Tilde Finance http://www.tildefinance.com/ en SilverDream Your ultimate Russian financial blog | Tilde Finance Wed, 23 Apr 2014 08:35:39 -0700 http://www.tildefinance.com/templates/images/logo.png Tilde Finance http://www.tildefinance.com/ Mechel Signed The Agreement with Transcontainer Mechel Signed The Agreement with Transcontainer

Moscow announces signing an agreement on creating a pool system for transporting cargo with the Russia’s leading intermodal container operator, JSC TransContainer.

The agreement was signed on the sidelines of the 19th Moscow International Transport & Logistics Exhibition and Conference “TransRussia”. According to the document, TransContainer will handle multimodal transportation of Mechel’s cargo of various types in containers. The annual turnover of cargo will amount to over 5,000 twenty-foot container units. 

Currently TransContainer ensures monthly transportation of some 400-450 twenty-foot containers with Mechel’s industrial facilities’ cargo to the company’s partners in Russia and abroad.

“TransContainer considers Mechel Group a reliable partner. With the signing of this agreement, our cooperation will become systematic and, I imagine, long-term as well. The geography of our work covers not only Russia but also CIS member states and Asia Pacific countries. We have the requisite experience and resources to offer Mechel high-quality service in container transportation,” TransContainer’s Chief Executive Officer Petr Baskakov commented.

“This new format of cooperation with JSC TransContainer will certainly enable us to streamline the Group’s container transport system. Moreover, we will be able to improve the quality of logistics on our geographic routes for Mechel’s enterprises, thus bringing down transport costs,” Mecheltrans OOO’s Managing Director Sergei Kulakov said.

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http://www.tildefinance.com/article/mechel-signed-the-agreement-with-transcontainer http://www.tildefinance.com/article/mechel-signed-the-agreement-with-transcontainer tim.berg@tildefinance.com (Tim Berg) Wed, 23 Apr 2014 10:20:00 -0700 Metals & Mining
NLMK improves logistics of electrical steel NLMK improves logistics of electrical steel

NLMK Group is growing the share of container deliveries of transformer steel coils in its total export supplies of this product.

NLMK has launched a pilot project to develop a new system of logistics at its main production site in Lipetsk: electrical steel coils will now be delivered in multi-tonnage containers. This will halve the costs of their transportation. 

As part of the project, NLMK has already successfully completed the delivery of dynamo steel to Tunisia through the port of Novorossiysk. Steel coils were loaded into the containers to be transported via railway to the port directly at NLMK’s production site. In 2014, NLMK plans to ship over 4,000 tonnes in containers from the Lipetsk site.

Previously, NLMK Group exported transformer steel coils in multi-tonnage containers only from its site in Yekaterinburg, VIZ-Steel. Monthly container deliveries from VIZ-Steel are 2,400 tonnes (16% of total deliveries) and growing.

Sergei Likharev, Acting Vice President for Logistics, said:

“The proposed arrangement and the new, more convenient organizational structure for logistics are aimed at improving the quality of service for our consumers. Our key goal is to further improve the operational and commercial efficiency of our logistics, to achieve maximum synergies, and ultimately improve the efficiency of the entire company.”

Compared to the use of railway cars, multi-tonnage containers allow halving transportation costs; using intermodal transportation without additional transshipment operations at the pre-port container terminal and the ports of destination; and minimizing the risk of damage in the process of transporting and handling the goods.

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http://www.tildefinance.com/article/nlmk-improves-logistics-of-electrical-steel http://www.tildefinance.com/article/nlmk-improves-logistics-of-electrical-steel tim.berg@tildefinance.com (Tim Berg) Tue, 15 Apr 2014 11:20:00 -0700 Metals & Mining
Mechel Increases Coal Supplies To China's BaoSteel Corporation To Reach 1.2 Million Tonnes Mechel Increases Coal Supplies To China's BaoSteel Corporation To Reach 1.2 Million Tonnes

Mechel announces that its contract with China’s steelmaking major Baosteel Resources corporation, which provides for an increase of coal supplies to 1.2 million tonnes of coking coal a year, has been prolonged.

According to the memorandum signed at Baosteel Resources’ Shanghai headquarters, Mechel Carbon Singapore will supply Baosteel Resources with up to 1.2 million tonnes of coking coal. The agreement will be valid from April 2014 through March 2015, with a possibility of further prolongation. Prices will be determined on a monthly basis. Mechel Carbon Singapore has fully met its obligations according to the earlier contract, having shipped a total of 960,000 tonnes of coking coal to Baosteel enterprises in China’s eastern and southern provinces. As part of last year’s agreement, Mechel Carbon Singapore also made test shipments of PCI coals, as well as steam coal from the Elga deposit. 

Thanks to the new agreement, Baosteel Resources will account for up to 10% of Mechel’s coal exports to Asia Pacific.

“Baosteel Resources remains a key strategic partner for Mechel. The agreement is proof that both we and our Chinese partners aim for long-term cooperation based on transparency and mutual profit. Moreover, the Chinese side voiced interest in additional shipments of various grades of coal. This signed agreement is in line with the new program for the development of Russia’s coal industry until 2030, which calls for an increase of exports to promising Asian markets,” Mechel Mining Management Company OOO’s Chief Executive Officer Pavel Shtark noted. 

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http://www.tildefinance.com/article/mechel-increases-coal-supplies-to-china-s-baosteel-corporation-to-reach-1-2-million-tonnes http://www.tildefinance.com/article/mechel-increases-coal-supplies-to-china-s-baosteel-corporation-to-reach-1-2-million-tonnes bill.pradi@tildefinance.com (Bill Pradi) Fri, 11 Apr 2014 10:20:00 -0700 Metals & Mining
NLMK Brings Premium Products To The Russian Market – Abrasion-Resistant And High-Strength Quard And Quend Steels NLMK Brings Premium Products To The Russian Market – Abrasion-Resistant And High-Strength Quard And Quend Steels

NLMK Group is bringing new premium steel products to the Russian market – thick plate low-alloy abrasion-resistant Quard steel and structural high-strength Quend steel, both designed for use in the manufacture of construction and mining equipment and machinery.

NLMK will present these steel products, which are unique in Russia in terms of quality, in Moscow on 9–11 April, at the 18th International MiningWorld Russia Exhibition for the Mining and Processing of Metals and Minerals (Stand B 03). 

NLMK Group is currently in negotiation with several major Russian machine building companies for the implementation of steel processing methods using Quard and Quend steel plates in the production of construction and mining machinery. This development will enable Russian machinery and equipment manufacturers to significantly improve the operational and environmental performance indicators of their products by reducing the weight of machine components without losing any strength characteristics, and, as a result, compete on a par with the best foreign manufacturers using wear-resistant and high-strength steel.

“By offering premium products to domestic buyers, we are not only demonstrating how the Group’s European and Russian sites cooperate successfully, but also the efficiency of NLMK’s balanced business model. By offering wear-resistant and high-strength steel to Russian machine builders for the manufacture of component parts, the Company is helping to increase the competitiveness of domestic machine building”, NLMK Vice President for Sales Ilya Gushchin said.

For three years, NLMK Group has been successfully selling Quard and Quend plates in Europe, North America, and the Far East, as well as in the CIS. Buyers of Quard and Quend plates include leading machine building companies, such as Liebherr, Caterpillar, Volvo, JCB, BYG, and Metso. In the CIS market, BELAZ, the Belarusian dump-truck manufacturer, is one of the largest buyers of abrasion-resistant Quard steel manufactured by NLMK.

NLMK’s broad range of Quard and Quend plates is produced out of slabs supplied by the Company’s Lipetsk production site, using a unique technique involving quenching and tempering at NLMK’s Belgian Clabecq plant. NLMK Clabecq employs a modern quenching and tempering method enabling the production of highest quality low-alloy plates. The processing line for the production of Quard and Quend plates was launched in 2011. Total investments in the project exceeded EUR 100 million.

Abrasion-resistant Quard plates (hardness 400HB, 450HB and 500HB – Quard 400, Quard 450 and Quard 500 respectively, with thicknesses ranging from 4 mm to 40 mm and widths from 1,500 to 3,100 mm) are designed for use in the manufacture of construction and mining equipment, as well as for other types of special equipment and machinery (crushing and pulverizing machinery, excavators, dump trucks, bulldozers, hoppers, mixers, etc.), where the use of abrasion-resistant Quard steel may result in a 40% reduction of the weight of the structural component while increasing its volume by 5%, reducing fuel consumption, and reducing production costs by 45%.

High-strength Quend plates (tensile strength 700 MPa, 900 MPa and 960 MPa – Quend 700, Quend 900 and Quend 960 respectively, with thicknesses ranging from 4 to 50 mm and widths from 1,500 to 3,100 mm) are designed for use in the construction of bulk vehicle frames, bulk lifting and handling machinery, vehicle trailers, and other machinery where high structural strength is of the essence. The use of high-strength Quend plates reduces the weight of structural components by more than 20%, thus reducing the cost of production and increasing the performance of the machines.

NLMK is planning to expand the range of premium Quard and Quend steel products in 2014–2015 by adding Quard 550, Quend 1100 and Quend 1300.

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http://www.tildefinance.com/article/nlmk-brings-premium-products-to-the-russian-market---abrasion-resistant-and-high-strength-quard-and-quend-steels http://www.tildefinance.com/article/nlmk-brings-premium-products-to-the-russian-market---abrasion-resistant-and-high-strength-quard-and-quend-steels bill.pradi@tildefinance.com (Bill Pradi) Wed, 09 Apr 2014 14:30:00 -0700 Metals & Mining
Certified Polished Diamond Prices Rise in March Certified Polished Diamond Prices Rise in March

New York: Diamond markets were positive in March after the Hong Kong show demonstrated steady Chinese demand for commercial-quality diamonds. The recent Basel shows signaled robust demand for top-quality large diamonds, fancy colored diamonds and fine-cut fancy shape diamonds.  The RapNet Diamond Index (RAPI™) for 1-carat diamonds increased 0.8 percent during the month, while RAPI for 0.30-carat diamonds grew 3.8 percent and RAPI for 0.50-carat diamonds rose 2 percent. RAPI for 3-carat diamonds increased 1.4 percent. Prices firmed in all categories during the first three months of 2014 and the trade enjoyed its strongest quarter since early 2011. 

 

The Rapaport Monthly Report – April 2014, ‘A Good Quarter,’ noted that polished trading was steady throughout the first quarter driven by inventory replenishment throughout the pipeline. Polished demand was spurred by jewelers restocking after they had sold off inventory during the Christmas and Chinese New Year holiday periods. Diamond manufacturers began to buy rough again, having refrained from buying in the fourth quarter.

Rough trading was steady during March as prices were stable at the De Beers February 24 to 28 sight. However, recently, demand has slowed and premiums on the secondary market diminished after De Beer raised prices by 3 percent to 4 percent at the March 31 to April 4 sight. Liquidity is tight and manufacturers are maintaining production below full capacity. There are reported shortages of 0.30-carat to 0.40-carat diamonds which are in high demand, but there remains a significant amount of polished diamonds in the pipeline – particularly as backlogs at the GIA persist.

The market is expected to slow in the second quarter as wholesale and retail jewelers have replenished their inventories and may restrain their buying at current higher polished price points. Liquidity has tightened as rough prices rose toward the end of March and banks are increasingly conservative in lending to the industry. While sentiment remains positive, diamond market growth is projected to stabilize in the coming months, after a relatively strong first quarter.

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http://www.tildefinance.com/article/certified-polished-diamond-prices-rise-in-march http://www.tildefinance.com/article/certified-polished-diamond-prices-rise-in-march tim.berg@tildefinance.com (Tim Berg) Wed, 09 Apr 2014 09:30:00 -0700 Metals & Mining
Alfa-Bank announces financial results for 2013 Alfa-Bank announces financial results for 2013

Alfa Banking Group, which includes Alfa-Bank and its subsidiaries, today reported audited IFRS financial results for the full year 2013.

Net profit of the Alfa Banking Group for the period amounted to USD 900 million (2012 — USD 829 million) which is the highest reported annual profit in the history of Alfa Banking Group. Return on average equity constituted 20.1%. Total equity increased by 16.0% to USD 4.8 billion after a USD 150 million dividends. Alfa Banking Group maintained a capital adequacy ratio under IFRS of 16.7% (December 31, 2012 — 15.6%). 

Total operating profit before tax and provisions amounted to USD 3.1 billion (USD 2.2 billion at December 31, 2012), with provision charges for loan impairment increasing to USD 565 million in 2013 (2012 — USD 95 million). High profit was fueled by considerable growth in net interest income and fee and commission income reflecting excellent performance in all core business segments based on expanded customer base, portfolio growth combined with high quality of delivered services and operational efficiency.

The Alfa Banking Group net interest income increased by 33.5% to USD 2.3 billion in 2013 from USD 1.7 billion in 2012. The increase was mainly driven by growth in interest bearing assets, in particular retail loans. Net fee and commission income for 2013 increased by 34.5% and totaled USD 780 million compared with USD 580 million in 2012. Net income from settlement transactions has become the key growth driver constituting 63.6% of net fee and commission income in 2013. Net fee and commission income together with net interest income represented 99.0% of total operating profit before tax and provisions.

In the reporting period total assets of the Alfa Banking Group increased by 5.9% to USD 48.6 billion at December 31, 2013 from USD 45.9 billion at December 31, 2012. As at December 31, 2013 total gross corporate loans increased by 2.3% to USD 27.8 billion (USD 27.2 billion as at December 31, 2012), while total gross loans to individuals increased by 32.7% to USD 6.2 billion (USD 4.6 billion as at December 31, 2012), mostly represented by growth of credit card loans, personal installment loans and consumer loans. The overall provisioning rate increased to 4.3% as at December 31, 2013 from 4.0% as at December 31, 2012. Share of overdue loans (by one and more days) in total portfolio slightly increased from 1.6% as at December 31, 2012 to 2.1% as at December 31, 2013 mainly due to rise in retail overdue loans in line with the market trend. Provisions coverage of overdue loans amounted to 205% at 2013 which is well above market averages. Cost of risk as at December 31, 2013 comprised 1.72% compared with 0.35% as at December 31, 2012.

In the funding structure of the Alfa Banking Group customer accounts remained stable at USD 26.7 billion as at December 31, 2013. Meanwhile, retail customer accounts increased by 17.8% to USD 14.4 billion as at December 31, 2013. In 2013, the Alfa Banking Group issued ruble denominated bonds in the total amount of RUR 20 billion and placed debut ruble-denominated Eurobonds (LPNs) in the amount of RUR 10 billion. In April 2013, the Alfa Banking Group received a USD 350 million syndicated loan.

As at December 31, 2013, cash and cash equivalents accounted for 12% of total assets. In addition, the Alfa Banking Group holds investment portfolio of highly liquid debt securities available for sale and repo amounting to USD 2.1 billion. The Group has also access to secured and unsecured funding provided by the Central Bank of Russia.

The Alfa Banking Group has maintained its position as the top Russian private bank by total assets, total equity, customer accounts and loan portfolio, also being one of the most profitable banks on the market.

The Alfa Banking Group’s full year 2013 IFRS accounts have been audited by PwC.

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http://www.tildefinance.com/article/alfa-bank-announces-financial-results-for-2013 http://www.tildefinance.com/article/alfa-bank-announces-financial-results-for-2013 tim.berg@tildefinance.com (Tim Berg) Tue, 01 Apr 2014 10:20:00 -0700 Banking
NLMK Group expands funding for social programmes in 2013 NLMK Group expands funding for social programmes in 2013

In 2013, NLMK Group (LSE: NLMK) increased funding for social programmes by 6% to RUB 2.3 billion. Priority areas of NLMK Group’s 2013 Social Policy are: creating comfortable and safe working conditions; professional development and career growth; improved healthcare for NLMK employees and members of their families; organization of sporting and cultural events; and co-financing of additional non-state pension programmes.

Last year, approximately RUB 780 million was allocated for social programmes for NLMK Group employees: improvements in working conditions, disability and retirement benefits, and bonuses. 

Approximately RUB 380 million went towards funding family and motherhood support programmes, youth initiatives, welfare, and education. For many years, NLMK has been providing ongoing support for basic educational institutions in organizing the education process, and in creating the conditions needed for students to receive quality education. NLMK Group employees are involved in a whole range of educational programmes: occupational adaptation, training in related professions, various specialized courses and workshops. In 2013, approximately 16,000 workers, or over 50% of the entire workforce, went through various educational programmes at Novolipetsk alone.

This area of NLMK Group’s social policy has received high appreciation from the state. In September 2013, a joint project from NLMK Group’s Novolipetsk and its affiliated university, the Lipetsk State Technical University, won an open contest organized by the Russian Ministry of Education and Science for a state grant to implement projects aimed at training highly-qualified personnel for companies of the Lipetsk region. The winning project, Staff Training for Production Companies of the Lipetsk Region, will now be implemented by Lipetsk University together with Novolipetsk with the financial support from the federal budget.

Over RUB 253 million went towards healthcare for employees in 2013. An additional RUB 187 million was used to provide health resort treatment for NLMK Group employees. Over RUB 160 million was allocated for sporting and cultural initiatives.

NLMK Group continued to fund housing programmes, allocating approximately RUB 146 million for these purposes. The bulk of the money was used to fund the Housing for Young Steelmakers programme at NLMK’s Lipetsk production site, and the housing programme for employees at NLMK’s new next-generation plant, NLMK Kaluga.

In 2013, NLMK allocated over RUB 155 million to the Miloserdiye charity fund. Throughout the year, funds were used to support vulnerable social groups, such as orphans and orphanage graduates, and retired citizens. The Miloserdiye charity fund was able to help a total of over 30,000 people from the Lipetsk region.

RUB 134 million was used to co-finance additional non-state pensions for NLMK Group employees. An additional RUB 91 million went towards social support for retired citizens and disabled people.

Alexander Sokolov, NLMK Group Vice President for Social Issues, said:

“NLMK Group’s strategy is based on socially responsible business principles and partner relations with the state and the community to promote active participation in improving the quality of life and ensuring stable social and economic development in the regions where we operate. This year, the Group intends to maintain its current level of support for social programmes.”

In 2013, three of the Group’s companies (Novolipetsk, Altai-Koks, and Stagdok) renewed their Collective Bargaining Agreements until 2016, maintaining existing benefits and, in some cases, expanding the obligations of the Employer.

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http://www.tildefinance.com/article/nlmk-group-expands-funding-for-social-programmes-in-2013 http://www.tildefinance.com/article/nlmk-group-expands-funding-for-social-programmes-in-2013 tim.berg@tildefinance.com (Tim Berg) Mon, 31 Mar 2014 09:20:00 -0700 Metals & Mining
Mechel Launches Screening Complex At Vishakhapatnam Coal Terminal In India Mechel Launches Screening Complex At Vishakhapatnam Coal Terminal In India

Mechel reports that its subsidiary Мechel Somani Carbon Private Limited launched a screening facility at coal terminal in Vishakhapatnam on India’s east coast. This will greatly expand Mechel’s capacity for marketing coal on the promising Indian market.

