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China’s potash deal with Russia threatens Canadian profits – by Carrie Tait (Globe and Mail – September 25, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

CALGARY — China has bought a chunk of one of the world’s largest potash producers, giving the Asian country more control over what price it should pay for the fertilizer – a move that could drag down prices for the mineral and eat into profits for Canada’s potash companies.

China Investment Corp., Beijing’s sovereign wealth fund, agreed to acquired a 12.5-per-cent stake in Russia’s OAO Uralkali. The deal – a debt-for-equity exchange between CIC and a company owned by three Russian oligarchs – comes after Uralkali said it intends to break from Belarus Potash Co., the cartel it had with state-owned Belaruskali.

Companies controlled by Beijing have invested billions of dollars as part of an overall strategy to secure energy supplies as well as basic manufacturing and building materials. In Canada, Chinese oil and gas companies, along with CIC, are significant energy players. CIC’s deal with Uralkali fits the recent Chinese model: Invest in resources in order to secure supply and exert some control over prices.

China is the world’s most populous country and largest potash consumer, and its stake in Uralkali could hurt Canada’s fertilizer producers because they could further lose pricing power.

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A Bitter ‘Fertilizer War’ Gripping Belarus and Russia Is Helping U.S. Farmers – by Andrew E. Kramer (New York Times – September 16, 2013)

http://www.nytimes.com/

MOSCOW — American farmers are getting an unexpected windfall from a contentious fight between Russia and Belarus, a former Soviet splinter state.

The subject of the fight is potash, a fertilizer. The score so far: One imprisoned Russian business executive, the disintegration of a once-effective cartel that kept world potash prices high and political tension between the two countries.

What is being called the “fertilizer war” is the latest of numerous trade and economic spats between Russia and Belarus, whose leaders, though presiding over similar autocratic political systems, do not get along personally, Russian political analysts say. Aleksandr G. Lukashenko, president of Belarus, and Vladimir V. Putin, president of Russia, by most accounts detest each another. Their feelings have spilled over into the fertilizer business.

The potash problem reached a peak on July 30, when Uralkali, the Russian potash company, announced it was withdrawing from an international cartel called the Belarusian Potash Company, or B.P.C., which was created to keep prices high.

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Gabriel threatens Romania with billion-dollar lawsuit – by Eric Reguly (Globe and Mail – September 12, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

ROME — Canada’s Gabriel Resources Ltd. is issuing a stern ultimatum to the Romanian government: Approve the Rosia Montana gold mine or face a lawsuit for billions of dollars.

The strategy marks a stunning reversal for the Toronto Stock Exchange-listed company, which until recently had expected the government would approve a draft law that would allow the $1-billion (U.S.) mining development in Romania’s Transylvania to go ahead.

Then, on Monday, Romanian Prime Minister Victor Ponta said parliament would likely reject the draft law, a move that would kill Europe’s largest gold project. Gabriel shares went into freefall. The same day, Gabriel said it would “assess all possible actions open to it, including the formal notification of its intentions to commence litigation for multiple breaches of international investment treaties.”

On Wednesday, Gabriel chief executive officer Jonathan Henry vowed that the legal action would go ahead if the government does kill the mining project, and attached a big number to it.

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Protests, cyanide concerns may halt Canadian-Romania gold mine project – by Nick Logan (Global News – September 10, 2013)

http://globalnews.ca/

VANCOUVER – Anti-mining protesters appear to have won their battle against the Romanian government and a Canadian firm planning to build Europe’s largest open-cast gold mine.

At least for now.

After more than a week of rallies in the capital city of Bucharest and the country’s second-largest city of Cluj Napoca, Romanian Prime Minister Victor Ponta said Monday the project likely won’t get approval.

A majority of Romanian parliament members weren’t in favour of the mine proposal for the northwest mountain community of Rosia Montana, and Ponta asked parliamentarians to vote quickly on draft legislation that would have moved the proposal forward.

“There’s no point in wasting time, I want to make sure that the Senate and the Chamber of Deputies vote on the rejection and then this project is closed,” Ponta said, according to Bloomberg News on Monday. “I don’t want the government to be responsible for contracts undertaken by previous cabinets.”

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Vladimir Potanin plans Norilsk Nickel overhaul – by Courtney Weaver and Charles Clover (Financial Times – September 9, 2013)

http://www.ft.com/home/us

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.”

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Gabriel shares plummet as massive project in Romania now on the rocks – Peter Koven (National Post – September 10, 2013)

The National Post is Canada’s second largest national paper.

The long-suffering shareholders of Gabriel Resources Ltd. two weeks ago received a brief glimmer of hope — a hope that now appears to be extinguished.

Shares of the Canadian miner plunged an astounding 53.7% to close at 68¢ on Monday after Romanian Prime Minister Victor Ponta reversed course and said the company’s giant Rosia Montana project should not go ahead. At one point, the stock was down as much as 72%.

While Mr. Ponta’s comments do not mark the end of Gabriel’s quest to build Rosia Montana, which could become Europe’s biggest gold mine if it is ever approved, the response from investors on Monday shows many of them have had enough of this saga.

Gabriel has been trying to win approval for the project since the late 1990s, but has faced vicious opposition from anti-mining activists along the way. The company battled back — it even helped fund a documentary called Mine Your Own Business, which portrayed the activists in a very negative light and suggested the mine is needed to create economic activity in an impoverished part of Romania.

