Russia 090508 Basic Political Developments

Russia's Severstal says to idle more U.S. ops

http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSL7103052720090507
Thu May 7, 2009 1:04pm EDT
MOSCOW, May 7 (Reuters) - Severstal (CHMF.MM: Quote, Profile, Research, Stock Buzz) (CHMFq.L: Quote, Profile, Research, Stock Buzz), Russia's largest steel maker, announced on Thursday further cuts to its North American operations, citing deteriorating economic conditions and continuing decline in demand.

The company said in a statement the steelmaking and hot rolling operations at Severstal Wheeling Inc., previously Esmark Inc, will remain idled.

"In addition, the cold rolling and coating operations at Wheeling will also be temporarily idled in the coming weeks while the company balances production with orders across its business," it said.

Severstal also said that all production and finishing operations at the Warren, Ohio facility will be idled indefinitely until there is an improvement in market conditions.

In February, Severstal said it was temporarily idling the steel galvanizing line at Warren which has a total annual steel-making capacity of 1.22 million tonnes, to reduce output during the economic downturn. [ID:nLR895414] (Reporting by Maria Kiselyova; Editing by David Cowell)
Production pruning - Evraz to restart ZapSib BF No 3

http://steelguru.com/news/index/2009/05/08/OTM1ODY%3D/Production_pruning_-_Evraz_to_restart_ZapSib_BF_No_3.html
Friday, 08 May 2009

YIEH reported that Evraz Group has planned to restart its ZapSib steel plant's No 3 blast furnace within the following few months.

Evraz expected ZabSib, a steel plant located in Western Siberia, to restart all blast furnace operations in summer, 2009.

The major reason for Evraz decision to increase ZapSib's capacity is because the production costs of this plant are still low enough to compete in the Chinese steel market.

(Sourced from YIEH)

Amur Minerals wins Russian exploration approval

http://www.reuters.com/article/rbssMiningMetalsSpecialty/idUSBNG35325820090508
Fri May 8, 2009 2:58am EDT

* Says approvals provide opportunity to increase resources

* Shares indicated up 6 pct
May 8 (Reuters) - Amur Minerals Corp (A7L.L: Quote, Profile, Research, Stock Buzz) said on Friday it has received approvals from Russian authorities for further exploration at its flagship nickel-copper Kun-Manie project in the Russian Far East.

"These approvals provide the company with the opportunity to increase resources and to discover new deposits within a highly target-rich environment," Chief Executive Robin Young said in a statement.

The mineral explorer said the approvals confirmed that the company has successfully met its historical exploration commitments for the past five years, which was the timeframe allotted for the original exploration licence.

Amur Minerals shares were indicated up 6 percent at 3.3 pence at 0656 GMT on the London Stock Exchange. (Reporting by Balachander Surianarayanan in Bangalore; Editing by Mike Miller)

GAZ Group to facilitate Opel production in Russia

http://en.rian.ru/analysis/20090507/121492765.html

Vedomosti

Russia's second-largest automaker GAZ Group and its partners Magna International, Canada's largest automobile parts manufacturer, and Sberbank, the undisputed leader of the Russian banking industry, are currently unable to buy a stake in General Motors Corporation's Opel.

However, GAZ is ready to manufacture Opel vehicles at its (now idle) assembly line that had until recently turned out Volga Siber cars.
In 2006, GAZ bought Sterling Heights Assembly, a Chrysler automotive plant in Sterling Heights, Michigan, where Volga Siber vehicles with Chrysler Sebring chassis have been assembled since 2008.
The $200 million project was scrapped after GAZ failed to sell enough Volga Sibers and with the onset of the global financial and economic crisis. In all, 500 and 679 cars were sold in 2008 and in the first quarter of 2009, respectively. The assembly line has now stopped operating.
GAZ wants to assemble two or three more models at Sterling Heights Assembly whose annual capacity is estimated at 120,000 cars. GAZ CEO Sergei Zanozin said the company was in talks with Chrysler and GM.
Vladislav Tsvetkov, managing partner at the Marketing and Investment Projects company, said Opel Class B and C Astra, Corsa and Vectra cars could become popular on the Russian market.
He said Opel cars, a popular choice, now cost too much in Russia. An Astra vehicle costs at least 511,700 rubles ($15,600), while the price of one Corsa car is at least 461,600 rubles ($14,073).
Sterling Heights Assembly equipment could operate to full capacity if the partners reduce the price of one Astra car to 400,000 rubles ($12,195), Tsvetkov said.
GM is ready to cede Opel for free, if prospective buyers pledge to invest 500 million euros in the project. There are seven prospective buyers at present, and the main among them is Italy's Fiat. Yelena Sakhnova, an analyst with VTB Capital, said GAZ which currently owed 45 billion rubles in debts would not have to buy into Opel, and that the aforementioned investment would probably be financed by Sberbank.
Magna which supplies components to Opel would also profit from the car-assembly project in Russia. The Canadian company's top managers have said they were looking for variants to buy assets in Russia.

Odfjell vs. Sevmash in court

http://www.barentsobserver.com/odfjell-vs-sevmash-in-court.4588493-16175.html
2009-05-07

The Norwegian shipping company Odfjell demands more than USD 100 million from Russia’s Sevmash naval yard after it cancelled the construction of 12 chemical carriers last year.

Odfjell decided to cancel the contract due to serious delays in construction and continued price increases. The contract was said to be valid USD 45 million for each of the 12 carriers, in total USD 540 million.

When the contract for the first eight chemical carriers was signed in 2004 it was the biggest business contract between a Norwegian and Russian company ever. In June 2006, another contract for additional four carriers was signed during an official ceremony in Severodvinsk, Arkhangelsk Oblast, where Sevmash is located.

A news-release placed at the web-site of Sevmash from the ceremony is followed by a photo of General Director of Sevmash Vladimir Pastukhov and president of Odfjell ASA, Bernt Daniel Odfjell shaking hands. The text under the image says: “Cooperation will be last for a long time.”

The first ship in the series was to be delivered in October 2007. The vessels in order were IMO type II fully coated vessels of about 45 000 dwt., supposed to replace some of Odfjell’s older single hull chemical carriers.

But, the cooperation between Odfjell and Sevmash was not to “last for a long time.” When the contract was cancelled in February last year BarentsObserver.com wrote that Odfjell management was very disappointed.

-They (Sevmash) have shown no will to try to understand that this is a commercial project. They have deliberately sabotaged and delayed the project, Odfjell’s chief Terje Storeng said.

He also said that the Russian shipyard had acted with disrespect as well as a lack of will to meet the contract conditions.

According to the Norwegian business newspaper Dagens Næringsliv the compensation Odfjell demands from Sevmash is more than USD 100 million.

In a press-release shortly after Odfjell cancelled the deal in February last year, Sevmash maintains that it has no understanding of Odfjell’s accusation about the alleged deliberate delays in the project. “Sevmash categorically rebuffs this accusation and confirms that it has met all obligations with regard to the construction of the vessels,” Sevmash wrote.

Sevmash also confirms that it will continue the construction of the tankers and sell them for market prices, which in the next turn will help the company avoid losses.

The case will come up for a court in Sweden by the end of May, and a final result is expecded by September according to Dagens Næringsliv.