Mechel Somani Carbon Private Limited’s screening facility on the basis of the coal terminal enables the company to sort anthracites supplied by Mechel’s mining enterprises. Its chief consumers are small and medium-sized businesses. The screening facility’s project capacity is set at up to 250,000 tonnes a year. 

Mechel gradually increases sales of its coal in India. In 2014, the joint venture plans to market a total of 250,000 tonnes of anthracites, which will make up 20% of India’s anthracite market.

“The Indian market, where demand for coal continues to grow, is of strategic interest to us. As of now, India annually buys 110 million tonnes of steam coal and 40 million tonnes of coking coal. Experts estimate that by 2020 India will be importing up to 120 million tonnes of coking coal of various grades. Considering the favorable forecasts for the future, Mechel’s efforts are aimed not only at building up stable ties directly with all kinds of clients, but also at setting up necessary infrastructure,” Mechel Mining Management Company OOO’s Chief Executive Officer Pavel Shtark noted. 

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http://www.tildefinance.com/article/mechel-launches-screening-complex-at-vishakhapatnam-coal-terminal-in-india http://www.tildefinance.com/article/mechel-launches-screening-complex-at-vishakhapatnam-coal-terminal-in-india bill.pradi@tildefinance.com (Bill Pradi) Fri, 21 Mar 2014 12:20:00 -0700 Metals & Mining
De Beers Adds Five New Sightholders De Beers Adds Five New Sightholders

The De Beers Group of Companies today announced the qualification of five new Sightholders for the remainder of the 2012–2015 Supplier of Choice (SoC) contract period. De Beers’ modified SoC re-planning process, announced in 2011, enables non-Sightholder businesses that have demonstrated sufficient demand through De Beers’ auction sales in 2013 to qualify for Sightholder status and term contract supply (subject to availability).

Sightholder status in the current contract period is subject to De Beers’ forecast rough diamond availability and eligible applicants’ submission of a Contract Proposal Questionnaire (CPQ) as part of the 2014 Intention to Offer (ITO) re-planning process. Each applicant for a SoC contract under the 2014 ITO re-planning process has been subject to the same rigorous and objective selection process as those applicants that applied for supply at the start of the 2012–2015 contract period in 2011. Additionally, all applicants are required to adhere to the De Beers Best Practice Principles, ensuring that Sightholders are “living up to diamonds” by adopting strict ethical standards in their business practices. 

In addition to the qualification of new Sightholders, the ITO re-planning process also provided opportunities for existing Sightholders to qualify for new rough diamond allocations as part of their 2014–2015 ITOs. The new allocations are subject to forecast availability and reflect Sightholders’ demonstrated requirements for rough diamond categories outside of their 2013–2014 ITOs.

Paul Rowley, Executive Vice President, Global Sightholder Sales, said: “Each of our new Sightholders has demonstrated consistently strong requirements for De Beers rough diamonds via their auction purchases and we look forward to working with each of them more closely. Our aim is to get the right diamonds into the right hands at the right time and our dynamic distribution system gives us the ideal vehicle to do this.”

The 2014–2015 ITO period is the last in the current contract period. A new De Beers Sightholder contract will start on 31st March 2015. Applications for the new contract will open in the third quarter of 2014. The new contract will involve a simplified allocation process and even more rigorous financial compliance criteria. The dynamic ITO re-planning approach will remain in the new contract, continuing to provide De Beers with a highly efficient and responsive distribution system.

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http://www.tildefinance.com/article/de-beers-adds-five-new-sightholders http://www.tildefinance.com/article/de-beers-adds-five-new-sightholders tim.berg@tildefinance.com (Tim Berg) Wed, 19 Mar 2014 10:20:00 -0700 Metals & Mining
VEB Continues to Finance Elga Coal Deposit Development VEB Continues to Finance Elga Coal Deposit Development

Mechel announces that project company Elgaugol OOO, which is part of Mechel Group, and State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” signed agreements for the second and third credit lines of project financing for developing Elga Coal Complex’s first phase, for 2.085 billion US dollars and 418.7 million US dollars respectively.

The second credit line, totaling 2.085 billion US dollars, will be used to finance construction of Elga Coal Complex’s facilities until the complex’s coal mining and processing capacity reaches 11.7 million tonnes of run-of-mine coal a year, as well as completion of works aimed at increasing the Ulak-Elga railway’s capacity. 

The third credit line totaling 418.7 million US dollars will be used to fund expenses on paying Vnesheconombank’s interest and fees for the second credit line until Elga Coal Complex’s first- phase facilities are launched, as well as to repay the 150-million-dollar bridge loan — the first credit line granted Elgaugol OOO in October 2013.

49% of Elgaugol OOO’s shares, as well as the project company’s movable and real property will be offered as security on these credit lines. Vnesheconombank will also acquire 0.01% of Elgaugol OOO’s equity capital with following repurchase.

Vnesheconombank’s (VEB) Supervisory Board approved the agreement granting Mechel OAO project financing totaling 2.5 billion US dollars in September 2013. The loan has a tenor of 13.5 years.

“We highly value our cooperation with Vnesheconombank, which lends support to our company in a fairly volatile period for the industry and the global financial market. Thanks to this loan we have fully resolved the issue of financing for the Elga project, which will be developed regardless of volatility in commodity markets,” Mechel OAO’s Chief Financial Officer Stanislav Ploschenko said.

Note to editors:

State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” is a key instrument for the state economic policy aimed at eliminating infrastructure limitations for economic growth, improving the efficiency of developing natural resources, developing high- tech industries, realizing innovative and production potential of small and medium-sized businesses, providing support for exports of Russian products, works and services.

Elga, located in southern Yakutia, is Russia’s largest and one of the world’s largest deposits of high-quality coking coal. Its reserves are estimated at 2.2 billion tonnes according to JORC standards.

Mechel OAO Ekaterina Videman Tel: + 7 495 221 88 88 Ekaterina.videman@mechel.com

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Mechel is an international mining and steel company which employs over 80,000 people. Its products are marketed in Europe, Asia, North and South America, Africa. Mechel unites producers of coal, iron ore concentrate, steel, rolled products, ferroalloys, heat and electric power. All of its enterprises work in a single production chain, from raw materials to high value- added products.

***

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Mechel, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements. We refer you to the documents Mechel files from time to time with the U.S. Securities and Exchange Commission, including our Form 20-F. These documents contain and identify important factors, including those contained in the section captioned “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in our Form 20-F, that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of our recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or ADRs, financial risk management and the impact of general business and global economic conditions. 

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http://www.tildefinance.com/article/veb-continues-to-finance-elga-coal-deposit-development http://www.tildefinance.com/article/veb-continues-to-finance-elga-coal-deposit-development bill.pradi@tildefinance.com (Bill Pradi) Fri, 14 Mar 2014 10:45:00 -0700 Metals & Mining
Rapaport Auctions Will Hold Major Diamond Sale in Israel Rapaport Auctions Will Hold Major Diamond Sale in Israel

Rapaport Auctions will be holding its next single stone polished diamond auction and sale in Israel during the U.S. & International Diamond Week from April 6 to 10. As the leading recycler of diamonds in the world, Rapaport expects to offer over 2,000 diamonds at the sale.

Israel is a very strong supporter of the recycled market due to the expertise of its cutters who optimize the value of recut diamonds. Rapaport is pleased to be coordinating its efforts with the Israel Diamond Exchange and expects the upcoming event to attract hundreds of international buyers. The Rapaport sale will provide unprecedented opportunities for buyers to source a large quantity and wide variety of diamonds at fair market prices. 

“Israel’s active diamond bourse and manufacturing expertise make it an ideal market for trading diamonds. We applaud the Israel Diamond Exchange initiative and look forward to promoting trade in Israel and the global diamond market,” said Ezi Rapaport, Director of Rapaport Global Trading.

“The Israel Diamond Exchange is pleased to cooperate with the Rapaport Group and create a great trading opportunity at the U.S. & International Diamond Week in Israel. We are privileged to have the presence of this extended sale within the venue of this extraordinary week,” said Shmuel Schnitzer, president of the Israel Diamond Exchange.

The Rapaport Auction will feature a broad range of recycled diamonds as well as select diamonds direct from manufacturers offered for sale at Buy Now prices for immediate purchase. The Israel Diamond Exchange will be providing four nights of free accommodation for registered buyers.

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http://www.tildefinance.com/article/rapaport-auctions-will-hold-major-diamond-sale-in-israel http://www.tildefinance.com/article/rapaport-auctions-will-hold-major-diamond-sale-in-israel tim.berg@tildefinance.com (Tim Berg) Thu, 06 Mar 2014 10:20:00 -0800 Metals & Mining
NLMK Group Saves Over RUB 850 Million in 2013 Through Increased Energy Efficiency NLMK Group Saves Over RUB 850 Million in 2013 Through Increased Energy Efficiency

As a result of measures taken in 2013 to improve energy efficiency, NLMK Group (LSE: NLMK) has saved more than RUB 850 million.

NLMK Group’s Strategy 2017 forecasts that its energy efficiency improvements will lead to an annual increase in EBITDA of around USD 88 million.

At the main production site in Lipetsk, which accounts for around 80% of the Group’s entire production, specific energy intensity was reduced to 5.67 Gcal per tonne of steel produced in 2013, compared with 5.74 Gcal for the previous year. The reduction in specific energy intensity at Novolipetsk has been achieved thanks to:

 

increasing the share of electricity generated onsite to 53% through more efficient utilization of secondary fuel gases at the site’s power plants (the share of electricity produced from secondary gases has increased from 71% to 78%); reducing the per unit consumption of fuel and energy resources at the steelmaking and rolling facilities and at the various energy production units through increasing capacity, optimizing equipment operating methods, and implementing energy saving measures; reducing coke consumption in pig iron production and adopting the pulverized coal injection method for Blast Furnace No. 5; increasing the use of steam from recovery plants.

 

“The Group will achieve further reductions in the energy intensity of steel production through the phased implementation of measures aimed at maximizing the effective use of secondary energy resources, streamlining operational processes, and upgrading facilities. The company’s success in introducing the best technologies for optimizing energy consumption, reducing energy costs, and making rational use of resources will increase efficiency across the Group’s entire production chain, and is viewed by the company as being of strategic importance,” announced Alexander Starchenko, Vice President for Energy at NLMK.

Further energy saving work across NLMK Group companies will include upgrading the production lighting system and introducing an efficient infrared heating system for defrosting bulk cargo, as well as localized heating for equipment and premises.

In 2012, NLMK Group received the ISO 50001 Energy Management Systems certificate confirming that it meets international standards – the first company in the Russian steel industry to do so. The certification of NLMK’s energy management system, testifying to its compliance with the ISO 50001:2011 international standard, is an endorsement of the company’s success in employing the best technologies for optimizing energy consumption and making rational use of energy resources.

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http://www.tildefinance.com/article/nlmk-group-saves-over-rub-850-million-in-2013-through-increased-energy-efficiency http://www.tildefinance.com/article/nlmk-group-saves-over-rub-850-million-in-2013-through-increased-energy-efficiency bill.pradi@tildefinance.com (Bill Pradi) Tue, 04 Mar 2014 09:29:00 -0800 Metals & Mining
Forevermark Diamond Brand Reports Strong Growth In 2013 Forevermark Diamond Brand Reports Strong Growth In 2013

Forevermark, the diamond brand from the De Beers group of companies, announced a strong year of growth, driven predominantly by continued consumer demand in core markets, China, U.S., India and Japan. Stephen Lussier, Forevermark CEO commented, “The brand has performed exceptionally well in the last year. We are now fully established as a globally recognised brand with presence in over 1,300 retail outlets across 12 major markets.”

Expansion has progressed rapidly since the brand launched in 2008. In the last year alone, the number of stores selling Forevermark diamonds has increased by almost 40%. Forevermark’s licensee program also saw launches in Australia, Brunei, Kuwait and producer country, Namibia in 2013. 

The Forevermark Diamond Institute, the very centre of the business had an extremely successful year. Jonathan Kendall, President of Forevermark Diamond Institute remarked, “We are defining quality and integrity in the diamond industry. Our technological excellence, diamond knowledge and expertise are unrivalled in the industry and demand for our services is increasing every year.” Forevermark recently announced that a second inscription and grading facility will open in early 2015 in Surat, India to meet the continued demand.

Since 2009, grading and inscription numbers have increased by 666% and 426% respectively. More than 870,000 diamonds have now been inscribed with a Forevermark unique inscription number and icon.

Stephen Lussier attributes Forevermark’s ongoing success to the strength of the brand positioning. “Our promise, underpinned by the individual inscription on every Forevermark diamond sets us apart. With Forevermark you get a beautiful diamond of exceptional quality from a brand with strong integrity values. These are assurances which we know today’s consumers are looking for.”

The second half of 2013 saw the launch of Forevermark’s fourth design collection, CornerstonesTM which helped to drive significant sales for Forevermark partners during the key end of year sales period and will continue to do so throughout 2014.

In addition, the exceptional qualities of Forevermark diamonds have inspired more stunning jewellery creations around the world including House of Waris founded by actor and designer Waris Ahluwalia, who debuted his first Forevermark collection in the U.S. that was inspired by a visit to Southern Africa to witness the journey of a Forevermark diamond. Authorized Forevermark Jeweller Chow Tai Fook also introduced the latest Forevermark Swan Bridal Collection in Greater China. Since the exclusive collection launched in 2011, the product range has quadrupled and sales have more than doubled year on year.

Forevermark diamonds also made a big impact on the red carpet worn by some of the world’s biggest names including Michelle Obama, Ziyi Zhang, Norah Jones, Jessica Chastain and Jennifer Garner, amongst others in the past year.

Forevermark has ambitious plans for 2014 and beyond, Lussier summarises, “We are excited about the year ahead; increasing distribution in our core markets and expanding into new markets remain our priorities. We are in very strong position to realise our goal to become the world’s leading diamond brand.”

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http://www.tildefinance.com/article/forevermark-diamond-brand-reports-strong-growth-in-2013 http://www.tildefinance.com/article/forevermark-diamond-brand-reports-strong-growth-in-2013 tim.berg@tildefinance.com (Tim Berg) Sun, 02 Mar 2014 10:52:00 -0800 Metals & Mining
NLMK Obtains International Certificates For High-strength Steel Slabs NLMK Obtains International Certificates For High-strength Steel Slabs

NLMK Group has successfully passed certification audits confirming that its production of special-size slabs from high-strength and corrosion-resistant steel grades is compliant with the requirements set forth by certifying agencies Det Norske Veritas (Norway), Lloyd’s Register (Great Britain), and the Russian Maritime Register of Shipping (Russia).

Following the audits, which were conducted in accordance with the rules of the International Association of Classification Societies (IACS), NLMK obtained new certificates extending the scope of application for slabs from F and FH high strength steels and in new sizes – 355 mm thick and 2,200 mm wide. 

High-strength slabs in unique sizes are supplied by NLMK’s main production site in Lipetsk to Russian manufacturers of large-diameter pipes. They are also used by NLMK Europe Plate Products Division for the manufacture of a wide range of thick plates used for offshore windmills and drilling platforms, shipbuilding, and other industrial applications where steel structures have to be particularly strong and corrosion-resistant.

Production of these products was made possible by a multi-billion rouble investment in upgrading and improving process equipment at NLMK Group’s main production site in Lipetsk.

Ilya Guschin, NLMK Group Vice President for Sales, said: “An analysis of the market which takes Northern Europe into account indicates that there is stable demand for premium steel products, such as high-strength and unique-dimension thick plates. We believe that these international certificates will help further enhance the trust held for NLMK Group products, and ultimately to consolidate our position in this niche high-margin segment.”

As part of a single production chain, NLMK’s Lipetsk site supplies wide slabs from high-strength steels to NLMK DanSteel A/S – a Group company based in Denmark that manufactures a wide range of thick plates for the production of windmills, drilling platforms, shipbuilding, yellow goods, and infrastructure.

In Russia, NLMK supplies slabs with superior chemical composition and steel structure standards to Vyksa Steel Works (VMZ, part of OMK Group) for the manufacture of wide plates and large-diameter pipes. The dimensions of these slabs are unique for the Russian market.

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http://www.tildefinance.com/article/nlmk-obtains-international-certificates-for-high-strength-steel-slabs http://www.tildefinance.com/article/nlmk-obtains-international-certificates-for-high-strength-steel-slabs tim.berg@tildefinance.com (Tim Berg) Mon, 17 Feb 2014 10:20:00 -0800 Metals & Mining
Arbitrazh Court of Moscow orders Maximov to return RUB 7.3 billion to NLMK Group Arbitrazh Court of Moscow orders Maximov to return RUB 7.3 billion to NLMK Group

On 7 February 2014, the Arbitrazh Court of Moscow decided to recover from Nikolai Maximov over RUB 7.3 billion in favor of NLMK, declaring invalid the Agreement of 2007, under which NLMK bought a controlling share (50%+1) in Maxi-Group, as concluded under the influence of fraud on the part of Mr. Maximov.

Moreover, an appraisal was conducted as part of the proceedings, revealing that the cost of the controlling shares in Maxi-Group at the moment of purchase was 2 times lower than the advance payment made by NLMK in favor of Mr. Maximov when concluding the deal. 

Thus, the court of the first instance has satisfied NLMK’s claims, the latter being convinced that the Agreement was signed under the influence of fraud on the part of Mr. Maximov. The Defendant had deliberately concealed from the company a number of negative circumstances related to the financial position and the quality of Maxi-Group assets.

In March 2011, NLMK filed a claim with the Moscow Arbitrazh Court to declare the Agreement as null and void. This happened following Mr. Maximov’s unexpected declaration at the end of 2010 during proceedings at the International Commercial Arbitration Court (ICAC) of the Chamber of Commerce and Industry of the Russian Federation that he refuses to recognize the representations and warranties that he had taken on under the Agreement. On 7 February 2014, Mr. Maximov confirmed this refusal to accept the obligations as to the representations and warranties during a court hearing in the Arbitrazh Court of Moscow.

Earlier, on 30 January 2014, the ICAC had refused to consider Mr. Maximov’s claim against the Company on the recovery of damages he had allegedly incurred as a result of NLMK violating the Agreement. ICAC has ruled that it does not have the competence to handle this dispute and it should be taken to the Arbitrazh Court of Moscow.

The Decision made by the Arbitrazh Court of Moscow on 7 February 2014 confirms the fairness of NLMK’s actions and the reasonability of the position the Company has been holding for the last several years, i.e. that Mr. Maximov was involved in a large-scale fraud against NLMK in connection with the execution of the Agreement.

Reference information of the conflict around Maxi-Group

Maxi-Group was created in the beginning of the 2000s. Nikolai Maximov was Maxi-Group’s major shareholder and president. The company united a number of companies collecting and recycling scrap, as well as companies manufacturing steel and rolled products for the construction industry; directly or indirectly the company controlled dozens of legal entities. Its key production units – NSSMZ and UZPS – are located in the Sverdlovsk region.

In Autumn 2007, Mr. Maximov turned to the shareholders of large steelmaking companies offering them to buy the controlling share in Maxi-Group. On 22 November 2007, NLMK and Mr. Maximov, at that time the sole shareholder and president of Maxi-Group, signed an Agreement under which NLMK acquired 50%+1 share of the company. The Purchase Agreement included representations and warranties on the part of Mr. Maximov, including those related to the financial standing and quality of the assets of all legal entities that made up Maxi-Group.

