THE RUSSIA JOURNAL
JULY 6 - 12, 2001 BUSINESS / METALS 17
Putin signs decree on precious metals
By JOHN HELMER
The Russia Journal
new presidential decree
on the export of precious
metals, promised by mid-
VLADIMIR POTANIN summer, has been signed by
President Vladimir Putin.
Interros halts However, it has not yet been
According to officials who
Novolipetsk have read the text, it makes
none of the changes that had
been rumored in the terms of
share issue trade of Russia's platinum group
metals (pgm). Norilsk Nickel
officials claim the text holds out
By JOHN HELMER the possibility of a multi-year
The Russia Journal export authorization for plat-
inum, which the company has
ovolipetsk Metal Com- spent years unsuccessfully lob-
N bine’s annual general
shareholders’ meeting was
disrupted when the Interros
bying the Kremlin to grant.
"The decree doesn't change
anything in terms of the pgm
group, a 34 percent shareholder in trade," Dmitry Ignatiev, the
the firm, blocked a plan to finance pgm specialist at
plant modernization through a Vneshtorgbank, said. "It only
new share issue. changes the terms for exports
The management and majority and imports of gold and silver,
shareholders of Novolipetsk — jewelry and gemstones."
Russia’s third largest steelmaker The latest decree is one of sev- GOLDMINING OPERATIONS like this one in Krasnoyarsk will soon be able to sell directly to foreign buyers.
— then retaliated by voting down eral that are known to be wend-
all of Interros’ proposals. ing their way through the gov- Ignatiev claimed that deregula- inum. "There is no market for agree. "It makes more sense to
The Interros group is con- ernment bureaucracy and the tion of sales channels "will estab- platinum inside Russia compa- abolish the export duty alto-
trolled by Vladimir Potanin. It Kremlin staff. lish additional problems for buy- rable to the domestic market for gether," Ignatiev said, "since it
acquired its 34 percent stake in One source, who has seen ear- ers of gold. Exports through gold, and since platinum is main- does not produce any significant
Novolipetsk a year ago from lier versions of the latest decree, banks, which care about their ly metal for export, it is best to fiscal effect."
David and Simon Reuben, own- says the Kremlin appears to reputation, are safe in terms of keep it under proper control," he But there is an important
ers of the London-based Trans have decided to implement the the origins of the metal that is said. "That's my understanding breakthrough in the new policy
World group. The acquisition least controversial provisions, exported. Banks do not deal with of the government's reasoning." document, according to Ignatiev.
was part of a hostile takeover leaving the ministries and indus- stolen gold or gold produced in In his decree, Putin instructed "It enables jewelry producers to
engineered by Boris Jordan, a try lobbyists to continue arguing the shadows. In this respect, the the government to negotiate export their products, which are
Moscow-based American over the rest. decree may help to further with Russia's neighbors, such as of good quality," he said. "The
financier who had fallen out The new document, according develop the shadow sector." Belarus, the Ukraine, and decree offers protection of the
with Vladimir Lisin, chairman to Ignatiev, will allow gold and Experts on Russian bank deal- Uzbekistan, to introduce parallel interests of domestic jewelry
of the Novolipetsk board. silver producers to sidestep the ings in bullion say comments like duties on exports of precious producers. They have been suf-
Potanin paid a premium of $30 Russian banking system, receive this are self-serving. They claim metals to prevent Russian fering from a prohibition on
million to outbid Lisin’s bid for export quotas from the govern- that at least 10 percent of exporters shipping bullion export, and unfair competition
the stake. ment, and contract to export Russia's annual mined gold pro- through the customs-free zone from low quality jewelry, which
ING Bank was authorized to their metal directly to buyers duction of 145 tons circulates on and avoiding Russia's 6.5 percent is brought to Russia through
represent Interros at the June 30 abroad. the black market, and passes export duty. shadow channels."
shareholders’ meeting in Freeing the miners has made through the commercial bank- Ignatiev and other bankers Most of the gold jewelry
Lipetsk. As expected, it voted the banks unhappy, and reflect- ing system as well. said that vested interests in the smuggled into Russia comes
against the share emission plan ing a campaign by the Moscow Ignatiev said the Kremlin had cross-border trade make it from Turkey and the United
that was designed to raise part of banks to oppose this measure, also reached a decision on plat- unlikely these countries will Arab Emirates.
the $1.1 billion estimated for the
plant’s upgrade to production of
steel products. For the plan to be
implemented, a 75 percent vote
Scrap-metal looting kills 834 in two years
by shareholders is required.
