fertilizers by about a third next year after gaining approval from regulators, it said Wednesday in a statement. Fertilizer makers will pay 5,700 rubles ($182) a metric ton in the first quarter, up from 4,300 rubles this year, and the price will then be revised each quarter, Uralkali said.

While PhosAgro, the country's largest phosphate fertilizer producer, and EuroChem signed long-term contracts with Uralkali on those terms, Novgorod-based Acron has said it opposes the decision to allow the price increases.

"As a result of a totally non-transparent operation, new rules have emerged that we have no intention of respecting," Vyacheslav Kantor, the billionaire owner of Acron, said in an interview in Moscow last week.

Kantor told Putin at a meeting in July that Acron's profits were being hurt by "monopolists."

With the world population adding 75 million people a year, food demand is increasing the need for fertilizer. A fivefold surge in potash prices over 2007 and 2008 led to at least eight class-action claims in the United States over alleged collusion, a charge the producers denied. Consolidation among producers of potash has caused concern that prices will increase in countries from Russia and India, the biggest importer last year, to Canada.

Acron, which has benefited from price caps on potash prices imposed by the Russian government to guarantee its farmers cheap fertilizer supplies, exported 83 percent of its complex fertilizer output last year.

Silvinit, the country's largest potash maker, and Uralkali, its sole domestic rival, are controlled by billionaire Suleiman Kerimov and his partners, who acquired stakes in the companies this year and plan to merge them.

Kerimov is ranked by Finans magazine as the country's fourth-richest man with $14.5 billion.

Uralkali and Silvinit have said domestic makers of complex fertilizers compete with them on exports after buying potash from miners as a raw material. Anton Subbotin, a spokesman for Silvinit, declined to comment immediately, saying the company planned to release a statement.

Uralkali referred Bloomberg to Wednesday's news release and a statement Monday that said the company would keep prices for local farmers at 4,280 rubles. Acron owns about 8 percent of Silvinit. 

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