Mr. Maximov received RUB 7.3 billion as an advance payment for the shares. Besides this, NLMK provided debt financing for Maxi-Group to pay off its arrears, including for salaries, and restructured Maxi-Group’s debt owed to more than 50 banks (at the end of 2007 its debt levels exceeded RUB 50 billion).

However,  as a result of enormous debt burden that turned out to be unsecured by assets that were absent due to fraudulent actions and unduly management by Mr. Maximov and his management team prior to the Agreement being signed by the parties, in August 2011 Maxi-Group was declared bankrupt and is currently going through bankruptcy proceedings.

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http://www.tildefinance.com/article/arbitrazh-court-of-moscow-orders-maximov-to-return-rub-7-3-billion-to-nlmk-group http://www.tildefinance.com/article/arbitrazh-court-of-moscow-orders-maximov-to-return-rub-7-3-billion-to-nlmk-group tim.berg@tildefinance.com (Tim Berg) Thu, 13 Feb 2014 14:30:00 -0800 Metals & Mining
Mechel Starts To Ship Coal From Posiet Seaport Mechel Starts To Ship Coal From Posiet Seaport

Mechel reports successful tests of the new coal export terminal at Primorye Region’s Port Posiet. Modernization of the port’s facilities will enable the company to significantly increase export to the Asia-Pacific countries. The project’s cost is estimated to total some 4.5 billion rubles.

The first stage of Port Posiet’s technical revamping provisions for a cargo turnover growth to up to 7 million tonnes a year. With the new coal export terminal, the port will be able to unload some 400 wagons a day (28,000 tonnes of coal) and load about 30,000 tonnes of coal daily onto cargo vessels. 

The coal export terminal’s equipment was produced by the German-based ThyssenKrupp concern, whose experts are currently overseeing start-up and commissioning works. The complex’s chief characteristic is its use of car tipping machines, which technology makes unloading more intensive while minimizing damage to the wagons. The terminal also comprises storage equipment. The terminal’s production line is equipped with magnet collectors that can eliminate foreign impurities that could contaminate the coal during transport. To unload coal in wintertime, the terminal employs a defreezing facility with infrared electric heaters. The coal export terminal is operated remotely from a single monitoring center.

Port Posiet’s modernization will have a positive impact on Posiet village’s environment. The new complex is equipped with highly efficient aspiration and dust-control systems which create an atomized water veil, which provides additional protection for the environment.

The coal export terminal is due to be launched into testing and industrial operation in the second quarter of 2014, which will mean completion of the first stage of Port Posiet’s technical revamping investment project. The second stage is planned to be implemented in the next few years. The second stage includes construction of a deep-water berth and bottom dredging of the approach channel for Panamax-type vessels of up to 60,000-tonne cargo capacity.

“We expect that Port Posiet’s modernization will enable us to improve its attraction for cargo recipients in Asia Pacific and accordingly increase coal sales. Also, by improving the port’s capacity up to 7 million tonnes a year, we are preparing to transship coal products from the Elga deposit. The port’s technical revamping also tackles an important social issue in Primorye Region’s Khasan area, where this will create over 175 new jobs,” Mechel OAO’s Chief Executive Officer Oleg Korzhov noted.

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http://www.tildefinance.com/article/mechel-starts-to-ship-coal-from-posiet-seaport http://www.tildefinance.com/article/mechel-starts-to-ship-coal-from-posiet-seaport bill.pradi@tildefinance.com (Bill Pradi) Thu, 13 Feb 2014 11:20:00 -0800 Metals & Mining
NLMK Group Enters A New Growth Phase With The Launch Of "Strategy 2017" NLMK Group Enters A New Growth Phase With The Launch Of "Strategy 2017"

NLMK had announced the launch of its “Strategy 2017”. “Strategy 2017” targets net gains of $1.0 billion per annum and contemplates total new investment of $1.6 billion. “Strategy 2017” is focused on unlocking significant internal potential of the Group’s businesses by boosting operational and process efficiency across the entire production chain, enhancing vertical integration into key raw materials, increasing sales of high-value added (HVA) products, and pursuing environmental, safety and human capital development programmes. 

In implementing “Strategy 2017”, the Group will maintain its commitment to a conservative financial policy aimed at further debt reduction and financing investments through internal cashflow. As a result, the Group targets a Net Debt/EBITDA leverage ratio of 1.0x.

In addition, NLMK will adhere to a consistent dividend policy that provides for a payout ratio of at least 20% of US GAAP net income and an average payout of 30% during 5 year period.

Oleg Bagrin, NLMK Group CEO, said: “With the launch of our “Strategy 2017”, NLMK enters the next phase of its growth. We have a proven track record of successfully delivering on our strategic objectives in the past and we believe our new strategy will enable us to strengthen our leading positions in the industry.

Over the last 10 years we have invested $11 billion, doubling the size of our business. We now intend to exploit the potential of this platform to ensure further growth and value creation.

“Strategy 2017” has a modular structure combining multiple projects across all business units. We intend to significantly improve the Group’s operating efficiency and the quality of our business processes, and increase self-sufficiency in strategic resources. In the same time we are working on enhancing our positions in the key markets through better utilization of the newly-built and upgraded facilities.

We seek to ensure the robustness of the strategy both through efficiency programs launched in each division (NLMK Production System) and through implementing more than one hundred investment projects with high return hurdles. The mix of operational and investment levers will ensure the Group’s sustainable development under various market conditions. NLMK Production system has already delivered savings of $235 million in 2013 compared to 2012 levels.

The Group’s new strategy places a special emphasis on industrial safety, a key priority for the company, sustainability and human capital development, which are critical for long-term leadership.

We are today presenting “Strategy 2017” to the investment community and look forward to explaining our vision in more detail”.

Objectives and targets of “Strategy 2017”:

1.     Leadership in operational efficiency

·         100% rollout of NLMK Production System 

·         Targeted net gains of $330 million per annum

2.     World-class resource base

·         100% self-sufficiency in iron ore with a flexible feed structure (pellets, sinter, sinter ore)

·         Reduced consumption of valuable resources

·         Targeted net gains of $480 million per annum

3.     Leading positions in strategic markets

·         16.3 mt steel product sales vs. 14.9 mt in 2013

·         High value added products in total sales of 40% vs. 35% in 2013

·         Domestic market sales of 45% vs. 39% in 2013

·         Targeted net gains of $190 million per annum

4.     Leadership in sustainability and safety

·      Systematic minimization of environmental footprint

·      Full compliance of production processes with health and safety standards

·      Industry leadership in labour efficiency with motivated and engaged workforce

 

Full document can be downloaded via this link: NLMK Strategy 2017 (Capital Markets Day, London, 10 Feb.2014) -- 5.9 Мb size

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http://www.tildefinance.com/article/nlmk-group-enters-a-new-growth-phase-with-the-launch-of--strategy-2017- http://www.tildefinance.com/article/nlmk-group-enters-a-new-growth-phase-with-the-launch-of--strategy-2017- bill.pradi@tildefinance.com (Bill Pradi) Tue, 11 Feb 2014 09:20:00 -0800 Metals & Mining
De Beers Bolsters Executive Committee: Adds Three New Members De Beers Bolsters Executive Committee: Adds Three New Members

The De Beers Group of Companies has made three new appointments to its Executive Committee, adding 75 years of diamond experience. Paul Rowley, Executive Vice President of Global Sightholder Sales, Neil Ventura, Executive Vice President of Auction Sales and Balisi Bonyongo, CEO of Debswana, will join the Executive Committee with immediate effect.

Paul Rowley joined De Beers in 1983 and has filled a variety of senior positions in the organisation. He has served on both the DTC Botswana and Namibia DTC boards and was Acting CEO of DTC Botswana prior to his current role. His earlier experience also includes key account management, rough diamond purchasing in various African diamond producing countries and heading the Global Sightholder Sales Diamond Division. 

Neil Ventura joined De Beers in 1989, gaining experience in both mature and emerging markets, before taking on the position of CEO of Diamdel (now Auction Sales) in July 2007. Since taking on this role, he has established De Beers as a market leader in the sale of rough diamonds to small, mid-size and large manufacturing, retailing and trading businesses via online auctions.

Balisi Bonyongo started his career with Debswana in 1993 as a junior Plant Metallurgist, holding several senior positions including the critical role of Commissioning Manager of the Aquarium diamond processing plant at Jwaneng, the first of its kind in the world. He also held the position of Corporate Strategy Manager before assuming the role of Jwaneng General Manager and later Chief Operating Officer of Debswana.

Philippe Mellier, CEO of the De Beers Group said: “I am delighted to welcome Paul, Neil and Balisi to the Executive Committee. Together they have extensive diamond experience and have built reputations as diamond experts, creating value for De Beers and its partners. I look forward to working closely with them as we position De Beers for continued growth across the pipeline”. 

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http://www.tildefinance.com/article/de-beers-bolsters-executive-committee--adds-three-new-members http://www.tildefinance.com/article/de-beers-bolsters-executive-committee--adds-three-new-members tim.berg@tildefinance.com (Tim Berg) Thu, 06 Feb 2014 12:50:00 -0800 Metals & Mining
EuroChem Reports IFRS Financial Information for 2013 EuroChem Reports IFRS Financial Information for 2013

EuroChem yesterday announced consolidated full year 2013 revenues according to IFRS of RUB 176.9bn (US$ 5.6bn), which represented a 6% increase on revenues of RUB 166.5bn (US$5.4bn) in 2012. Earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to RUB 43.0bn (US$ 1.3bn), as compared to RUB 49.2bn (US$ 1.6bn) in the previous year.

Full year fertilizer sales volumes for our nitrogen and phosphate segments, excluding sales of mining co-products, increased 788 thousand metric tons (KMT) or by 8% to 10.6 million metric tons (MMT) as compared to 2012 sales volumes (or up less than 1% on a like-for-like basis, excluding EuroChem Antwerpen and EuroChem Agro). Mining raw material sales volumes, which include iron ore and baddeleyite, added over half a million tonnes and grew to 5.9 MMT, which represented an 11% increase on the previous year. 

CEO Dmitry Strezhnev commented: “Despite the growth in fertilizer demand falling short of market expectations, we continued to challenge ourselves to increase volumes and gain market share. As highlighted by our results, our unique asset base is well positioned to drive and support robust cash flow generation across the business cycle. The ensuing value creation is set to be boosted by our targeted strategic initiatives, such as in potash, nitrogen and phosphates, which will serve to further entrench our resilience.”

2013 Market Conditions

The fertilizer markets had a rather tumultuous year. While the year started off slowly on account of adverse weather in some key markets, conditions had materially improved by late spring. Farmers quickly made up for the lost time as favourable soft commodity prices provided the incentive to increase yield and expand acreage. Despite the return of healthy demand levels for all three nutrients, the first quarter’s inventory build-up limited any significant pricing appreciation. Urea prices proved the most vulnerable on account of record urea exports from China where ample coal supply and lower prices boosted the global competitiveness of local producers. On the demand side, India’s currency devaluation coupled with what has been described as an archaic subsidy system left one of the world’s largest fertilizer importers incapacitated for the better part of the year.

In a positive for both producers and customers, raw material price dynamics mirrored the softer market conditions. Over the course of the year, gradually weakening ammonia, sulphur and phosphate rock prices helped alleviate some of the margin pressure on the producer side. Prilled urea (FOB Yuzhny) averaged US$ 341/tonne in 2013, down 16% from its 2012 average of US$ 408/tonne. Ammonium nitrate (AN) (FOB Black Sea) performed slightly better and finished 2013 with an average of US$ 288, 5% below its average for the previous year.

While phosphate prices received some support from the growth in planted acreage in Latin America, the market remained otherwise fragile given the limited buying activity from India. Average MAP and DAP (FOB Baltic Sea) prices for 2013 were US$ 454 and US$ 457$/tonne respectively, trailing their 2012 average prices by 18% and 17% respectively.

Midway through the year, unexpected strategic repositioning by Uralkali wreaked chaos over the potash landscape. Citing lost market share and declining sales volumes, the Russian potash producer\'s abrupt exit from the BPC marketing vehicle, which it formed with neighbour Belaruskali, brought the market to a standstill. Potash prices reacted in a knee-jerk fashion and went on to shed over 25% by year end. While many potash expansion projects were reassessed in the wake of this market reshuffling, EuroChem reiterated its commitment to the “third nutrient” with work continuing at both its greenfield potash projects in Russia. At an average of USD 352/tonne in 2013 MOP (FOB Baltic Sea) contract prices fell 17% year-on-year as compared to an average of USD 424/tonne in 2012. The spot price premium to contract prices tightened as buyers held out given the market uncertainty. MOP (FOB Baltic Sea) spot prices ended 2013 with an average US$ 379/tonne, 19% behind their 2012 average of US$ 467/tonne. Spot prices for MOP on the Baltics finished the year at around US$ 290/tonne, or ca. 40% below their late December 2012 levels.

Buoyed by stronger-than-expected demand from China, iron ore (63.5%Fe, China CFR) averaged USD 136/tonne for the year, a 3% increase versus its 2012 average.

BUSINESS SEGMENTS

Segment revenues (both volume and value) are shown gross and inclusive of intra-segment sales.

Nitrogen segment

Our 2013 nitrogen segment sales volumes continued to benefit from the added depth to our fertiliser production chain. Full year volumes increased 11% and rose to 8,217 KMT, which corresponded to an additional 838 KMT of product as compared to 2012. While the year proved challenging for urea and AN trading, the breadth and flexibility of our production and distribution assets alleviated some of the pressure. The consolidation of EuroChem Antwerpen and EuroChem Agro yielded significant gains for our more advanced crop nutrition products. Sales in NPK, UAN, and granulated AN increased a combined 978 KMT over the previous year, more than compensating the slightly lower urea and AN sales volumes, which slipped 7% and 11% year-on-year respectively. CAN sales volumes were also strong, increasing 24% to 943 KMT as compared to 759 KMT in 2012. 

Our nitrogen revenues for the 12 months ended 31 December 2013 climbed to a record high of RUB 100.1bn, which represented an 8% increase on what was a strong 2012 performance. Average prices for nitrogen products nevertheless reflected the challenging market backdrop and pulled nitrogen segment EBITDA down 14% to RUB 26.2bn as compared to RUB 30.6bn in 2012.

Sales to Europe, which represented 26% of total nitrogen sales in 2012, increased 29% and accounted for 31% of the Group’s nitrogen sales in 2013. The increase in sales to Europe was primarily brought on by the expansion of our distribution network and asset base in Western Europe coupled with challenging conditions on the other side of the Atlantic. Our sales to Russia increased 14% and accounted for 23% of segment sales (2012: 22%).Urea’s relative weakness versus other nitrogen products was especially felt in the Americas. Sales to Latin America and North America decreased 31% and 18% respectively. Together these two regions accounted for 23% of sales in 2013 (2012: 32%).

At our upstream nitrogen operations, our Severneft-Urengoy (SNU) natural gas subsidiary provided RUB 5.1bn and RUB 1.5bn to the Group’s revenues and EBITDA, respectively. Natural gas sales volumes increased 27% year-on-year to reach 830 million m3 while gas condensate sales volumes expanded 26% to 141 KMT as compared to 2012. The natural gas volumes were sold to Novomoskovskiy Azot at regulated prices less a 5% discount.

For the year, our Novomoskovskiy Azot and Nevinnomysskiy Azot ammonia facilities paid average natural gas prices of RUB 3,966 and RUB 4,120 per 1,000m3 respectively (c. US$ 3.87 and US$ 4.03/mmBtu), as compared to average prices of RUB 3,432 and RUB 3,594 per 1,000m3 respectively (c. US$ 3.43 and 3.60/mmBtu) for the 12 months ended 31 December 2012. Two natural gas price increases were implemented in 2013 in Russia. An increase of 15% took effect from July 1st followed by a 2-3% raise from October 1st. No price increases have been announced for 2014.

Phosphate segment

Total sales volumes for the phosphate segment, excluding raw material mining operations, slipped 2% or 50 KMT to 2,405 KMT in 2013, as compared to last year. MAP/DAP sales remained practically flat with a modest 13 KMT year-on-year increase while NP sales finished the year 53 KMT below their 2012 levels. Iron ore demand remained resilient throughout the year. Sales of our apatite-mining co-product finished the year up 11% to 5,858 KMT as compared to 2012.

The strong iron ore backdrop lent support to our phosphate segment revenues for the January to December 2013 period and limited the effects of the year’s lacklustre MAP/DAP showing. Full year revenues for our phosphate segment amounted to RUB 58.3bn, representing a 4% decline on 2012 segment revenues of RUB 60.8bn. Phosphate segment EBITDA had a more pronounced decline, pulled down by the lower average realized prices for phosphate fertilizer products, particularly MAP/DAP, and finished the year at RUB 13.9bn, 15% below the RUB 16.2bn recorded a year earlier.

Our mining operations mitigated the weakness in phosphate-based fertilizers as healthy demand from China carried average iron ore prices 3% higher year-on-year. Iron ore and baddeleyite, which are the co-products of apatite mining operations at our Kovdorskiy GOK mine, together generated 38% and 74% of phosphate segment revenues and EBITDA, respectively, as compared to 31% and 51% in 2012.

The sales geography of our phosphate segment reflected the contribution of mining co-products to the segment’s performance. The share of revenue from Asia increased three percentage points as compared to 2012 and accounted for 30% of total segment sales. Higher feed phosphate sales drove gains in Europe. As in 2012, it was our second largest phosphate market and represented 29% of 2013 sales, a three percentage point increase on last year. Sales to Russia declined six percentage points on lower MAP/DAP prices and accounted for 18% of sales in 2013.

In late October 2013 we announced the launch of drilling and blasting operations at our phosphate rock mining project in Kazakhstan. Most of the major equipment items required to build the initial phase have been purchased, including but not limited to excavators, dozers, haul trucks, crushers, as well as screening, conveying and loading facilities. First production is expected to come on stream in the fourth quarter of 2014. With its targeted initial production capacity of around 640 KMT of phosphate ore per year, our Kazakh mining project has been an important part of the company’s upstream raw material strategy.

Potash segment

Eurochem VolgaKaliy (Gremyachinskoe deposit, Volgograd region)

With the cage shaft bottom cleared of water and debris, we resumed sinking in the fourth quarter and had progressed to a depth of -148 meters as of 31 January. As previously announced, the restart of sinking was delayed by several months. Once the shaft was cleared, detailed surveying revealed that corrections to the shaft liner were required. These issues were inherited from our initial contractor for the project and included the need to remove and replace eleven tubing rings and the concrete backing. Please refer to the Legal Proceedings section at the end of this release for further information.

Work also continued on schedule at the skip shaft #1 where the freeze wall was completed in December. Sinking operations resumed after extensive testing of the water and pressure below the bottom concrete plug. The plug was then removed and sinking operations resumed from -572 meters. As of 31 January, the skip shaft #1 had reached a depth of -601 meters out of its planned -1,147 meters.

The freeze wall for the skip shaft #2 was further developed and had achieved its designated thickness at the time of this release. Sinking efforts on our phase 2 skip shaft are currently scheduled to start later this month.