In an uncontested vote, Ivan By VLADIMIR KITOV According to UES, losses security or to try to influence the offences warrant up to five
Frantsenyuk was elected gener- The Russia Journal from “wire thieves” have situation on a legal front.” years in jail.
al director of the plant. reached 3 billion rubles ($103.4 Many observers say that scrap “This punishment does not
Novolipetsk spokesmen said ussians are dying for million) over the last two years, yard owners are often to blame correspond with the damage
they would not disclose results metal: non-ferrous with 43,660 criminal incidents as they take suspicious items these thefts do to the economy,”
of the meeting and the voting metal, to be precise. In officially reported. The sum is without asking where they came said Vladimir Shchurov, director
for several days. A press report the last two years, 834 people the equivalent of the invest- from. There are more than 150 of of Moscow’s Sheriff security
that Lisin, the chairman of the have died while attempting to ment UES made into construct- these yards in Moscow and its agency, which is helping Mos-
board, had proposed to raise steal wire, cable and metal ing its Northwestern Power region alone, receiving thou- energo to tackle the problem.
$200 million in bank financing devices used in high-voltage Station. sands of tons of scrap metal each “A person might cut off some
for the modernization program power lines and other facilities “The situation is catastrophic, year, according to the Moscow 3-4 km of power lines — which
was denied by Valentin belonging to regional power given that not only transformers Government Committee on will bring him several thousand
Shapko, spokesman for operators, a report from electric- or power stations are being Natural Resources. rubles — but that is not the final
Interros. He also said there ity grid operator RAO UES has robbed, but dangerous or deadly Experts say that if the yard count,” Shchurov said, adding
have been no direct negotia- revealed. objects under high voltage as owners followed the letter of the that every case brings substan-
tions between Lisin and the Meanwhile, police say they well,” the report said. “Last year, law, some 60 percent of the tial collateral damage, including
Interros group since the have lost track of the number of the number of thefts went down, waste metal taken to their facili- large enterprises being forced to
takeover took place a year ago. monuments and signs pilfered partly due to increased security ties would be reported to the stop work or lighting being cut
Shapko said: “It is likely from streets and squares measures that included air police because of its dubious ori- off in residential buildings. “I
Interros managed to block the throughout the country. patrolling of potentially vulnera- gin. The yard owners remain would suggest that courts take
share emission of Novolipetsk, For many thieves, the business ble sections.” tight-lipped on the subject, how- into consideration collateral
while the majority shareholders has become so serious that Such expensive security mea- ever, and several refused to talk damages of this kind and tighten
blocked proposals made by reports of some incidents recall sures may end up having a nega- to The Russia Journal this week. sentences,” Shchurov said.
Interros.” He claimed that his scenes from cop movies. In tive impact on UES’ tariff policy, A law calling for tighter He added that there are at
group’s proposals included one February, for example, five experts say. “The [UES] compa- licensing for scrap metal deal- least four organized groups in
to change the charter of the masked men broke into Nizhny ny controls tens of thousands of ers and tougher punishment for the region that make a good liv-
company so as to limit adoption Tagil’s power station, beat and kilometers of power wires, and it thieves remains to be properly ing by cutting power lines.
of strategic decisions to a vote of tied up the guard and carried off certainly cannot place guards enforced. Only five cases of this “Wires, cables, cars and other
not less than 75 percent of share- two rolls of aluminum wire. under each line,” said Kakha type made it to the Moscow metal-containing devices bring
holders. Another proposal by Other thefts are almost comic. Kihnavelidze, an energy and courts last year, according to steady profits for thieves and
Interros to bring the structure of Last year, a 12-meter high Ferris metal analyst with Troika Dialog Vitaly Naumov, spokesman for scrap yard owners who then
the board of directors to a share- wheel was dismantled in brokerage. “But as long as the Mosenergo, UES’ largest resell the scrap metal abroad and
holder vote, instead of a vote by Vladimir and reportedly sold in problem exists, UES must decide regional branch. Under the make 100-200 percent profit on
the directors themselves, was parts to local scrap yards. whether to lay on more intense Russian Criminal Code, these each sale.”