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Mechel Takes Over Failing Steel Factory
http://www.themoscowtimes.com/article/600/42/380118.htm
04 August 2009By Nadia Popova / The Moscow Times
Mechel will take over management of Zlatoust steel mill, the Chelyabinsk region said Monday, in a deal many say was driven more by political than economic considerations.
A three-way strategic partnership was agreed on by Estar Group, former owner of the plant, Mechel and the Chelyabinsk region, which has been managing the mill since workers staged a hunger strike over unpaid wages. The nature of the partnership was not disclosed. The Chelyabinsk-based Zlatoust plant, one of the oldest steel producers in Russia, suspended its production from late April until mid-June because of a lack of orders. The plant filed for bankruptcy on May 27, but the case was rejected by the court.
The plant’s ownership was uncertain until the local prosecutor’s office found in late June that it was owned by State Duma Deputy Vadim Varshavsky, who had previously denied ownership.
Mechel agreed to the deal because it has had success in similar projects, namely the Beloretsk and Izhevsk steel mills, chief executive Andrei Deineko was quoted as saying in a statement. The mills were nearing bankruptcy when Mechel bought them.
Deineko also cited a “longtime positive relationship with the regional government” as a reason for the deal.
The regional government said the decision was not an easy one for Mechel.
“We understand that Mechel doesn’t have any spare money,” said Vladimir Yelistratov, a Chelyabinsk region deputy industry and natural resources minister who has been charged with supervising the Zlatoust plant.
“Yes, the choice of Mechel was a political decision, and it was the regional government’s — not Mechel’s — initiative to create the strategic partnership with the Zlatoust plant. But we want the partnership to be mutually profitable,” he said. “The synergy is possible, as Mechel’s [Chelyabinsk Steel Mill] and Estar’s plants are located only around 120 kilometers from each other.”
Mechel spokesman Ilya Zhitomirsky and Ilya Ananyev, the governor’s spokesman, declined to comment. Nobody answered the phone at Estar’s press office on Monday.
Regional governments have been quick to head off problems after protests in June forced Prime Minister Vladimir Putin to visit Pikalyovo, where he reopened a closed plant and rebuked its owner. President Dmitry Medvedev later threatened to fire governors who failed to cope with unemployment and wage arrears.
Analysts say the deal could spell financial trouble for the steel giant.
“Mechel’s own steel facilities are the least efficient among Russian majors, and this would further erode the firm’s cost competitiveness in steelmaking,” Alfa Bank said in a note Monday. “This acquisition may be part of the quid pro quo for state support in financing Mechel’s long-dated projects.”
“There is no huge economic benefit in taking control of a nearly bankrupt enterprise with last century’s equipment and technologies,” Alfa Bank analyst Sergei Krivokhizhin said.
Alrosa Resumes Diamond Sales
http://www.themoscowtimes.com/article/1009/42/380129.htm
04 August 2009Bloomberg
Alrosa resumed sales of unpolished gems in the market in July after a seven-month halt triggered by a collapse in demand stemming from the world recession, the company said Monday.
Domestic and foreign buyers purchased rough diamonds valued at $150 million, including gems worth $13 million bought at a Moscow auction. PO Kristall, the country’s largest diamond polisher, plans to buy gems worth at least $100 million from Alrosa before the end of the year, it said.
The diamond market is strengthening as demand for jewelry and other luxury goods stabilizes after a plunge caused by the world slowdown. De Beers, the world’s biggest producer of the gems, temporarily shut mines in Botswana and Namibia this year as the recession caused the company’s first-quarter output to plunge 91 percent.
ALROSA July Sales Reach $150M 
http://www.diamonds.net/news/NewsItem.aspx?ArticleID=27430
Posted: 08/04/09 03:29
By Avi Krawitz
ALROSA has resumed its rough diamond sales and sold $150 million worth of goods to the market in July, the Russian diamond mining company reported.
“Starting from July 2009 the current market situation has enabled ALROSA to resume its trading operations and sizably increase market supply,” the company said in a note on its website. Sales under long term contracts accounted for the largest proportion of the supplies, it added.
ALROSA explained that it views the “consistent development of long term customer-producer relationships” as a key priority in its marketing of diamonds. In line with this program, the company reported that it resumed its long term relationship with Kristall adding that the Russian diamond manufacturing company intends to buy at least $100 million worth of rough from ALROSA before the end of 2009. In addition, the mining company said it plans to restart sales to local manufacturers in Yakutia.
ALROSA has also resumed its international special size diamond tenders due to the “steady demand for large size diamond goods” seen in the past two months. The company suspended thye auctions in September 2008 when the economic crisis hit global markets. The first auction in Moscow garnered $13 million with the next tender scheduled in Antwerp.
ALROSA stressed it intends to act responsibly regarding its sales policy, and in particular, “where it concerns volumes of special size goods to be offered at auctions, carefully monitoring current changes in the situation on the market for large size goods.”
Unlike most of its mining counterparts, ALROSA continued production during the economic crisis at near-full capacity but kept goods off the market by selling to the RF State Depository of Precious Metals and gems, Gokhran.
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