On the surface, we saw good progress on the construction of the main process beneficiation building, warehousing facilities, and loading and shipping facilities. The main electrical substation is essentially complete and undergoing rigorous commissioning checks prior to energizing.

EuroChem Usolskiy Potash (Verkhnekamskoe deposit, Perm region)

We successfully completed cage shaft sinking operations in October 2013 and expect to wrap up skip shaft sinking efforts within the next quarter. The abandonment of the site’s two freeze walls, which were designed, installed, and operated by Thyssen Schachtbau is underway, a program also contracted with the German mining specialists.

As of 31 January, underground operations at the Usolskiy skip shaft were down to 509 meters with only 37 meters left to sink before the shaft’s planned depth. We also made progress on other excavations in this shaft such as openings for the loading bins and pockets.

Above ground, our teams were engaged in the construction of the tailings pond and railroads. The landscape of the site further evolved with the erecting of the foundations for various buildings including the administration building, mine rescue building and permanent canteen.

For the January to December 2013 period, total capital expenditure at both VolgaKaliy and Usolskiy amounted to RUB 12.4bn, bringing the aggregate total to RUB 57bn since the start of our greenfield potash developments.

Distribution segment

Our distribution segment comprises the sale of fertilizers and services via a number of retailers located within the CIS, specifically in Russia, Ukraine and Belarus. Our strategy to provide our clients with “yields, not just fertilizers” is there to support our customers improve yields through better crop nutrient balance. In 2013, our distribution segment realized sales of RUB 17.0bn and generated EBITDA of RUB 683m.

FINANCIAL

Income statement

Consolidated revenues for the twelve months ended 31 December 2013 grew 6% to RUB 176.9bn (US$ 5.6bn). The additional 838 KMT in nitrogen sales volumes coupled with an 11% increase in iron ore sales volumes helped alleviate the pricing erosion in phosphates and drive the year-on-year revenue expansion. Excluding EuroChem Antwerpen and EuroChem Agro, consolidated from Q2 and Q3 2012, respectively, our revenues and EBITDA for 2013 amounted to RUB 135.0bn and RUB 39.2bn respectively.

For the twelve months ended December 2013, our total cost of sales displayed a 15% increase over the previous year and amounted to RUB 112.8bn. The increase in costs outpaced the 6% revenue growth as average costs and tariffs for key raw materials such as natural gas, phosphate rock, ammonia, and energy moved slightly higher than in the previous year. In line with the growth in production volumes, group costs for materials and components used or resold increased from RUB 64.6bn in 2012 to RUB 70.1 bn in 2013. However, their share within the Group’s costs of sales structure decreased four percentage points to 62%.

Within cost of sales, labour costs, which include social fund contributions, increased 11% in 2013 and amounted to RUB 10.9bn. Most of the uptick in labour costs was driven by a salary indexation in January 2013 combined with an increase in personnel brought on by the integration of assets acquired in the previous year. As in 2012, labour costs comprised 10% of the Group’s total costs of sales in 2013.

Despite the considerable increase in production volumes, the share of energy costs within our cost structure remained flat at 7%. Although we registered a 14% year-on-year increase in energy costs following the upward revision to tariffs in the Russian power generation, our efficiency upgrade program yielded substantial savings. Particularly, in addition to increasing internal power generation capacity at Phosphorit, the replacement of obsolete catalysts at Novomoskovskiy Azot provided RUB 45m in energy savings in 2013.

Total distribution costs ticked up 8% to RUB 25.3bn as compared to RUB 23.3bn for the same period in 2012. Within S&D costs, transportation expenses registered a slight 3% growth to RUB 18.6bn (2012: RUB 18.1bn). Despite increasing year-on-year, transportation costs comprised 74% of total distribution expenses in 2013, down from 78% a year earlier. While lower maritime freight rates provided a 14% reduction in transportation costs, the savings were offset by an increase in rail shipments of iron ore concentrate to Zabaikalsk (Chinese border).

General and administrative (G&A) expenses for the Group increased 20% from RUB 5.6bn in 2012 to RUB 6.7bn in 2013. Accounting for 47% of G&A expenses, labour costs increased 16% over the same period. Total staff costs, including social expenses, grew to RUB 16.6bn, up15% from RUB 14.4bn a year ago. As highlighted earlier, the growth in staff expenses was primarily linked to recent acquisitions and organic growth initiatives. Some of the key ongoing projects of 2013 were the development of phosphate rock mining operations in Kazakhstan, the launch of our railcar depot to service the Group’s 6,500+ rolling stock, and our ambitious VolgaKaliy and Usolskiy potash projects in Russia.

For the full year 2013 we recognized other operating expenses of RUB 425m versus other operating income of RUB 371m in 2012. The main items behind other operating expenses for the period were sponsorship expenses of RUB 839m (2012: RUB 516m) and foreign exchange gains of RUB 393m (2012: losses of RUB 263m). The main sponsorship expenses included a new sports facility in Kėdainiai, Lithuania, constructed as part of celebrations commemorating Lifosa’s 50th anniversary, and the upgrade of social infrastructure and public utilities in Novomoskovsk, site of our Novomoskovskiy Azot nitrogen facility.

Below the operating profit line, we recognized unrealized financial foreign exchange losses of RUB 5.9bn, compared to an unrealized gain of RUB 4.3bn in 2012. Changes in these noncash items reflect the impact of the weaker Russian rouble on the company’s primarily US dollar-denominated debt which matches our mainly US$-denominated revenues.

Interest expenses for 2013 increased in line with the Company’s higher debt level and amounted to RUB 5.2bn (2012: RUB 4.3bn). For 2013 we recognized other financial losses of RUB 945m on changes in the fair value of US$/RUB non-deliverable forward contracts and changes in the fair value of cross currency interest rate swaps in amounts of RUB 535m and RUB 165m, respectively.

Balance sheet

Working capital needs decreased slightly as lower prices for finished goods slightly balanced higher prices for certain raw materials. The Company’s net working capital decreased 3% from RUB 23.9bn in 2012 to RUB 23.1bn as at 31 December, 2013

EuroChem’s portfolio of borrowings from banks remained fairly unchanged until late August when we successfully closed a club facility for an amount of US$1.3bn. Structured as a 5-year unsecured finance facility and priced at LIBOR 3M + 1.8%, the facility includes a 2-year grace period. The proceeds were immediately used to pay down the outstanding amount under EuroChem’s 2011 US$1.3 billion pre-export facility.

While the company’s debt ratio remained well below bank covenant levels and at all times within our targeted across-the-cycle range, the volatility in the fertiliser markets prompted the Group’s shareholders to proceed with a pre-emptive USD 300m capital injection in the fourth quarter of 2013 through the acquisition of 2.36% of share capital of the Group’s holding company. Consequently, we closed 2013 with a net debt to 12-month rolling EBITDA ratio of 2.07x as compared to 2.27x in Q3 2013 (2012: 1.53x).

Highlighting EuroChem’s strong product and geographic diversification, its partial vertical integration and its advantageous position on the industry cost-curve as its core strengths underpinning its cash flow generation, Fitch Ratings and Standard & Poor’s both affirmed EuroChem at BB / stable outlook in 2013.

Cash flow 

At RUB 36.2bn, operating cash flow for the twelve months ended 31 December 2013 remained within 7% of the previous year’s level. 

Our total capex spending for the January to December 2013 period amounted to RUB 32.6bn (US$ 1.0bn), comprised of investments of RUB 12.4bn in potash, RUB 10.4bn in nitrogen and RUB 8.6bn in phosphates. The remainder was allocated to our distribution network and logistics infrastructure.

2013 corporate developments

In 2013 the Group finalized the acquisition of 54,613 ordinary shares of OJSC “Murmansk Commercial Seaport” for a total consideration of RUB 3.15bn. These ordinary shares represent 48.26% of the total number of the ordinary shares and 36.20% of the total issued share capital of the Company. As at 31 December 2013, the Group held 36.20% of the OJSC “Murmansk Commercial Seaport” voting rights.

On 10 July 2013, EuroChem announced its intention to consider building an ammonia and urea production plant in Louisiana. A final decision on the parameters and location of the facility should be taken later in 2014.

On 29 July 2013, we announced our plans to create a joint venture (JV) with the Migao Corporation, a specialty potash fertilizer producer based in the southern Chinese province of Yunnan. The JV is expected to bring up to 60,000 tonnes per year of potassium nitrate (NK) and 200,000 tonnes per year of chloride-free NPK capacity online by the end of 2014.

Legal proceedings

In October 2012 the group filed a claim against Shaft Sinkers (pty) ltd and Rossal 126 (pty) limited (formerly known as Shaft Sinkers (pty) ltd.), (“Shaft Sinkers”), the contractor involved in the construction of the mining shafts at the Gremyachinskoe potash deposit, seeking compensation for the direct costs and substantial lost profits arising from the delay in commencing potash production, due to the inability of that construction company to fulfil its contractual obligations. Further details of the proceedings are available in note 34 of the Group’s 2013 IFRS accounts.

In March 2013 the Group filed a claim against International Mineral Resources B.V. (“IMR”) which, the Group believes, held a controlling interest in Shaft Sinkers, claiming IMR is responsible for its subsidiary’s actions. In July 2013, a Dutch Court granted EuroChem definitive leave for levying the requested prejudgment attachments against IMR’s Dutch assets, while fixing the amount for which the leave is granted, including interest and cost at euro 886 million. The court held an in-depth hearing on 21 January 2014 where it considered the arguments and witnesses of both sides, following which, the court notified that a final judgment is to be rendered on 16 April 2014.

OUTLOOK

Despite the lingering presence of global imbalances and market volatility, the growth of the fertilizer industry remains solidly underpinned by global food demand. Growing yield gaps in certain regions coupled with the increasing pressure on the global food system from emerging economies and dietary shifts will continue to support and further drive the use of fertilisers.

Following their significant rally, nitrogen prices have reached more comfortable levels which could be sustained heading into the second quarter on account of plant turnarounds in the Middle East and limited export flows from China to North America as compared to last year. At the same time, weather related delays to spring planting in the US could erode some of the price gains. Nevertheless most producers are in a comfortable spot with many reportedly sold out until March. While Chinese urea export parameters have been relaxed for 2014, EuroChem expects yearly export volumes from China to remain in line with 2012-2013 levels. In Europe, annual benefit payments to the agricultural sector have been distributed and should provide a positive impact on fertiliser purchasing activity.

Re-emerging demand in phosphates has tightened supply and provided a boost to prices. While lower ammonia prices may help margins at producer levels, we would expect to see any significant upward movement in DAP/MAP prices to be matched by a ramp-up in capacity utilization. Prices are expected to gradually come down as seasonal demand diminished. India’s market presence is likely to remain limited until after the May elections.

In potash, contract prices have established a floor price for the upcoming months. Potash producers have been applying upward pressure on spot prices with product in Latin America and Southeast Asia trading at around $ 350 CFR. While the changes in the ownership of Uralkali should eventually restore the joint marketing of product with Belaruskali, this does not appear to be imminent in the near term and presents a challenge to significant price appreciation.

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http://www.tildefinance.com/article/eurochem-reports-ifrs-financial-information-for-2013 http://www.tildefinance.com/article/eurochem-reports-ifrs-financial-information-for-2013 bill.pradi@tildefinance.com (Bill Pradi) Thu, 06 Feb 2014 10:00:00 -0800 Fertilizers
The Diamond Show Set to Dazzle Basel The Diamond Show Set to Dazzle Basel

The Diamond Show is set to bring a sparkling revolution to the Basel jewelry and watch week. Opening its doors on March 27, at Basel’s Markthalle in Viaduktstrasse, the show will provide an opportunity for retailers, jewelers, designers, dealers and watch makers to source their diamonds and diamond jewelry from the best manufacturers around the world.

A large contingent of U.S. diamond manufacturers will be exhibiting top-quality diamonds in a pavilion organized by the Diamond Dealer’s Club of New York. “New York specializes in the finest quality of large diamonds and fancy color diamonds. The Diamond Show will provide international buyers with a great opportunity to access an extensive range of diamonds direct from the source,” said Mordy Rapaport, Director of Rapaport Exhibitions. 

To facilitate visitors, an updated website offering information about the show and online registration is now available in German, French, Spanish and Chinese at www.thediamondshow.net. The show is open to members of the diamond and jewelry industry, investors, private collectors and the media.

The show venue is 300 meters from the Basel SBB station and there will be complimentary shuttle buses running between Markthalle and Messe Basel throughout the show days.

The Diamond Show, organized by a subsidiary of the Rapaport Group, will be open on March 27, 28, 30 & 31, 2014.

The international companies set to exhibit at The Diamond Show include: Appelbaum Diamonds, Arcadia Diamonds B.V.B.A., Artinian NV, Avi Paz Fancy Ltd, Baguette Diam Inc., Bass Premier Co., Benelux Diamonds B.V.B.A., Benma Diamonds Ltd, Chester International LLC, Choco Diamonds BVBA, D.N. Diamonds 2007 Ltd, E. Goldstein Diamonds BVBA, East Continental Gems Inc., Edelstein Diamonds, Eizenstien, Elie Brilliant Gems Inc., Eliezer Broide Diamonds, Eliyahu Yona Diamonds. Ltd, Five C’s Inc., Gemasia B.V.B.A, Gil Kimchi Diamonds Ltd, Haviv Moreno, J.B. and Brothers Pvt. Ltd., Jack Reiss LLC, Julius Klein Group, Kahiri Diamonds, Kapu Gems Ltd, KARP, Ketan Brothers Diamondz Exports, Leibish & Co. LTD., Luster Gems N.Y. Inc., M. Suresh Company Pvt. Ltd., Mahendra Brothers Exports Private Limited, Millei Diamonds BvBa, Paco Art H.K. Ltd., Param Exports, Philip Lazarus Diamonds, Reuven Kaufman Inc., Rick Shatz Inc., Richdiam Inc., Rio Ltd. (HK), S.B. Diamond Corp, S. Schnitzer Diamonds, Savi Kreations (Israel), Simplex Diam Inc, Star Rays, SuperGems NV, Sunview NV, Taché Company NV, Warcel Diamonds N.V. and Worldwide Diamond Co.

Additional information about The Diamond Show and visitor registration is available online at: www.thediamondshow.net and via email at: info@thediamondshow.net.

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http://www.tildefinance.com/article/the-diamond-show-set-to-dazzle-basel http://www.tildefinance.com/article/the-diamond-show-set-to-dazzle-basel tim.berg@tildefinance.com (Tim Berg) Tue, 21 Jan 2014 10:31:00 -0800 Consumer
Pavel Shilyaev appointed acting CEO of Magnitogorsk Iron and Steel Works Pavel Shilyaev appointed acting CEO of Magnitogorsk Iron and Steel Works

Board of Directors of OJSC Magnitogorsk Iron and Steel Works (MMK) appointed Mr. Pavel Shilyaev acting CEO of the company today.

Boris Dubrovsky, former MMK CEO, was appointed acting Governor of the Chelyabinsk Region (Southern Urals) by the Decree of the Russian president Vladimir Putin dated January 15, 2014. 

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http://www.tildefinance.com/article/pavel-shilyaev-appointed-acting-ceo-of-magnitogorsk-iron-and-steel-works http://www.tildefinance.com/article/pavel-shilyaev-appointed-acting-ceo-of-magnitogorsk-iron-and-steel-works bill.pradi@tildefinance.com (Bill Pradi) Fri, 17 Jan 2014 09:23:00 -0800 Metals & Mining
Rapaport Small Diamond Index Up 4% in 4Q Rapaport Small Diamond Index Up 4% in 4Q

The Rapaport Melee Index (RMI™) for small diamonds increased by 4% to 130.54 during the fourth quarter of 2013. Year on year the index is up 3.5% from its level of 126.05 in December 2012.

The diamond market stabilized toward the end of the year after a period of weak demand and price declines in the second and third quarters. Melee diamond prices increased during the last quarter of 2013 as overall trading was boosted by holiday demand in December combined with shortages in supply. Sales during the holiday period exceeded the trade’s low expectations and despite continued consumer caution. Polished trading is expected to improve during the first quarter driven by the Chinese New Year and as U.S. retailers start to replenish sold inventory. 

“We’ve seen strong demand in the fourth quarter with steady U.S. orders driving liquidity and market stability. Small melee diamond prices consistently increased these past few months as shortages in supply were noticed. Manufacturers are currently increasing production and the New Year is starting with positive sentiment due to the upcoming Chinese New Year. We are anticipating current price trends to continue throughout the first quarter.” said Ezi Rapaport, Director of Global Trading, Rapaport Group.

Rapaport Diamond Auctions sold over 115,000 carats of diamonds for $24.5 million during the fourth quarter of 2013. While the U.S. wholesale market is solid, demand from overseas buyers continues to drive up market prices. Rapaport Auctions continue to provide a reliable fair market value platform for a broad range of diamond sizes and qualities with competitive bidding from the strongest buyers and consistent cash flow for suppliers from around the world. 

Upcoming Rapaport Auctions:

January 14-22, New York & Dubai January 15-22, New York & Israel January 27 - February 10, Miami & New York February 4-12, New York & Belgium February 5-12, New York & Israel

To participate in Rapaport Auctions, companies are invited to visit: www.rapaportauctions.com, contact Auction Support via email: auctions@rapaport.com or call their local Rapaport office.

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http://www.tildefinance.com/article/rapaport-small-diamond-index-up-4--in-4q http://www.tildefinance.com/article/rapaport-small-diamond-index-up-4--in-4q tim.berg@tildefinance.com (Tim Berg) Wed, 15 Jan 2014 11:20:00 -0800 Metals & Mining
NLMK Group Joins Russian Anti-Corruption Charter for Business NLMK Group Joins Russian Anti-Corruption Charter for Business

NLMK Group (LSE: NLMK) has joined the Russian Anti-Corruption Charter for Business, an initiative by the Russian Union of Industrialists & Entrepreneurs (RUIE).

Joining the Charter represents a strong statement of NLMK’s commitment to further promote best practices in transparent and responsible business and corporate governance in Russia, as applied by the Group. It is also testament to their contribution to the fight against corruption, as well as to developing standards for conducting business honestly and impartially, in close cooperation with the Russian authorities and other companies. 

Commenting on this recent development, Oleg Bagrin, President of NLMK Group, said: "NLMK Group has always adhered to best business practices, both in Russia and abroad. This is attested to by the company’s high level of attractiveness to investors. It is also evidenced by the fact that the Group is a preferred supplier to leading international corporations that are known for selecting their suppliers very carefully. In turn, NLMK imposes the same requirements on its own suppliers. Joining the Charter demonstrates that NLMK Group intends to stand shoulder to shoulder with other Russian companies to fight corruption and, ultimately, improve the investment climate in the country."

