Page 2 of 2 Putin wades into tungsten mire
By John Helmer
"If support is necessary, we will help," Putin was reported locally as saying
on his April visit. He had little option. The region, and capital Vladivostok,
have been selected as the site for the summit conference of the Asia-Pacific
Economic Cooperation (APEC) states in 2012. A three-year program of capital
investment to create the facilities and infrastructure has already gotten under
way.
Tungsten mining is no priority, but the prospect of starving miners and their
protesting wives near the summit site was embarrassing enough to make their
claims Kremlin concerns. Putin ordered his regional representative, Victor
Ishaev, to put in the fix. Ishaev has recently moved to his federal job after
serving for many years as
governor of the Khabarovsk region. He is a past master in arranging the
transfer of mining licenses and mine company assets.
In mid-June, as the tungsten mine protest hit the Moscow media, Ishaev and
Darkin arranged for a new owner to take over. The Primorsk regional
administration confirms that the mine workers have been paid 6.3 million
roubles (US$203,400) in wage arrears they were claiming. This was done by a
bank acting on the regional government's guarantee. The regional branch of the
United Russia political party was then assigned the task of restarting the
mine. The party branch arranged for the signing of an agreement by Russian
Tungsten, ceding a five-year lease of the mine and assets to Primteploenergo,
the state controlled regional energy enterprise and one of the largest in the
region.
The new controlling stakeholder of Russian Tungsten has been reported locally
to be OAO Dalpolimetall GMK. Dalpolimetall is Russia's largest zinc and lead
miner, with its own lead smelter and some silver production as well. Once owned
by Glencore International, the Swiss-based metals trader, it is reported in the
industry press to be now privately owned. In Moscow, industry sources claim its
controlling shareholder is Vasily Usoltsev. Because he is a parliamentary
deputy, he is barred from running a business on the side but not from owning
one or from acquiring assets in the interests of his business.
Usoltsev, 46, says in his public resume that he was born and educated in the
Primorsk region and graduated as a radio and electronics engineer. In 1998, he
says, he became chief executive of Dalpolimetall, and three years later
president of the management or holding company through which the mining company
was owned. In 2002, he took a seat in the regional parliament, and in 2003 he
moved to the State Duma in Moscow, where, today, he is deputy chairman of the
committee for the northern and far eastern territories.
For a member of parliament representing a constituency in the Primorsk region,
Usoltsev is unnaturally untalkative. He refuses to answer questions about his
relationship to Dalpolimetall or his involvement in the purchase, sale and
lease transactions that have involved Russian Tungsten and the Seychelles
company, Granite Management. Svetlana Taisayeva, a member of Usoltsev's
parliamentary office in Moscow, told Asia Times Online she cannot say whether
Usoltsev now holds a 50% stake or more in Russian Tungsten. Over several days,
she claimed that Usoltsev was in Vladivostok and would reply himself to Asia
Times Online's questions in time. He has not.
If Usoltsev is the controlling stakeholder in Dapolimetall, he appears to have
known what was happening at the mine for months before the miners sought
Kremlin intervention. According to Russian company registration records, OOO
Lermontovskiy Mining Management was recorded on December 30, 2008, with
authorized capital of 50,000 roubles. The stock of the company - apparently not
the same as OAO Lermontovskiy GRK - was divided between OOO Pacific Company of
Vladivostok and OOO Impex-Trade of Moscow.
Another company called Fintex Capital Management Inc is also registered as a
stakeholder; it is an offshore registration, based in the Seychelles.
Impex-Trade has been reported in the Russian press as connected to
Dalpolimetall through Vitaly Gedz, who reportedly holds management positions in
both companies.
Ishaev and his spokesman, Yevgeny Anoshin, were asked to clarify reports that
ownership of the Svetlogorye mine is contested between Martynov and the
principals of Granite Management on the one hand, who say they own OAO
Lermontovskiy GRK; and Usoltsev, Gedz, and others in the Dalpolimetall group,
who appear to own OOO Lermontovskiy Mining Management. The former is the mine
licence-holder; the latter would like to have it. Although regional authorities
and mine union representatives say they have been trying to make contact with
Martynov for months, Ishaev has said publicly he has spoken with the owner of
the mine, and reached an agreement with him. Ishaev refuses to say which owner
he is talking about.
Ishaev's representatives will say only that on June 17 he met with Governor
Darkin and others with an interest in the tungsten mine. This is their
communique of what happened: "Victor Ishayev and Sergey Darkin held a joint
meeting with the proprietors and the administration of the enterprise, and also
with the administration of Pozharsky district. Following the results of the
meetings in the presence of the plenipotentiary [Ishaev], the agreement among
the administration of the Primorskiy Krai, the federation of trade unions of
the Primorskiy Krai, the primary trade-union organisation of Tungsten [mine],
the representatives of the OOO Lermontovskiy mining management (LGRU), and the
Primorye regional branch of the political party United Russia was signed.
"The agreement was signed in the interests of renewal and industrial
development of the Lermontovskiy tungsten deposit and keeping social stability
in the settlement of Svetlogorye. According to the agreement, from June 17,
2009, the property of OOO Russian Tungsten is given in lease to KGUP
Primteploenergo for 5 years. Until June 19, KGUP Primteploenergo and OOO
Lermontovskiy Mining Management undertake to conclude a contract agreement on
carrying out works connected with the operation of the Lermontovskiy tungsten
deposit. From July 1 of this year KGUP Primteploenergo and OOO Russian Tungsten
undertake to transfer the workers involved in production at the tungsten
deposit on to the staff of KGUP Primteploenergo. Until July 1, 2009, the
parties should develop the plan of document preparation for the renewal of
mining and ore processing. Also, the parties undertake to assist employment of
the population of the settlement and to develop other industrial bases in the
settlement of Svetlogorye."
It is clear that a transfer of operational responsibility has occurred to the
benefit of the Dalpolimetall group. It is also clear that the payroll costs at
the mine, and possibly other operating expenses, have been moved on to the
regional budget through Primteploenergo. Whoever owns the mine ought to be free
to restart production and sales.
But that's the question no one wants to address for the time being. In a
statement by Ishaev, released to Asia Times Online by his office, at the June
17 meetings he said he had referred the mine license currently held by OAO
Lermontovskiy GRK to the federal mine license agency Rosnedra, at the Ministry
of Natural Resources in Moscow "to consider the problem of returning the
license to the proprietor. The plenipotentiary representation will supervise
this question. It is necessary to do the utmost, so that the enterprise will
reach the design capacity. I hope that the market and the prices on the foreign
market will change."
Russian mining legislation authorizes revocation or cancellation of a mining
license. But when that occurs, the state is required to put the licence up for
an open bidding auction. If it had been anyone's intention to take over Russian
Tungsten and Lermontovskiy GRK at the lowest price possible, without triggering
a fresh valuation of the reserves by the State Reserves Committee, and
competitive bidding for the asset, then the temporary leasing arrangement
signed last month appears to do the trick. But who benefits is a question that
may only be answered for certain a long way from Svetlogorye - in the
Seychelles.
John Helmer has been a Moscow-based correspondent since 1989,
specializing in the coverage of Russian business.
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