The Russian Union of Industrialists and Entrepreneurs, of which NLMK Group is a member, was the first organization in Russia to propose that the business community work together to help fight corruption in the corporate sector. At its congress in February last year, the RUIE approved the basic principles of anti-corruption practice for member companies, drawing up a founding document, which became the Russian Anti-Corruption Charter for Business. The document was signed at the XI Investment Forum in Sochi in the presence of Prime Minister Dmitry Medvedev by the heads of the RUIE, the Chamber of Commerce and Industry of the Russian Federation, Delovaya Rossiya (Business Russia) and OPORA Russia. The document outlines a number of special anti-corruption programmes and practices to be undertaken by companies. These programmes and practices are not limited to internal use, but also apply to external relationships with business partners and the government. Among other measures, the Charter requires members to reject preferential treatment for certain companies, carry out procurement based on public tenders, agree to financial control, provide staff training and development, and grant assistance to law enforcement authorities.

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http://www.tildefinance.com/article/nlmk-group-joins-russian-anti-corruption-charter-for-business http://www.tildefinance.com/article/nlmk-group-joins-russian-anti-corruption-charter-for-business tim.berg@tildefinance.com (Tim Berg) Fri, 10 Jan 2014 11:20:00 -0800 Metals & Mining
Mechel Sells Its Ferroalloy Assets To Turkish Yildirim Group Mechel Sells Its Ferroalloy Assets To Turkish Yildirim Group

Mechel just announced it has closed the deal for disposal of 100% shares in Voskhod Mining Plant (Khromtau, Kazakhstan) and Tikhvin Ferroalloy Plant (Tikhvin, Leningrad Region, Russia) to Turkey’s YILDIRIM Group for a total of 425 million US dollars.

In accordance with the deal’s conditions, the YILDIRIM Group paid the entire sum to Mechel OAO. 

Société Générale Corporate and Investment Bank, ING Bank and Dechert LLP were advising Mechel on this transaction.

“This agreement was signed in line with the strategy on restructuring the group’s non-core assets. The funds our company got from this deal will be used for deleveraging. On the whole, in 2013 we made significant headway in disposing of non-core assets, closing deals on nine out of 14 enterprises we marked for disposal. We will complete sales of other non-strategic assets in 2014,” Mechel OAO’s Chief Executive Officer Evgeny Mikhel noted.

Tikhvin Ferroalloy Plant – Located in Tikhvin, Leningrad Region, it is a modern enterprise of a capacity to produce up to 120,000 tons per annum of high-carbon ferrochrome used to produce stainless steel. As raw material, the plant uses the chrome ore concentrate produced at Voskhod mining plant.

Voskhod Mining Plant – includes a modern chrome ore mine and a beneficiation plant for further processing of the ore and producing chrome ore concentrate. Voskhod’s proven and probable reserves total 20.3 million tons of ore according to JORC standards.

YILDIRIM Group is a Turkey-based, privately owned, highly diversified industrial group active in 11 sectors including mining, ferroalloys , fertilizer production and trade, coal and coke trading, port operations and logistics, shipping and shipbuilding, energy, real estate development and private equity investments . The Group is headquartered in Istanbul, Turkey, and employs globally over 8,500 employees.

YILDIRIM Group is the owner of ETI KROM INC., Turkey’s largest producer of chrome ore as well as high-quality high-carbon ferrochrome, and of VARGÖN ALLOYS AB, the oldest ferroalloy plant in the world. The Group is one of the world’s largest hard lumpy chrome ore producers as well as the world’s second largest high-quality high-carbon ferrochrome producer. Erdem & Erdem Law Office in Istanbul, Turkey and Norton Rose Fulbright (Central Europe) LLP were advising YILDIRIM Group on this transaction.

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http://www.tildefinance.com/article/mechel-sells-its-ferroalloy-assets-to-turkish-yildirim-group http://www.tildefinance.com/article/mechel-sells-its-ferroalloy-assets-to-turkish-yildirim-group bill.pradi@tildefinance.com (Bill Pradi) Fri, 27 Dec 2013 10:41:00 -0800 Metals & Mining
The Diamond Show Launches in Basel The Diamond Show Launches in Basel

A new exclusive diamond show featuring the best diamonds from the world’s leading diamonds manufacturers and dealers will open in Basel, Switzerland on March 27, 2014. The show will be located in the iconic Markthalle building, only 300 meters from the Basel SBB train station and will be open to the trade, as well as private collectors and investors.

The Diamond Show will provide an innovative trading environment for buyers and sellers of diamonds and diamond jewelry. The exhibition will provide direct access to the finest quality diamonds from 60 of the best diamond manufacturers and dealers in the world. It will also include a specialized salon for natural fancy colored diamonds.  

“The Diamond Show is the place to be for serious diamond buyers seeking the finest quality diamonds at true market prices. We are proud to provide an unprecedented opportunity for buyers to deal directly with the most important diamond manufacturers and dealers.” said Mordy Rapaport, Director of Rapaport Exhibitions.

The Diamond Show, owned and operated by the Rapaport Group, will be open on Thursday and Friday, March 27-28, as well as Sunday and Monday, March 30-31. The show will be closed on the Jewish Sabbath, March 29, due to the religious requirements of the show organizers.

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http://www.tildefinance.com/article/the-diamond-show-launches-in-basel http://www.tildefinance.com/article/the-diamond-show-launches-in-basel tim.berg@tildefinance.com (Tim Berg) Wed, 18 Dec 2013 09:20:00 -0800 Metals & Mining
NLMK Group appoints new Vice President for Sales NLMK Group appoints new Vice President for Sales

NLMK Group (LSE: NLMK) announces the appointment of Ilya Guschin as Vice President for Sales. Sergei Khorn, former acting Vice President for Sales, is appointed his deputy. 

Ilya Guschin is responsible for coordinating NLMK Group’s sales divisions in order to enhance their efficiency. Service centers and sales companies currently offer an uninterrupted supply of NLMK Group’s steel products and a high quality of service to consumers in over 70 countries around the world. NLMK CEO Oleg Bagrin said: “NLMK’s sales policy is based on creating competitive advantages for our clients by providing top-quality products and services, a customized approach and an uninterrupted supply. The new vice president has been charged with a challenging task of enhancing the efficiency of our sales divisions in the difficult market conditions, including through the promotion of HVA steel products in new markets.” This position was previously held by Dmitry Baranov, who is leaving the company to pursue his own projects. NLMK management would like to thank Dmitry Baranov for his many years of service strengthening NLMK’s positions in domestic and international markets. 

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http://www.tildefinance.com/article/nlmk-group-appoints-new-vice-president-for-sales http://www.tildefinance.com/article/nlmk-group-appoints-new-vice-president-for-sales bill.pradi@tildefinance.com (Bill Pradi) Mon, 16 Dec 2013 12:30:00 -0800 Metals & Mining
Acron Completes Initial Exploration Programme at Saskatchewan Potash Project Acron Completes Initial Exploration Programme at Saskatchewan Potash Project

JSC Acron and its Canadian subsidiary North Atlantic Potash Inc. are very pleased to report a world-class potash resource has been delineated on their KP 405 potash permit in southern Saskatchewan, Canada, operated by a joint venture (the “JV”) between North Atlantic Potash Inc. (“North Atlantic”) and Rio Tinto Potash Management Inc. (“RTPM”), a wholly-owned subsidiary of Rio Tinto plc. 

The JV has completed an exploration programme that defined an inferred resource of 1.4 billion tonnes of potash with an average grade of 31% KCl. The critically important downhole temperatures for a solution mine averaged 63O C, ranking this deposit one of the highest in Saskatchewan. Based on a solution mining operation, it is estimated that 329 million tonnes KCl are recoverable at the wellhead from the resource defined within the northern area of KP 405. 

“We have said we are focused on developing potash production in Saskatchewan,” said Arie Zuckerman, Vice President of JSC Acron and President of North Atlantic Potash Inc. “This massive potash deposit is located in one of the most favourable potash regions in the world. The size, quality, and temperature characteristics place the project globally in the top tier of potash deposits. Exploration shows that this deposit has the potential to support a world-class solution mine for many years and its technical characteristics point to very favourable operating costs.”

You can find more from this PDF document distributed among media.

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http://www.tildefinance.com/article/acron-completes-initial-exploration-programme-at-saskatchewan-potash-project http://www.tildefinance.com/article/acron-completes-initial-exploration-programme-at-saskatchewan-potash-project bill.pradi@tildefinance.com (Bill Pradi) Thu, 12 Dec 2013 11:40:00 -0800 Metals & Mining
NLMK Group Improves Occupational Health And Safety Across Russian Sites NLMK Group Improves Occupational Health And Safety Across Russian Sites

NLMK Group has launched new OHS programs at all of its Russian sites. The initiative was announced by Oleg Bagrin, NLMK Group CEO, at NLMK Group’s First OHS Conference held on 10-11 December in Lipetsk.

The new programs are based on a preventative approach to management of OHS risks through application of a uniform methodology for identifying potential hazards; risk assessment; and introducing the most advanced risk management measures across all NLMK companies. The plan provides for the active involvement of all personnel in identifying production hazards and developing response measures. 

The two-day conference was attended by members of the NLMK Management Board, heads of divisions and employees responsible for occupational health and safety. NLMK Group’s OHS development strategy was discussed and a workshop was held to drive development of safety culture and implementation of new tools designed to manage production risks whilst ensuring personnel involvement. The conference ended with a practical exercise In Search of Safety at the Lipetsk site.

Oleg Bagrin, NLMK Group CEO, said at the conference:

“NLMK Group’s strategic objective is to become a global leader in the industry. Leadership involves the highest level of performance in all disciplines: from economic efficiency; quality of output and use of technology; to environmental footprint and occupational health and safety. Steelmaking is a complex and hazardous technological process and achieving top performance is impossible without a world-class occupational health and safety management system and best practices for identifying and preventing risks. A systematic, proactive approach ensures exceptional results. Currently, a unified program is being launched at all NLMK’s sites in Russia. Next up are NLMK’s international companies, many of which are already showing positive trends in occupational health and safety.”

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http://www.tildefinance.com/article/nlmk-group-improves-occupational-health-and-safety-across-russian-sites http://www.tildefinance.com/article/nlmk-group-improves-occupational-health-and-safety-across-russian-sites tim.berg@tildefinance.com (Tim Berg) Wed, 11 Dec 2013 12:10:00 -0800 Metals & Mining
Mechel Announces Finalization of Negotiations on 1-Billion-Dollar Syndicated Loan Agreement with International Lenders Mechel Announces Finalization of Negotiations on 1-Billion-Dollar Syndicated Loan Agreement with International Lenders

Mechel has just announced it has reached an agreement to extend the grace period and maturity of its USD 1 billion syndicated facility to the end of 2014 and 2016 respectively.

The process was coordinated by ING Bank N.V., Societe Generale and VTB Capital.

The agreement was signed on behalf of a syndicate of leading international banks, including ABN Amro, BNP Paribas, Caterpillar Financial Services Corporation, Commerzbank Aktiengesellschaft, ICBC (London) plc., ING Bank N.V., Natixis, Raiffeissen Bank International AG, Societe Generale, UniCredit, VTB. 

The borrowers under the agreement are Mechel’s main mining division enterprises — Yakutugol Holding Company OAO and Southern Kuzbass Coal Company OAO.

“The agreement reached with our international syndicate will ensure Mechel a more stable financial environment, allowing us to continue our financial strategy of lengthening the maturity profile of our debt portfolio and reducing leverage through the disposal of non-core assets. This will enable us to successfully pass the commodity price depression. Additionally, it will greatly ease the pressure on Mechel’s cashflow in the next 12 months, moving approximately US$ 600 million of repayments from 2013-2014 to 2015-2016” Mechel OAO’s Chief Financial Officer Stanislav Ploschenko said.

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http://www.tildefinance.com/article/mechel-announces-finalization-of-negotiations-on-1-billion-dollar-syndicated-loan-agreement-with-international-lenders http://www.tildefinance.com/article/mechel-announces-finalization-of-negotiations-on-1-billion-dollar-syndicated-loan-agreement-with-international-lenders tim.berg@tildefinance.com (Tim Berg) Fri, 06 Dec 2013 09:27:00 -0800 Metals & Mining
Certified Polished Diamond Prices Stable in November Certified Polished Diamond Prices Stable in November

Certified polished diamond prices were stable in November supported by improving demand during the Christmas shopping season.  Diamond dealers were focused on supplying U.S. jewelers with strong demand for lower priced commercial quality diamonds as consumers tighten their holiday shopping budgets.

The RapNet Diamond Index (RAPI™) for 1-carat certified diamonds was down 0.1 percent in November. RAPI for 0.30-carat diamonds rose 1.4 percent during the month, while RAPI for 0.50-carat diamonds increased 0.2 percent. RAPI for 3-carat diamonds declined 0.3 percent. 

The Rapaport Monthly Report – December 2013, ‘Holiday Stability,’ noted that polished diamond trading was quiet at the beginning of November as Indian dealers were on vacation during the Diwali festival. Trading improved as Thanksgiving holiday expectations rose, but trading volume remained below previous years. There is good demand for 0.30-carat to 0.50-carat, H-J, SI1-I2 diamonds and strong demand for fancy color diamonds. U.S. retail sales reportedly declined by 2.7 percent during Thanksgiving weekend as the average spending per consumer fell 4 percent to $407.02, according to the National Retail Federation.

Far East markets continue to be driven by strong gold jewelry demand, supplemented by steady demand for gem-set jewelry. Chinese consumers are seeing value in relatively low gold prices, which have declined by about 25 percent in 2013. India’s jewelry retail sales were relatively slow during Diwali. The government has curbed consumption by raising import taxes on gold in numerous increments from 4 percent at the beginning of the year to its current level of 10 percent.

Rough diamond trading on the secondary market improved as De Beers reduced prices by about 3 percent to 5 percent at its November sight, which closed with an estimated value of $480 million. The final sight of the year, scheduled to take place from December 9 to 12, is expected to be relatively large as sightholders have deferred taking goods from previous sights until the end of the year. Large stone rough tenders continue to garner strong demand and prices.

Global diamond markets are being driven by the holiday season, although trading remains below levels witnessed in previous years. The positive momentum is expected to continue during December and January buoyed by last minute U.S. Christmas demand and steady Far East demand in preparation for the Chinese New year that begins on January 31.

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http://www.tildefinance.com/article/certified-polished-diamond-prices-stable-in-november http://www.tildefinance.com/article/certified-polished-diamond-prices-stable-in-november tim.berg@tildefinance.com (Tim Berg) Wed, 04 Dec 2013 10:20:00 -0800 Metals & Mining
Mechel Receives First VEB Tranche For Elga Coal Deposit Development Mechel Receives First VEB Tranche For Elga Coal Deposit Development

Mechel announces that JSC "Elgaugol" project company has received the 150-million-dollar first tranche of the project financing for Elga Coal Complex’s first stage totalling 2.5 billion US dollars from Vnesheconombank.

Currently development of the rich Elga deposit is a key investment project for Mechel. Receiving these funds enables the company to continue working on this project regardless of market volatility and attain planned results as scheduled. “The quality of Elga’s coals and Elga’s geographic location make this project one of the most efficient in the world,” Chairman of Mechel OAO’s Board of Directors Igor Zyuzin said. 

“It is through financing such important projects that the economy of Far East and Eastern Siberia should develop. This project is a key one for the region in the sense of economic effect,” Vnesheconombank’s First Deputy Chairman and member of the Board Andrey Sapelin said.

The deal granting Mechel OAO project financing totaling 2.5 billion US dollars for the development of Elga Coal Complex’s first stage was approved by Vnesheconombank’s Supervisory Board in September 2013. The loan has a tenor of 13.5 years with a grace period until 2017. According to the transaction’s conditions, Vnesheconombank’s funds will be used to complete construction of Elga Coal Complex’s first stage. It includes construction of a railroad and a mining and washing complex with an annual capacity of 11.7 million tonnes of run-of-mine coal by 2017.

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http://www.tildefinance.com/article/mechel-receives-first-veb-tranche-for-elga-coal-deposit-development http://www.tildefinance.com/article/mechel-receives-first-veb-tranche-for-elga-coal-deposit-development bill.pradi@tildefinance.com (Bill Pradi) Thu, 28 Nov 2013 12:30:00 -0800 Metals & Mining
RapLab Launches Synthetic Diamond Detection Services RapLab Launches Synthetic Diamond Detection Services

RapLab, a Rapaport Group company, is now offering synthetic diamond detection services to the diamond trade. The service will utilize DiamondSure® and DiamondView® technology developed by De Beers. RapLab will begin providing services in Ramat Gan, Israel and Mumbai, India on December 2. Additional service centers in New York and Surat will be available in the near future.

RapLab will provide testing for individual diamonds as well as implement statistical sampling protocols for parcels of diamonds. 

“RapLab synthetic diamond services will add confidence and support to the trade. It will ensure international buyers and their customers that the diamonds they purchase are natural. The Rapaport Group urges all members of the diamond trade to provide full disclosure when selling synthetic diamonds, said, Joshua Kersh, Managing Director of Rapaport Israel.

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http://www.tildefinance.com/article/raplab-launches-synthetic-diamond-detection-services http://www.tildefinance.com/article/raplab-launches-synthetic-diamond-detection-services tim.berg@tildefinance.com (Tim Berg) Wed, 27 Nov 2013 11:20:00 -0800 Metals & Mining
NLMK Group optimizes energy sector management NLMK Group optimizes energy sector management

NLMK Group (LSE: NLMK) continues to optimize its energy sector management. This process is part of developing an efficient and transparent functional/divisional management system covering all production sites in Russia and abroad; and a comprehensive program aimed at boosting business process efficiency.

At this new stage in developing the Energy Function, Alexander Starchenko, previously Director for Energy, was appointed to the newly created position of NLMK Group Vice President for Energy. 

Oleg Bagrin, NLMK Group CEO, said:

“Energy resources account for approximately 12% of NLMK Group’s consolidated costs. The Energy Function is therefore strategically important in ensuring the Group’s competitive advantages. Priority tasks for the Energy Department include ensuring an uninterrupted energy supply factoring in the future development of the sites; enhancing the energy efficiency of operations; cutting energy costs; and increasing the operating efficiency of in-house energy generation. Creating the new position and appointing Alexander Starchenko to be the new Vice President for Energy emphasizes the high priority of these tasks.”

For reference

From 2007 to November 2013, Alexander Starchenko was Director for Energy at NLMK Group. He is member of the Supervisory Board at NP “Market Council”; chairman of the Supervisory Board at NP “Energy Consumer Community”; Deputy Chairman of the RSPP (Russian Union of Industrialists and Entrepreneurs) Commission on Metals and Mining Complex. From 2004 to 2007, Mr Starchenko was Deputy Director for Energy at Rumelco. From 2002 to 2004 he worked at MDM Bank and Renaissance Capital - Financial Capital. He graduated from Bauman Moscow State Technical University with a degree in Electrical Engineering.

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http://www.tildefinance.com/article/nlmk-group-optimizes-energy-sector-management http://www.tildefinance.com/article/nlmk-group-optimizes-energy-sector-management tim.berg@tildefinance.com (Tim Berg) Tue, 26 Nov 2013 10:07:00 -0800 Metals & Mining
De Beers Inaugural International Sight In Botswana 'A Success' De Beers Inaugural International Sight In Botswana 'A Success'

The De Beers Group of Companies successfully completed its first international Sight in Gaborone, Botswana on Thursday 14th November, providing a seamless transition for Sightholders following the relocation from London, with all systems and processes running smoothly. Strong demand was also in evidence at the Sight ahead of the end of year selling season.

The new US$35 million state-of-the-art De Beers facility, which was completed ahead of schedule and below budget, has been supported by investment in Gaborone airport by the Government of Botswana to improve entry for Sightholders. The relocation of international Sights to Gaborone highlights De Beers’ commitment to beneficiation and is a major milestone in the development of Botswana’s downstream diamond industry. 

Leading buyers from major global diamond centres such as Mumbai, Tel Aviv, Antwerp and New York arrived in Botswana throughout the week, with Sightholders voicing their approval of the facilities established in Gaborone. A major Indian Sightholder said: “I was surprised at the ease of doing business in Botswana, from the transit through the airport to the quality of the local amenities and the brand new De Beers offices. The Sight floor is better than how it was in London and I am impressed that De Beers and Botswana have got everything in place so quickly”.

Nigel Simson, Senior Vice President of Sightholder Services for De Beers Global Sightholder Sales said: “We and our partners in Government have worked extremely hard to make this a success and I am very proud of what we have achieved. There was a real buzz of excitement on the Sight floor and we are delighted to have had such a positive response from Sightholders. We will continue to seek improvements as we focus on establishing Botswana, and the broader southern African region, as one of the world’s major diamond hubs”.

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http://www.tildefinance.com/article/de-beers-inaugural-international-sight-in-botswana--a-success- http://www.tildefinance.com/article/de-beers-inaugural-international-sight-in-botswana--a-success- bill.pradi@tildefinance.com (Bill Pradi) Tue, 19 Nov 2013 10:55:00 -0800 Metals & Mining
Mechel Attends Metal Expo 2013 Mechel Attends Metal Expo 2013

Mechel reports its participation in the 19th International Industrial Exhibition Metal-Expo’ 2013, which was held at the All-Russia Exhibition Center in Moscow on November 12-15, 2013. 

Mechel’s corporate booth showcased the products of Chelyabinsk Metallurgical Plant, Urals Stampings Plant, Beloretsk Metallurgical Plant, Izhstal and Vyartsilya Metal Products Plant. As part of the exhibition, winners of various contests were awarded:

Chelyabinsk Metallurgical Plant’s universal rolling mill, launched in July 2013, won the Main Event in the Russian Steel Industry 2013 nomination.

Mechel-Service OOO was acknowledged the best sales network by sales volume.

Chelyabinsk Metallurgical Plant, Beloretsk Metallurgical Plant and Urals Stampings Plant won gold and silver medals for successful implementation of innovative projects and technologies.

Chelyabinsk Metallurgical Plant won a silver medal for implementing an automated steel production planning and accounting system on SAP ERP platform.

Mechel Group’s corporate media won awards in the Best Corporate Media in the Steelmaking Industry of Russia and the CIS 2013 contest. Beloretsk Metallurgical Plant’s Metallurg newspaper won the Best Steelmaking and Hardware Media nomination, while Mechel-Service’s Steel Service magazine won the Best Steel Selling Media nomination. Our Mechel magazine was awarded as the Best Corporate Magazine.

The book titled “Time. People. Steel”, dedicated to Chelyabinsk Metallurgical Plant’s 70th anniversary, won a special diploma “For Popularizing Steelmaking”.

Mechel-Steel Management Company was the laureate of the contest for best video products in the steelmaking industry of Russia and the CIS — Metal Vision 2013.

Chelyabinsk Metallurgical Plant’s Fyodor Shmidt and Beloretsk Metallurgical Plant’s Maria Yakovleva won the first and third place respectively in the photo contest “People of the Fiery Profession”.

The exhibition welcomed over 30,000 visitors from construction, engineering, fuel and energy, transport, logistics and steel trade industries. Over 50 conferences, seminars and round tables were held within the exhibition’s framework. 

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http://www.tildefinance.com/article/mechel-attends-metal-expo-2013 http://www.tildefinance.com/article/mechel-attends-metal-expo-2013 tim.berg@tildefinance.com (Tim Berg) Mon, 18 Nov 2013 10:20:00 -0800 Metals & Mining
EuroChem Reports IFRS Financial Information for Q3 2013 EuroChem Reports IFRS Financial Information for Q3 2013

EuroChem today reported consolidated IFRS revenues for the third quarter of 2013 of RUB 41.0bn (US$ 1.3bn), as compared to revenues of RUB 47.1bn (US$ 1.5bn) during the same period a year ago. EBITDA for the period amounted to RUB 8.7bn (US$ 264m), down 26% from RUB 11.7bn (US$ 364m) the previous year.

The challenging third quarter market backdrop weighed on our year-to-date performance. While Group revenues for the January-to-September period climbed 7% to RUB 133.1bn (US$ 4bn), as compared to the first nine months of 2012, the increase primarily stemmed from the inclusion of EuroChem Antwerpen and EuroChem Agro, which we only consolidated from the second and third quarters of 2012, respectively. Group EBITDA for the first nine months of the year amounted to RUB 33.7bn (US$1.1bn). 

Our third quarter fertilizer sales volumes reached 2,358 thousand metric tons (KMT), comprised of 1,793 KMT and 565 KMT from our Nitrogen and Phosphates segments, respectively. Iron ore and baddeleyite sales volumes jumped 39% to reach 1,570 KMT, as compared to 1,132 KMT in the third quarter of 2012.

CEO Dmitry Strezhnev commented: “While the fertilizer sector is facing turbulence from several sources, EuroChem continues with its strategy as the long-term food security agenda remains intact. The recent milestones achieved at our VolgaKaliy and Usolskiy projects further solidify our commitment to potash. We have seen numerous changes in the potash industry over the past years and further disruptions remain a possibility. One thing is certain, EuroChem has the most advanced greenfield potash projects globally, on deposits that will make it the world’s lowest cost producer.”

Third Quarter Market Conditions

While the third quarter began with good, although slightly muted, demand levels across most markets, increases on the supply side and negative regional developments combined to cast uncertainty and limit visibility across much of the fertilizer supply chain.

As expectations of a strong North American harvest applied pressure on soft commodity prices, the prospects of record ending stocks trickled down and eroded fertiliser prices beyond their 3-year lows. Nitrogen products proved vulnerable as ample coal supply and lower coal prices boosted the competitiveness of Chinese urea producers. Record exports from China during this year’s lower-tax window proved strong enough to force the shutdown of higher cost production globally. Reflecting the developments in the nitrogen landscape as well as softer demand for phosphates, ammonia (FOB Yuzhny) continued its downward slope, trading at an average of USD 429/tonne in the third quarter of 2013, 31% below its Q3 2012 average of USD 619/tonne. With seasonal plant turnarounds and supply curtailments unable to fully offset the record amount of Chinese product available for export, urea (FOB Yuzhny) tumbled to finish the third quarter with an average of USD 307/tonne, trailing the previous quarter by 10% and 20% down from its Q3 2012 average. Given the limited amount of supply available globally, ammonium nitrate (FOB Black Sea) fared much better than urea, slipping only 3% to an average of USD 263/tonne as compared to the third quarter of last year.

In phosphates, notwithstanding the continued growth in planted acreage underpinning demand growth in Latin America, the market remained otherwise lackluster in the wake of limited buying activity from India. The world’s largest importer of DAP grappled with the devaluation of its currency and the effects of a nutrient-based subsidy policy skewed to nitrogen. The Q3 2012 DAP (FOB Baltic Sea) average price of USD 567/tonne, while slightly ahead of the previous quarter’s average of USD 559/tonne, trailed its previous year average by 17%.

Uralkali’s shift in marketing strategy and accompanying warnings of potash price collapse caused havoc throughout the potash space. Distributors across major markets, rushing to destock on fears of a pricing correction, were confronted with buyers holding out for lower prices. The rift in the MOP market also spread across other products, most notably in NPK where the potash component dragged both sentiment and product pricing lower, prompting customers to defer purchases when possible. Third quarter MOP (FOB Baltic Sea) contract prices retreated 16% to an average of USD 358/tonne, while spot prices fell 19% to USD 377/tonne.

Demand for iron ore was buoyed by stronger-than-expected steel output in China coupled with healthy restocking activity. Iron ore spot prices averaged USD 134/tonne (63.5%Fe, China CFR) for the quarter, which was 15% higher than in the third quarter of 2012.

BUSINESS SEGMENTS

Segment revenues (both volume and value) are shown gross and inclusive of intra-segment sales.

Nitrogen segment

Our third quarter nitrogen sales volumes amounted to 1,793 KMT, as compared to 1,946 KMT for the same period the previous year. While a 9% boost in UAN sales provided some support to volumes, lower AN, NPK, and urea volumes, which together accounted for more than 60% of nitrogen sales, were the main drivers behind the 8% year-on-year decline. The decline in sales was mainly caused by an inventory buildup in September on expectations of a price recovery in the coming months.

Despite third quarter nitrogen sales volumes trailing the previous quarter by 13%, year-to-date nitrogen volumes remained 11% ahead of the first nine months of 2012, albeit due to the consolidation of EuroChem Antwerpen. For the period of 1 January to 30 September 2013, nitrogen segment revenues and EBITDA climbed to RUB 73.9bn and RUB 20.4 respectively.

For the three months ended 30 September 2013, while revenues showed a 14% year-on-year decline to RUB 21.8bn, significant downward pricing pressure pulled segment EBITDA 29% lower to RUB 4.6bn.

In upstream nitrogen, we continued to ramp-up production at Severneft-Urengoy. We raised natural gas production by 18% to 608 million cubic meters and managed to further increase our liquids output by 3% to 102 KMT of gas condensate as compared to the first nine months of 2012. Severneft-Urengoy contributed RUB 3.6bn and RUB 1.0bn to our revenues and EBITDA, respectively, in the first nine months of 2013.

For the first nine months of 2013, the average natural gas price at our Novomoskovskiy Azot and Nevinnomysskiy Azot ammonia facilities came out to RUB 3,643 and RUB 3,799 per 1,000m3 respectively (c. USD 3.59 and USD 3.74/mmBtu), as compared to RUB 3,348 and RUB 3,494 per 1,000m3 respectively (c. USD 3.35 and 3.50/mmBtu) for the corresponding period of 2012. Despite natural gas tariffs increasing 15% from July 2012, our 18% increase in gas output at Severneft Urengoy, when combined with downward revisions to tariffs in the second quarter, effectively capped the year-on-year change in gas prices to 2% in rouble terms.

Our presence in Western Europe, now firmly entrenched via EuroChem Antwerpen and our EuroChem Agro distribution force, drove third quarter sales to Europe to RUB 6.5bn or 30% of nitrogen sales. In Russia, we continued growing with the market as sales increased 6% over Q3 2012 and accounted for 20% of nitrogen revenues. With 14% of segment sales, Latin America was our third biggest market in nitrogen. For the first nine months of 2013 our home markets – Europe, Russia and the rest of the CIS – together accounted for 58% of our nitrogen revenues.

Phosphate segment

In spite of achieving a 3% quarter-on-quarter growth on the back of strong demand for NP and feed products, the depressed MAP/DAP trading environment pulled phosphate volumes lower. Third quarter sales volumes in our phosphate segment, when excluding raw material mining co-products, amounted to 565 KMT, which was 72 KMT less than in the same period last year.

Surprisingly resilient steel demand from China over the summer months helped propel our iron ore sales volumes 39% up year-on-year to 1.6 MMT. As mentioned earlier, the record high level of imports in China lifted iron ore spot prices to an average of USD 134/tonne, which was 15% higher than in Q3 2012.

While muted, our phosphate performance highlighted our integrated diversification as the strong iron ore showing alleviated some of the downward pricing pressure applied from fertilizers and feed. As a result, consolidated third quarter phosphate sales volumes only registered a slight 2% slip year-on-year, from RUB 14.9bn to RUB 14.6bn, while EBITDA contracted 13% to RUB 3.8bn on weaker product pricing

For the first nine months of 2013, total phosphate segment revenues and EBITDA amounted to RUB 44.2bn and RUB 11.0bn, respectively, as compared to 9M 2012 revenues of RUB 49.2bn and EBITDA of RUB 14.0bn.

Given the strong backdrop in iron ore and its relatively low correlation with fertilizer prices, sales of iron ore and baddeleyite, the two main co-products of our apatite mining operations, grew to account for 39% and 69% of third quarter phosphate segment revenues and EBITDA, respectively. This compares to contributions of 25% and 39% to revenues and EBITDA in the third quarter of 2012.

The 39% increase in iron ore sales slightly reshaped our third quarter phosphate sales geography. Accordingly, the share of revenue from Asia increased 17 percentage points as compared to Q3 2012 and accounted for 36% of total segment sales during the third quarter of 2013. While slightly diluted by iron ore’s impact on sales to Asia, Russia and Europe remained our top two phosphate fertilizer markets and respectively accounted for 22% (Q3 2012: 31%) and 18% (Q3 2012: 21%) of total phosphate segment sales.

Potash segment

Eurochem VolgaKaliy (Gremyachinskoe deposit, Volgograd region)

All of the systems were put in place to build the new freeze walls for the cage shaft, skip shaft #1, and skip shaft #2. With the cage shaft freeze wall sufficiently developed, we resumed working by first dewatering and clearing the bottom from debris following the setbacks brought on by the failure in the grouting technology used by Shaft Sinkers, a South African contractor, which had initially been hired for the project.

Work is being performed at the two skip shafts to finalize surface support equipment and headframe configuration. According to our current plan, sinking is set to resume from current levels before year-end. The skip shaft #1 is currently at -572 meters while skip shaft #2 is at -45 meters.

Specifically at skip shaft #1, while the freeze wall has not currently developed sufficiently but is expected to have achieved its designated thickness in time, thus providing us with the safest and optimum sinking conditions. We also reached another major milestone when we recently finished the erection of the main steel for the permanent headframe.

Freeze walls designed and operated by Thyssen Schachtbau will protect the three shafts throughout the sinking effort to below the lowest water bearing levels.

Steel has been going up at a steady pace across the site as we moved ahead with the construction of the main process beneficiation building, warehousing facilities, and loading and shipping facilities.

EuroChem Usolskiy Potash (Verkhnekamskoe deposit, Perm region)

In October, our Usolskiy team celebrated its five year anniversary by successfully completing the cage shaft sinking operations. The first potash shaft to be sunk in Russia over the past 25 years reached its designated depth of 473 meters a full month ahead of schedule and without any significant water inflow issues. The freeze wall for the site’s two shafts were designed, installed and operated by Thyssen Schachtbau, and are currently being abandoned in accordance with the mine’s rules and regulations and industry practice. Plans are now to proceed with the excavation of the ventilation and haulage sections.

As of the date of this release, underground operations at the skip shaft were progressing at a depth of -495 meters with crews having already created two sets of loading pockets and also excavating for the bins. The target depth of Usolskiy’s skip shaft is -547 meters.

Total capital expenditure at both our potash projects amounted to RUB 10.0bn for the first nine months of the year, for an aggregate total of RUB 55bn since the start of our greenfield potash developments.

Distribution segment

Our CIS distribution and sales network recorded EBITDA of RUB 100m on revenues of RUB 4.5bn in the third quarter of 2013, as compared to revenues and EBITDA of RUB 4.7bn and RUB 226m, respectively.

FINANCIAL

Income statement

Our consolidated revenues for the three months ended 30 September 2013 amounted to RUB 41.0bn. Despite subdued demand and depressed pricing across all three nutrient segments, robust iron ore trading coupled with a weaker Russian rouble supported our third quarter financial performance and helped limit the year-on-year decline in revenues to 13%. Group EBITDA for the period amounted to RUB 8.7bn, as compared to RUB 11.7bn in the third quarter of 2012.

For the first nine months of the year, our revenues increased 7% to RUB 133.1bn, up from the RUB 124.8 recognized during the same period last year. EBITDA amounted to RUB 33.7bn as compared to the RUB 38.9bn obtained the first three quarters of 2012.

In parallel with lower revenues, our cost of sales for the third quarter of 2013 declined 11% to RUB 26.2bn as compared to RUB 29.6bn in Q3 2012. Mirroring the decline, materials and components used or resold, which accounted for 70% of costs of sales, decreased 11% year-on-year to RUB 18.4 bn. Our gas costs for fertilizer production slipped from RUB 3.9bn in Q3 2012 to RUB 3.8bn for the same period this year.

Some slight upward pressure on energy costs remained with the implementation of previously delayed tariff increases in the Russian power generation sector over the last four quarters. As compared to the third quarter of 2012, our energy costs for the third quarter of this year increased from RUB 1.7bn RUB to 2.1bn and accounted for 8% of costs of sales (Q3 2012: 6%). In addition to earlier successes in increasing in-house energy generation capacity, our efficiency upgrade initiative has so far released a further RUB 35m in energy saving in 2013 through the overhaul of equipment at our Novomoskovskiy Azot facility. A substantial part of the savings achieved were generated by the replacement of obsolete catalysts at the plant’s methanol unit.

Our labour costs for Q3 2013 were slightly up year-on-year, primarily on account of the January 2013 salary indexation. Labour costs, including social fund contributions, amounted to RUB 2.6bn, as compared to RUB 2.3bn in the corresponding period of last year. In addition to the indexation, part of the increase was linked to the gradual introduction of KPI-based incentive targets across the Group. Labour costs accounted for 10% of Q3 2013 cost of sales (Q3 2012: 8%).

For the three-month period ended 30 September 2013, total distribution costs inched up 2% to RUB 6.3bn, up from RUB 6.2bn in Q3 2012. Transportation costs, which accounted for 74% of our distribution costs (Q3 2012: 77%), amounted to RUB 4.7bn (Q3 2012: RUB 4.8bn). While lower maritime freight rates reduced our transportation costs by 6%, the decrease was mitigated by an increase in rail shipments of iron ore concentrate on DAP-Zabaikalsk (Sino-Russian border) delivery terms.

Total general and administrative (G&A) expenses grew from RUB 1.3bn a year ago to RUB 1.7bn in the third quarter of 2013. Notwithstanding the increase, G&A labour costs, which amounted to RUB 764m, accounted for 45% of Q3 2013 G&A expenses (Q3 2012: 44%). For the first nine months of 2013, total staff costs (including social expenses) amounted to RUB12.2bn (9M 2012: RUB 10.3bn) with the increase primarily stemming from the growth of staff numbers linked to EuroChem’s investment initiatives, including our Kazakhstan phosphate rock project, our railcar depot, and two potash projects. 

Other operating expenses for the third quarter of 2013 amounted to RUB 833m (Q3 2012: RUB 679m). The main components of our other operating expenses for the quarter comprised RUB 375m in foreign exchange losses coupled with sponsorship expenses of RUB 226m. Our main projects for the period are the construction of a new sports facility in Kėdainiai, Lithuania, to celebrate Lifosa’s 50th anniversary and the upgrade of social infrastructure and public utilities in Novomoskovsk, site of our Novomoskovskiy Azot nitrogen facility.

For the three months ended 30 September 2013, we recognized an unrealized financial foreign exchange gain of RUB 891m, compared to a RUB 3.4bn unrealized gain in the third quarter of 2012. Changes in these noncash items reflect the fluctuations of the Russian rouble exchange rate on the company’s primarily US dollar-denominated debt.

Reflecting the company’s higher debt level, interest expense increased to RUB 1.4bn. Other financial gains of RUB 658m mainly arose from gains of RUB 613m in favorable changes in the fair value of non-deliverable forward contracts and RUB 109m in cross currency interest rate swap.

Balance sheet

The increasingly challenging market conditions observed in the bottom half of the third quarter prompted us to increase inventory, particularly at EuroChem Trading (Switzerland) and EuroChem Agro. At the end of the third quarter, our inventory of finished goods had increased by 20% or RUB 2.1bn as compared to Q2 2013.

In late August we successfully closed a club facility for an amount of US$1.3 bn. Structured as a 5-year unsecured finance facility and priced at LIBOR 3M + 1.8%, the facility includes a 2-year grace period. The proceeds were immediately used to pay down the outstanding amount under EuroChem’s 2011 US$1.3 billion pre-export facility.

Despite modest capital expenditure financing, uncharacteristically shallow net operating cash flow carried our net debt to 12-month rolling EBITDA ratio to 2.19x, as compared to 1.53x at the end of 2012. Despite its increase, leverage remains well below the Group’s bank covenant levels and within our targeted across-the-cycle range and bearing in mind the current low point in the cycle. At the same time, the Group may attract equity from its shareholders before year-end to somewhat reduce current leverage levels. Furthermore, a reduction of strategic expenditure should not be ruled out in the future should management anticipate a period of prolonged cash flow deterioration.

Highlighting EuroChem’s strong product and geographic diversification relative to rated fertiliser peers, its partial vertical integration and its good position on the industry cost-curve as its core strengths underpinning its cash flow generation, Fitch Ratings and Standard & Poor’s both affirmed EuroChem at ‘BB’ with Stable Outlook in September and October, respectively.

Cash flow 

The increase in net working capital pushed third quarter 2013 operating cash flow to RUB 7.8bn, or 33% below the RUB 11.6bn realized in Q3 2012.

Our capex spending for the three months ended 30 September 2013 amounted to RUB 8.3bn, of which RUB 3.7bn was allocated to nitrogen, RUB 2.9bn to potash and RUB 2.5bn to phosphate, with the remainder earmarked for investments in our distribution network and logistics infrastructure. For the first nine months of 2013, totaled capital expenditures came out to RUB 22.9bn.

Corporate developments

On 10 July 2013, EuroChem announced its intention to build an ammonia and urea production plant in Louisiana. A final decision on the parameters and location of the facility should be taken within the next year.

On 29 July 2013, we announced our plans to create a joint venture (JV) with the Migao Corporation, a specialty potash fertilizer producer based in the southern Chinese province of Yunnan. The JV is expected to bring up to 60,000 tonnes per year of potassium nitrate (NK) and 200,000 tonnes per year of chloride-free NPK capacity online within the next twelve months.

OUTLOOK

As the second half headwinds across the nutrient landscape subside, the expansion of crop area will continue driving increases in fertilizer demand with most of the tonnage growth expected to come from Asia, primarily India, and Latin America.

In the urea market, prices started firming in the run-up to the closure of the lower tax window in China. Despite the presence of some product in bonded warehouses, it is unlikely to satisfy the bulk of upcoming urea tenders. In ammonia, our non-vertically integrated EuroChem Antwerpen nitrogen facility is expected to take full advantage of the renewed affordability of ammonia on the back of its 26% price decline in the first three quarters of 2013.

In phosphates, capacity curtailments during peak off-season are helping to stabilize the market with demand likely to reemerge in the next couple of months. India’s absence has been felt globally across all three nutrients. Given the importance of the agricultural sector and its 260 million workers within the Indian economy, we would expect announcements of revisions to the subsidy system to be heard ahead of the May 2014 elections.

Potash prices appear to be stable at around USD 300/tonne (CFR, China), a level which could promote higher application in emerging markets.

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http://www.tildefinance.com/article/eurochem-reports-ifrs-financial-information-for-q3-2013 http://www.tildefinance.com/article/eurochem-reports-ifrs-financial-information-for-q3-2013 bill.pradi@tildefinance.com (Bill Pradi) Wed, 13 Nov 2013 15:40:00 -0800 Fertilizers
NLMK Kaluga launch is Event of the Year in Russian steelmaking NLMK Kaluga launch is Event of the Year in Russian steelmaking

The July 2013 launch of NLMK Group’s next-generation steelmaking plant project, NLMK Kaluga, was recognized as the Event of the Year 2013 in Russian steelmaking. The decision was taken by a panel of experts as part of the international Metal Expo 2013 exhibition, taking place in Moscow on 12-15 November. The award was accepted by the CEO of the plant, Sergey Shalyaev, at the opening ceremony. 

The Main Event of the Year 2013 in Russian Steelmaking award is designed to support and promote innovative steelmaking projects. Nominations are awarded to the most significant projects for the steelmaking industry and the economy of the country on the whole. A closed ballot among representatives of the Russian Ministry of Industry and Trade, unions and associations, and other members of the Metal Expo organization committee named the launch of the NLMK Kaluga mill the most significant achievement for the economy of the country in Russian steelmaking.

NLMK Kaluga is participating in the Metal Expo exhibition for the first time. At display booth #1c21, the company is presenting the project concept and advanced process solutions, and the key advantages of the new mill.

“That our work is held in such high esteem by the professional community certainly serves as an acknowledgement of our contribution to the development of the industry. Working on a tight schedule, we managed a successful greenfield project, and launched an advanced plant that has become a reliable partner and supplier for its customers, as well as an important element in the economy of the region. In the future, we will be looking to cut the long product shortage in the Central Region of Russia by a third, significantly reducing dependency on imports,” said NLMK Kaluga CEO Sergey Shalyaev.

NLMK Kaluga’s annual steelmaking and long product capacities are 1.5 m t of steel and 0.9 m t of long products. The plant is uniquely equipped for Russia, enabling it to produce the most expansive range of premium-grade long products used in construction.

Construction of the mill began in 2008. Investment into the project totaled RUB 32 billion. The plant is 100% self-sufficient in raw materials, with ferrous scrap supply ensured by the NLMK Group’s scrap collecting network. The plant will play an important role in the sustainability of operations in the region, collecting and utilizing waste and recycling secondary resources.

NLMK Kaluga employs the most advanced environmental technologies. The plant’s cleaning systems capture over 99% of air emissions, several times above the Russian average. A closed-loop water cycle fully eliminates effluents, and reduces water consumption significantly when compared to its peers. Production waste is recycled into by-products used for road construction and other purposes.

The launch of the next-generation NLMK Kaluga EAF Mill created approximately 2000 new jobs, including 1250 directly involved in production.

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http://www.tildefinance.com/article/nlmk-kaluga-launch-is-event-of-the-year-in-russian-steelmaking http://www.tildefinance.com/article/nlmk-kaluga-launch-is-event-of-the-year-in-russian-steelmaking bill.pradi@tildefinance.com (Bill Pradi) Wed, 13 Nov 2013 10:20:00 -0800 Metals & Mining
NLMK and OMK renew contract for slabs used in large diameter pipe production NLMK and OMK renew contract for slabs used in large diameter pipe production

Russian steelmaker NLMK and pipemaking company OMK signed a new Agreement on long-term cooperation renewing the contract for the supply of slabs until and inclusive of 2016. These slabs will be rolled into plates at the new Vyksa Steel Works (VMZ) Mill-5000 (MKS-5000) to be further used for the production of large-diameter pipes.

The Agreement was signed by NLMK Group President Oleg Bagrin and OMK Group President Vladimir Markin, on 7 November at the Vyksa Steel Works as part of a ceremony to mark the supply of the half-millionth tonne of slabs from NLMK to VMZ. The companies signed the initial contract in 2012. 

According to the Agreement, in 2014-2016 NLMK will supply Vyksa Steel Works with approximately 2 million tonnes of slabs with superior chemical composition and steel structure standards, and in dimensions that are unique for the Russian market.

NLMK slabs will be rolled into wide plates at the VMZ Mill-5000 to be further used for the production of large-diameter pipes at the VMZ Electric-Weld Pipe Workshop No. 4. Launched in 2011, VMZ Mill-5000 supplies the plant’s large-diameter pipe production capacities with 4.85 m wide plates.

Deliveries to OMK’s Vyksa plant form a substantial part of NLMK’s total third-party sales of slabs. Between the launch of the VMZ Mill-5000 in November 2011 and September 2013, approximately 460,000 tonnes of plates were produced from NLMK slabs.

Cooperation between NLMK and OMK allowed replacing imported plates, significantly improving OMK’s logistics and production processes, and ensured a consistently high quality of products for oil and gas companies through end-to-end monitoring of all production stages. The Agreement plays a strategically important role in the process of replacing imported HVA products, namely pipes and substrate required for their production, by high-quality domestically produced goods.

“The launch of the VMZ Mill-5000 and our partnership with NLMK Group created a large-scale sustainable process flow for the Russian ferrous steelmaking industry, from the production of steel to rolling plates and manufacturing large-diameter pipes. Cooperation with NLMK supports our certainty in the quality and promptness of our deliveries, and our ability to execute the most complex orders in time,” said OMK Group President Vladimir Markin.

“Our cooperation started in August last year, and allowed resolving an important challenge, i.e. eliminating the dependency of Russian pipe manufacturers on imported plates. A hi-tech chain was set up for the production of large-diameter pipes, from ore extraction through steelmaking to pipe manufacturing. This was made possible through multi-billion investments into technical upgrading by NLMK and OMK. I am convinced that our further cooperation will become an important step in the development of the entire industry, strengthening OMK’s leadership in the global pipe market and making NLMK Group the largest supplier of steel products for the pipe sector,” said NLMK Group President Oleg Bagrin.

In 2012 and 2013, VMZ produced 1,285 million tonnes of large-diameter pipes. These products went towards Russian and international pipeline projects, including Gazprom’s Bovanenkovo-Ukhta and Ukhta-Torzhok, Transneft’s Zapolyarye-Purpe, and the construction of the third stage of the Central Asia-China gas trunk line, etc.

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http://www.tildefinance.com/article/nlmk-and-omk-renew-contract-for-slabs-used-in-large-diameter-pipe-production http://www.tildefinance.com/article/nlmk-and-omk-renew-contract-for-slabs-used-in-large-diameter-pipe-production tim.berg@tildefinance.com (Tim Berg) Mon, 11 Nov 2013 11:40:00 -0800 Metals & Mining
Certified Polished Diamond Prices -1.7% in October Certified Polished Diamond Prices -1.7% in October

Certified polished diamond prices fell in October as trading volume did not meet expectations for this time of the year. The U.S. continues to be the dominant market for polished ahead of the Christmas season. India’s pre-Diwali demand was weak and Chinese demand soft after the National Day Golden Week (October 1). Trading is selective with steady demand for 0.30-carat to 0.50-carat goods in commercial qualities (H-K, SI-I1). 

The RapNet Diamond Index (RAPI™) for 1-carat certified diamonds fell 1.7 percent in October. RAPI for 0.30-carat diamonds rose 0.4 percent during the month, while RAPI for 0.50-carat diamonds increased 0.2 percent. RAPI for 3-carat diamonds declined 0.7 percent. 

 

The Rapaport Monthly Report – October 2013, “Price Uncertainties,” noted that polished prices softened in October due to weak global demand and tight market liquidity. U.S. retail buyers are delaying inventory purchases for the holiday season amid persistent price uncertainty and diminished consumer confidence. The political stalemate in October over the debt ceiling weakened retailers’ Christmas expectations.

Indian diamond traders faced uncertainty prior to the Diwali festival that began on November 1 amid unconfirmed reports that the government may raise the import duty on polished diamonds from 2 percent to 5 percent. Initial reports about Diwali signal a slump in gold and diamond jewelry demand. Liquidity in India’s manufacturing sector is tight due to low profit margins and high rough prices with weaker domestic demand throughout 2013.

Rough diamond trading on the secondary market remains quiet with most De Beers boxes selling for discounts or with long-term credit. Small-to-medium size factories in Surat are taking extended Diwali vacations (November 1 – 25) due to liquidity difficulties. Many have reduced their manufacturing levels and shifted to polished trading in search of better margins.   

Polished diamond trading is expected to improve before the end of the year influenced by a late surge in U.S. holiday demand and strong, selective competition to source the right “in-demand” goods. Forecasts for the season remain below that of previous years.

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http://www.tildefinance.com/article/certified-polished-diamond-prices--1-7--in-october http://www.tildefinance.com/article/certified-polished-diamond-prices--1-7--in-october tim.berg@tildefinance.com (Tim Berg) Tue, 05 Nov 2013 10:53:00 -0800 Metals & Mining
Effect of sale of NLMK Belgium Holdings’ shares on NLMK Group's consolidated financial statements Effect of sale of NLMK Belgium Holdings’ shares on NLMK Group's consolidated financial statements

On 30 September 2013 NLMK (LSE: NLMK) reported that Belgian state-owned company SOGEPA (Société Wallonne de Gestion et de Participations S.A.) had acquired a 20.5% interest in NLMK Belgium Holdings S.A. (NBH) for EUR 91.1m. NBH comprises the production and trading companies of NLMK Europe, other than NLMK Dansteel.

Following a review of the accounting treatment of the transaction, NLMK confirms that in light of the corporate governance rights afforded to SOGEPA the NLMK Group’s investment in NBH will be accounted for in the consolidated financial statements prepared in accordance with US GAAP under the equity method starting from 30 September 2013. 

NLMK Group brought in SOGEPA as a strategic investor in the context of the continuing restructuring of its European assets aimed at further enhancing efficiency and optimizing costs.

NLMK Belgium Holdings S.A. (NBH) includes two subdivisions of NLMK Europe: NLMK Europe Strip (flat rolled products) and NLMK Europe Plate (thick plate production). NLMK Europe Strip comprises three entities with total production capacity of 1.7 m tonnes: NLMK La Louvière (Belgium), NLMK Coating (France), NLMK Strasbourg (France) and a network of service facilities. NLMK Europe Plate comprises two entities with production capacity of 0.9m tonnes: NLMK Clabecq (Belgium) and NLMK Verona (Italy). NLMK Dansteel (Denmark) with production capacity of over 0.4m tonnes, which used to be an entity within NLMK Europe Plate, is not included within the NBH perimeter.

NLMK is a vertically integrated steel company. NLMK's manufacturing assets are located in Russia, Europe and USA. The company's liquid steel capacities exceed 17m tonnes a year. In 2012, the company's revenue was USD 12.2bn and EBITDA was USD 1.9bn. OAO NLMK ordinary shares are traded at the Moscow Stock Exchange (MICEX-RTS) and its global depository shares are traded at the London Stock Exchange.

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http://www.tildefinance.com/article/effect-of-sale-of-nlmk-belgium-holdings--shares-on-nlmk-group-s-consolidated-financial-statements http://www.tildefinance.com/article/effect-of-sale-of-nlmk-belgium-holdings--shares-on-nlmk-group-s-consolidated-financial-statements tim.berg@tildefinance.com (Tim Berg) Tue, 29 Oct 2013 11:20:00 -0700 Metals & Mining
De Beers Starts Its $2 Billion USD Underground Project De Beers Starts Its $2 Billion USD Underground Project

The De Beers Group of Companies today began construction of a new underground mine beneath its open pit Venetia Mine in Limpopo Province, South Africa. The US$2 billion (R20 billion) investment will extend the life of Venetia beyond 2040i and replace the open pit as South Africa’s largest diamond mine.

With underground production expected to commence in 2021, over its life, the Mine will treat approximately 130 million tonnes of ore, containing an estimated 96 million caratsii. The Mine will also support over 8,000 jobs directly, and a further 5,000 through the supply chain – benefitting the South African economy. 

His Excellency President Jacob Zuma, President of the Republic of South Africa and guest of honour, symbolically turned the first earth at a ceremony held at the Venetia Mine today. Also present were, amongst others, Honourable Susan Shabangu, Minister of Mineral Resources; Sir John Parker, Chairman of Anglo American plc; Mark Cutifani, Chief Executive of Anglo American plc and Chairman of The De Beers Group, Philippe Mellier, CEO of The De Beers Group; Barend Petersen, Chairman of De Beers Consolidated Mines (DBCM), Manne Dipico, Chairman of DBCM empowerment shareholder Ponahalo Holdings; and Phillip Barton, CEO of DBCM.

His Excellency President Zuma praised the investment by De Beers to extend the life of the mine into the 2040s, “Let me, again, welcome the launch of this construction phase of the Venetia underground project. This 20 billion Rand investment in the diamond industry, the biggest single investment in the diamond industry in decades, signals that indeed our mining sector is poised for growth, and that it has a bright future.”

The Minister of Mineral Resources, Susan Shabangu, also commended the company’s investment decision, adding that it boded well for the economy of the province. “The launch of this underground mine shows that South Africa remains an investment destination of choice and, through our mining laws, we will continue to ensure that this investment sustainably benefits mining communities and labour-sending areas.”

Mr Cutifani, Chief Executive of Anglo American plc and Chairman of The De Beers Group, said, “Anglo American’s roots are firmly in South Africa, and we have been a proud investor here for almost 100 years. Over the last 14 years alone, Anglo American has invested nearly 200 billion Rand in South Africa, emphasising our commitment and making a real difference for South Africa and all South Africans. The positive social impact of skills development, the acquisition of economically valuable experience and the potential to uplift rural and sometimes poorer communities, is what exists here at the heart of Venetia.”

Mr Mellier, CEO of The De Beers Group, said, “125 years ago, here in South Africa, De Beers created an industry that it has led ever since. As De Beers expanded beyond borders and into new markets, our heritage has always been inextricably linked with South Africa. There can be no greater vote of confidence by our shareholders in South Africa and De Beers than the decision to build an underground mine of the future here at Venetia, one of a handful of world- class diamond mines around the world. With production set to continue into the 2040s, Venetia will support South Africa’s mining economy for generations to come, and make diamond moments possible for millions of people around the world.” 

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http://www.tildefinance.com/article/de-beers-starts-its--2-billion-usd-underground-project http://www.tildefinance.com/article/de-beers-starts-its--2-billion-usd-underground-project bill.pradi@tildefinance.com (Bill Pradi) Wed, 23 Oct 2013 11:31:00 -0700 Metals & Mining
EuroChem Usolskiy Potash Completes Cage Shaft Sinking EuroChem Usolskiy Potash Completes Cage Shaft Sinking

EuroChem announced today that cage shaft sinking operations at its Usolskiy Potash project in Russia’s Verkhnekamskoe potash deposit have been completed. Begun in March 2012 following the successful freezing of the ground, the sinking operations progressed to the shaft’s target depth of -473 meters at an average rate of 42 meters per month and were completed a full month ahead of schedule. Usolskiy’s cage shaft is the first shaft to be completed in the Verkhnekamskoe deposit in the last 25 years. 

The underground work, which now centers on the ventilation and haulage section, is being performed by the renowned underground experts of FSUE "FF - 30". The freeze wall was designed and operated by Thyssen Schachtbau GmbH, the German shaft sinking specialist involved in the freezing of shafts at both of the company’s potash sites, Usolskiy Potash and VolgaKaliy.

At the time of this release, some 100 meters away from the cage shaft, the sinking operations at the skip shaft were progressing at a depth of -491 meters with crews working on the haulage sections and loading stations. The target depth of Usolskiy’s skip shaft is -547 meters .At present, approximately 70,000 m3 of overburden has been excavated during shaft sinking while a total of 8,361 iron tubings and 21,500 m3 of concrete were used for lining.

As previously announced, EuroChem continues to expect first production at Usolskiy to start in 2017 and to reach maximum capacity output in 2021. As at 30 September 2013, total cumulative capital expenditure at Usolskiy Potash amounted to more than RUB 15.0bn USD 465 million.

On October 15th 2013, Usolskiy Potash celebrated its 5th anniversary. Acquired via auction in 2008 for RUB 4.1bn (USD 172m) and comprising 132.9 km², the license area is located in the southern section of the Verkhnekamskoe deposit, one of the largest potash deposits in the world. The average KCl content of Usolskiy’s ore has been established at 30.8%.

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http://www.tildefinance.com/article/eurochem-usolskiy-potash-completes-cage-shaft-sinking http://www.tildefinance.com/article/eurochem-usolskiy-potash-completes-cage-shaft-sinking tim.berg@tildefinance.com (Tim Berg) Mon, 21 Oct 2013 09:51:00 -0700 Fertilizers
Rapaport: Certified Polished Diamond Prices Stable in September Rapaport: Certified Polished Diamond Prices Stable in September

Certified diamond prices were stable in September with significantly reduced trading volume. Price sensitive Far East buyers are increasingly shifting to commercial qualities, while tight liquidity and weak domestic demand in India have reduced diamond trading and lowered expectations for the important Diwali holiday season. High rough diamond prices have disrupted manufacturing activity as polished suppliers focus on depleting existing high inventory.

The RapNet Diamond Index (RAPI) for 1-carat certified diamonds fell 0.3 percent in September. RAPI for 0.30-carat diamonds rose 0.4 percent while RAPI for 0.50-carat and 3-carat diamonds were both flat for the month. RAPI fell by more than 2 percent in the third quarter in all sizes. 

The Rapaport Monthly Report – October 2013, “Selective Markets,” communicated that diamond markets were quiet in September due to weak demand in emerging economies. The Hong Kong Jewellery & Gem Fair demonstrated steady but selective Far East demand, but failed to significantly stimulate global trading with buyers focused on 0.30-carat to 0.50-carat, H and lower, VS-SI goods. Dealers remain cautious ahead of the fourth quarter holiday period.  Sentiment in the manufacturing sector is weak and liquidity is tight due to high rough prices and cautious bank lending to the industry. Indian manufacturers have pledged to keep polished production at 30 percent to 50 percent below regular fourth quarter levels in an attempt to ease their liquidity concerns and manage India’s foreign currency crisis. Indian trade organizations are discouraging the purchase of rough at high prices. 

Rough trading on the secondary market was quiet in September with dealers giving long-term credit and many boxes selling at discount. De Beers reduced prices at its October sight on Indian boxes and raised prices on goods that yield polished in the popular 0.30-carat to 0.50-carat sizes.

Rough trading and manufacturing is expected to remain unprofitable, as rough prices are still high and polished demand relatively weak. The market will be boosted by Diwali, Christmas and Chinese New Year activity, but expectations in India and China are muted, while U.S. demand is stable. After a weak third quarter, the holiday season should provide some relief to the market, but manufacturers will likely remain under pressure in the meantime.  

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http://www.tildefinance.com/article/rapaport--certified-polished-diamond-prices-stable-in-september http://www.tildefinance.com/article/rapaport--certified-polished-diamond-prices-stable-in-september tim.berg@tildefinance.com (Tim Berg) Fri, 04 Oct 2013 11:30:00 -0700 Metals & Mining
Vladimir Potanin plans Norilsk Nickel overhaul Vladimir Potanin plans Norilsk Nickel overhaul

Original of this material appeared on FT.com website. 

By Courtney Weaver and Charles Clover in Moscow

After years of vicious shareholder infighting, lawsuits and mudslinging, Norilsk Nickel’s oligarch shareholders are scrambling to overhaul its investment strategy and management structure following the steep fall in metals prices.

In an interview, Vladimir Potanin, Norilsk Nickel’s single biggest shareholder with 30 per cent and chief executive, said the company had hired western consultants including McKinsey and BCG to advise the nickel, platinum and palladium producer, which has a market capitalisation of $20.6bn. 

According to Mr Potanin, Norilsk has never managed to shake off its Soviet legacy and develop into a 21st century multinational, despite being the world’s largest nickel producer with $12bn in annual revenues and close to $5bn in earnings before interest, tax, depreciation and amortisation.

“To put it simply, the company should become more modern. It’s still working like a Soviet ministry,” Mr Potanin says. “There is a lot of red tape and other things that need to be done away with, given today’s difficult financial markets.

The company plans to move away from massive development projects with 15-year timelines to short-term projects that will be completed within two years and have an internal rate of return of at least 20 per cent.

“We had the Soviet habit of state planning. We built everything with a long-term perspective and didn’t care about what efficiency was reached at each stage,” Mr Potanin says.

The company plans to sell off foreign assets no longer seen as part of the group’s core business, and invite sector peers to take stakes in existing projects to minimise Norilsk’s capital expenditure risks.

The strategic overhaul, Mr Potanin notes, comes out of necessity, not choice. While Norilsk was more pragmatic than peers in the pre-crisis years in terms of mergers and acquisitions and capital expenditure, its four-year shareholder conflict limited the management’s ability to re-evaluate its post-crisis strategy. The infighting also weighed on Norilsk’s share price, which lost 40 per cent of its value between April 2011 and the peace deal in November last year.

Mr Potanin denies he and his former rival, fellow Norilsk shareholder Oleg Deripaska, who controls 28 per cent, were forced to reach a peace agreement by the Kremlin last year because of a looming court battle in London.

“Putin did not interfere in the process – as strange as that may sound,” Mr Potanin insists. Instead, Mr Potanin says, the two shareholders were simply forced to come to terms with market realities. “At some point the situation in the financial markets became very complicated. It was difficult to earn money and we all have problems with debts.”

Mr Potanin and Mr Deripaska found a mutually palatable solution to the stand-off in the form of a third oligarch, Roman Abramovich, who agreed to buy a 5.9 per cent stake in the group and act as an arbiter. In addition to his financial stake, Mr Abramovich has control of 20 per cent voting shares.

The shareholders hope the new agreement will help the company throw off its reputation for “conflict, scandals and stress”, as Mr Potanin puts it. But the peace will be tested by volatile market conditions.

While Norilsk had originally planned to pay back half of its earnings in dividends – a key point for Mr Deripaska who is contending with close to $10bn in net debt – Mr Potanin says this policy will probably have to be changed.

“The logic of the shareholders’ agreement was that about half of the company’s ebitda would be paid back in dividends. But of course we cannot ignore the change in the market situation so we will make some adjustments to the dividend policy.”

Mr Potanin says the company is bracing for nickel prices to remain at their current low levels for the short to medium term. Any recovery in price, he warns, will be limited.

“We certainly hope that nickel prices will improve by 10, 15, 20 per cent. But I’m not expecting huge growth,” he says.

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http://www.tildefinance.com/article/vladimir-potanin-plans-norilsk-nickel-overhaul http://www.tildefinance.com/article/vladimir-potanin-plans-norilsk-nickel-overhaul bill.pradi@tildefinance.com (Bill Pradi) Fri, 04 Oct 2013 09:20:00 -0700 Metals & Mining
Russia Increases Its Gold Holding Russia Increases Its Gold Holding

Russia continues its gold buying spree when it expanded its gold reserves to 1,015.5 tons, a 12.7 metric ton increase according to the data showed by the International Monetary Fund.

Gold has always been seen as a form of hedge against competing currencies in times of economic depression. Therefore, purchasing gold and keeping it as portion of their resources are efforts done by countries with high purchasing power. As of September 25, gold price amounted to $1,334.02 an ounce at 9 AM, Bullion Vault data showed. Gold prices are foreseen to increase around 7.5% this quarter. 

Analysts foresaw in July that gold was heading for at least a 9% increase if the Federal Reserve would continue their stimulus program, which includes the purchasing of bonds that cost more than $80 billion a month. When Federal Reserve announced that they wouldn’t wind down the program, gold reached an all-time high of $1,364.10 per ounce, the largest increase since January of 2009. 

Russia is the world’s 9th largest gold holder, with Germany as second with around 3,700 tons of gold and the US close to 9,000 tons. In the last decade, the Central Bank of Russia has garnered around 570 metric tons of gold. In a few more months or years, it wouldn’t be surprising if Russia will be included in the top five or even hold more than Germany’s current gold supply. Russia is currently the world’s largest buyer of gold.

According to reports, Russia’s efforts to purchase gold on a monthly basis are part of a move to expand its international reserves. Russia’s gold reserves and foreign currency are worth around $504 billion as of September 13 as shown on Bloomberg’s market data. 

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http://www.tildefinance.com/article/russia-increases-its-gold-holding http://www.tildefinance.com/article/russia-increases-its-gold-holding bill.pradi@tildefinance.com (Bill Pradi) Thu, 26 Sep 2013 13:05:00 -0700 Banking
VEB Will Finance Elga Coal Deposit Development VEB Will Finance Elga Coal Deposit Development

Mechel announces that Vnesheconombank’s (VEB) Supervisory Board approved financing totaling 2.5 billion US dollars for the development of Elga Coal Complex (Republic of Sakha (Yakutia))’s first stage.

The terms of the financing call for Vnesheconombank’s funds to be used to complete the first phase of the Elga deposit’s development project. The first stage includes construction of a railroad and a mining and washing complex with an annual capacity of 11.7 million tonnes of run-of-mine coal by 2017. The project’s implementation will create over 5,000 new jobs. 

The loan has a tenor of 13.5 years with a grace period until 2017. Vnesheconombank’s representatives will also have the right to two out of five seats on Elgaugol OOO’s Board of Directors.

“Over five years, we invested over two billion dollars into this project — constructing a 321- kilometer railroad from the Baikal-Amur Mainline to the deposit, infrastructure, a temporary workers’ settlement and a washing plant.

“Now with the help of Vnesheconombank’s funds we will be able to complete construction of the first phase and more quickly reach design capacity of coking coal production. Mechel has everything it needs to deliver this coal to its customers — including its own wagon fleet, port facilities in the Far East, long-term contracts with major international steelmakers.

“We are creating from scratch an industrial cluster that will become the basis for the whole region’s economic growth. We are grateful to the state for its support in these difficult times and are certain of this project’s success,” Chairman of Mechel OAO’s Board of Directors Igor Zyuzin noted. 

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http://www.tildefinance.com/article/veb-will-finance-elga-coal-deposit-development http://www.tildefinance.com/article/veb-will-finance-elga-coal-deposit-development bill.pradi@tildefinance.com (Bill Pradi) Tue, 24 Sep 2013 13:01:00 -0700 Metals & Mining
Yuriy Bokachev Appointed As Managing Director Of NLMK DanSteel Yuriy Bokachev Appointed As Managing Director Of NLMK DanSteel

Yuriy Bokachev has been appointed Managing Director of NLMK DanSteel A/S, a Danish plate producer and part of NLMK Europe Plate Products. In this capacity, Yuriy Bokachev will be responsible for NLMK DanSteel’s operating activities, operational health and safety, and environmental issues.

This position was previously held by Yury Tarasov, who has been appointed Commercial Director of NLMK Europe Plate Products, and will be responsible for managing the sales of the Division’s entire product range, excluding Q&T brands produced at NLMK Clabecq (new products, abrasion resistant [Quard] and high strength [Quend] steels). 

The new appointments are part of NLMK Group’s strategy to improve operational efficiency, and to separate the sales of branded Q&T and other products, thereby consolidating NLMK Europe’s positions in niche high-margin markets.

Yuriy Bokachev has been with NLMK Group since 1994. From 2008, he was NLMK DanSteel Deputy Managing Director, responsible for overall control, implementing efficiency enhancement measures, contractual relations, and designing plant development programmes. Among other things, he headed the new Mill 4200 construction project. Yuriy Bokachev graduated with honours from Lipetsk State University, specializing in Pressure Metal Treatment (Physics and Technology Department). He then underwent professional training in Strategic Management under the Federal Executive Management Training Programme (State University of Management, Moscow).

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http://www.tildefinance.com/article/yuriy-bokachev-appointed-as-managing-director-of-nlmk-dansteel http://www.tildefinance.com/article/yuriy-bokachev-appointed-as-managing-director-of-nlmk-dansteel tim.berg@tildefinance.com (Tim Berg) Tue, 17 Sep 2013 14:02:00 -0700 Metals & Mining
Certified Polished Diamond Prices Stabilize in August Certified Polished Diamond Prices Stabilize in August

Certified polished diamond prices stabilized in August while dealers remained cautious amid low-volume trading. Cutting center liquidity is being squeezed by the devaluation of the Indian rupee, high rough prices and cautious bank lending. Diamond manufacturers are holding on to relatively large inventories ahead of the fourth quarter selling season, while retail jewelers are expected to delay their buying.

The RapNet Diamond Index (RAPI™) for 1-carat certified polished diamonds fell 0.1 percent in August. RAPI for 0.30-carat diamonds rose 1.2 percent during the month, while RAPI for 0.50-carat diamonds increased 0.8 percent. RAPI for 3-carat diamonds fell 0.6 percent. The index is down from the beginning of the year after prices dropped in June and July. There is resilient demand for lower price points, with 0.30 to 0.40-carat, H-, VS-SI diamonds remaining the strongest category. RAPI for 0.30-carat diamonds increased by 4.8 percent in the first eight months of the year due to steady U.S. and Chinese demand for these goods.

According to the just released Rapaport Monthly Report – August 2013, “Liquidity Crunch,” the weak rupee continues to impact global diamond trading. There is rising expectation that India-based polished suppliers will reduce their prices at the September Hong Kong show in an effort to generate cash flow. India’s domestic market stalled as the rupee plummeted to a historic low of 69.22/$1, declining by more than 8 percent in August, while rupee-based gold prices hit a record high.

Chinese demand is selective with increasing demand for lower-quality diamonds at competitive price points and more buyers moving to memo. U.S. demand is stable with decent demand expected to continue during the fourth quarter.

Tight liquidity has forced manufacturers to refuse high-priced rough supply. Sightholders reportedly rejected 20 to 25 percent of approximately $600 million worth of rough on offer at the De Beers August sight. While De Beers reduced prices on cheaper Indian boxes, average prices were basically stable. There is very little activity on the secondary rough market with dealers giving long- term credit in order to offload goods.

"Rough prices are unsustainable because buyers will inevitably run out of money in the current market environment. Manufacturers should, and inevitably will, continue to refuse high-priced rough. Their inability to profit has resulted in less available credit and less liquidity. Miners are raising prices and rough is ahead of the polished. So why manufacture diamonds when it is so hard to make money? It's better to just buy polished,” said Martin Rapaport, Chairman of the Rapaport Group.

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http://www.tildefinance.com/article/certified-polished-diamond-prices-stabilize-in-august http://www.tildefinance.com/article/certified-polished-diamond-prices-stabilize-in-august tim.berg@tildefinance.com (Tim Berg) Tue, 03 Sep 2013 09:48:00 -0700 Metals & Mining
EuroChem Secures Debut Unsecured USD 1.3 Billion Facility EuroChem Secures Debut Unsecured USD 1.3 Billion Facility

EuroChem announces that it has signed a new debut US$1,300,000,000 unsecured loan facility on a club basis (the “Facility”).

The Facility, EuroChem’s first unsecured loan for such an amount and duration, is structured as a 5-year unsecured finance facility. Priced at LIBOR 3M + 1.8%, the facility includes a 2-year grace period. The proceeds will be used to pay down the outstanding amount under EuroChem’s 2011 US$1.3 billion pre- export facility. 

Andrey Ilyin, EuroChem CFO, commented “We are pleased with this latest landmark long-term financing for the Company. While on comparable terms to our 2011 PXF facility, which was secured, our ability to successfully replace it with unsecured debt allows us to further strengthen EuroChem’s credit profile."

Alexander Gavrilov, Deputy-CFO and Head of Corporate Finance at EuroChem added: “This facility not only provides EuroChem with additional financing flexibility, it also creates a new precedent within the Russian credit market. In light of today’s volatile environment, we appreciate the high level of commitment we received from our banking partners and value our growing relationship. This transaction extends the average maturity profile of our debt, which is now fully unsecured.”

Mandated lead arrangers under the facility were (in alphabetic order): Bank of America Merrill Lynch, Barclays Bank plc, the Bank Of Tokyo-Mitsubishi UFJ, ltd., BNP Paribas (Suisse) SA, Commerzbank Aktiengesellschaft, Crédit Agricole Corporate and Investment Bank, Deutsche Bank AG, HSBC Bank plc, Natixis, OJSC Nordea Bank, Sumitomo Mitsui Banking Corporation Europe Limited and The Royal Bank of Scotland plc, with BNP Paribas (Suisse) SA acting as facility and security agent and Barclays Bank plc as fixed rate agent. Bank of America Merrill Lynch acted as coordinator and documentation agent.

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http://www.tildefinance.com/article/eurochem-secures-debut-unsecured-1-3-billion-facility http://www.tildefinance.com/article/eurochem-secures-debut-unsecured-1-3-billion-facility bill.pradi@tildefinance.com (Bill Pradi) Fri, 30 Aug 2013 13:49:00 -0700 Fertilizers
Mechel Disposes Donetsk Metallurgical Plant Mechel Disposes Donetsk Metallurgical Plant

Mechel announces signing an agreement for the disposal of Donetsk Electrometallurgical Plant AO.

Mechel announces signing an agreement with businessman Vadim Varshavsky for the disposal of 100% shares of Daveze Limited, which in its turn owns 100% shares of Donetsk Electrometallurgical Plant, for a nominal sum of 2,000 euro. 

The buyer also assumes the obligation to ensure repayment of DEMZ AO’s debt to Mechel Group for a sum of up to 81 million US dollars depending on the time of the repayment. Operational management of the plant will be transferred to Vadim Varshavsky shortly. The deal is due to be closed in late 2013.

“In the current macroeconomic situation we see no further perspective for the plant’s development within Mechel Group, as we do not foresee significant improvement in the market where the plant operates over the next few years. This deal also helps decrease country risks for Mechel due to the specifics of doing business in Ukraine, which are often weighed down with non-market factors. Moreover, due to high scrap prices, which are partly due to several local producers’ monopoly status, production at the plant has become unprofitable and was halted in November 2012.

“In this year’s first quarter alone DEMZ’s net loss amounted to 16 million US dollars by US GAAP, with 50 million US dollars loss in 2012.

“Disposal of unprofitable assets will enable us to significantly improve our operational cash flows and focus on our priority businesses — mining and high value-added steel products,” Mechel OAO’s Chief Executive Officer Evgeny Mikhel commented. 

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http://www.tildefinance.com/article/mechel-disposes-donetsk-metallurgical-plant http://www.tildefinance.com/article/mechel-disposes-donetsk-metallurgical-plant bill.pradi@tildefinance.com (Bill Pradi) Tue, 20 Aug 2013 11:09:00 -0700 Metals & Mining