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Gabriel Resources seeks Romanian clarification on key gold mine – by Bertrand Marotte (Globe and Mail – September 9, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Gabriel Resources Ltd. is frantically trying to confirm statements by Romanian Prime Minister Victor Ponta and other ministers regarding rejection of a draft bill allowing the company to build Europe’s largest gold mine.

The Canadian mining company said Monday that it is “urgently seeking confirmation of the actual statements made and clarification of the impact on the proposed permitting of the Project.”

Media reports on Monday quoted Mr. Ponta as saying that the Rosia Montana gold-and-silver project in a small Romanian town is “case closed” after a week of protests by environmentalists and citizens throughout the country concerned over the use of cyanide in the extraction process.

The project, which Gabriel has been pursuing since the late 1990s, would also involve the razing of four mountains to allow for a giant open pit mine. Backers of the project say the mine would help boost the economically deprived region of northwest Romania and create much-needed jobs.

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From potash powerbroker to Minsk prison, the cost of crossing Belarus – by Polina Devitt (Reuters Canada – September 8, 2013)

http://ca.reuters.com/

MOSCOW (Reuters) – Vladislav Baumgertner has the fluent English, Western business degrees and meteoric career that typify Russia’s young executive elite, but the boss of Uralkali, the world’s largest potash producer, is now more in need of Soviet-era survival skills.

For two weeks Baumgertner, 41, has been held in a dank Stalin-era Belarusian cell, facing up to 10 years in jail on charges of abusing power and seeking gain at the expense of Belarus while chairman of a joint venture cartel, Belarusian Potash Company (BPC), which until last month controlled Russian and Belarusian exports of the fertilizer ingredient.

Belarus, which has long bridled at what it believes is Uralkali’s aim to take over its own producer Belaruskali, was angered by Uralkali’s abrupt exit from BPC last month, a move likely to lower prices, hit a key source of hard currency and hurt Belarus’s rickety economy.

The Belarusian Investigative Committee has not provided details on the charge, though among comments it made at the time of Baumgertner’s arrest are allegations that he and others at BPC provided discounts on product to some buyers without telling the Belarusians, redirected ships to take Uralkali product instead of Belaruskali’s, and cancelled some BPC contracts, promising partners a Uralkali alternative at lower prices.

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Potash prices head for 20 pct drop after cartel disintegrates – by Ron Bousso (Reuters U.S. – September 6, 2013)

http://www.reuters.com/

LONDON, Sept 5 (Reuters) – Potash prices are poised to drop some 20 percent after the surprise breakup of the world’s largest producer cartel sent buyers and sellers scrambling to establish new valuations, traders said.

Global trade in the material – one of three nutrients vital for agriculture – remains largely on ice after Russia’s Uralkali in July quit the partnership Belarusian Potash Co (BPC), which together with a rival North American cartel controlled some 70 percent of the market.

Belarus’ retaliatory arrest of Uralkali’s chief executive Vladislav Baumgertner in Minsk last week further highlighted the deep rift between the Russian and Belarusian producers.

“As a cartel, producers were able to cut supplies in order to control prices. As competitors, producers will reduce prices rapidly to gain business,” an industry source said.

BPC co-founder Belaruskali appears to be particularly keen to secure new supply deals after the split left it with limited global trading infrastructure, which had been dominated by its Russian partner, traders and industry sources said.

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Gabriel Resources’ Rosia Montana gold mine rests in Romanian parliament’s hands – by Peter Koven (National Post – September 5, 2013)

The National Post is Canada’s second largest national paper.

After years of delays and political turbulence, Gabriel Resources Ltd. may finally be on the cusp of building Europe’s biggest gold mine.

Gabriel’s saga has been one of the longest and most disappointing in Canada’s gold sector. The Whitehorse-based company has been trying to develop the Rosia Montana gold project in Romania since the 1990s, but has faced vicious opposition from anti-mining activists, which spread rhetoric against the project. Successive governments were reluctant to give Gabriel the go-ahead amid such a heated environment.

Things have changed. Current Prime Minister Victor Ponta won a convincing victory in last year’s election, and has majority control over parliament. That has allowed him to be far more aggressive than his predecessors in approving large capital projects that can boost the economy.

One of his priorities is Rosia Montana. Last week, his government approved a draft law that sets out a course for development of the mine. It now needs to be approved by parliament.

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Europe’s Biggest Planned Gold Mine May Face Romanian Referendum – by Irina Savu (Bloomberg News – September 2, 2013)

http://www.bloomberg.com/

Romania’s President proposed a vote on allowing development of Europe’s largest gold mine project following protests against technology that made the country home to one of the continent’s worst environmental disasters.

A day after thousands of demonstrators rallied against the use of cyanide in gold mining, President Traian Basescu said he may call a referendum next year on the Rosia Montana mine. That may delay the project, for which Canada-based Gabriel Resources Ltd. (GBU) said it could “hopefully” receive approval by November.

The rallies followed the government’s unveiling last week of a draft law to raise the state’s stake in the project, rekindling anger over the 2000 Baia Mare spill. Listed by the United Nations Environment Programme alongside Chernobyl as one of Europe’s major human-caused disasters, the spill happened when a dam holding back mine debris burst, flooding the Somes, Tiza and Danube rivers with tens of thousands of tons of cubic meters of cyanide-contaminated water.

“The biggest scare about the Rosia Montana mine is the cyanide process, which should have been discussed with experts,” Basescu said on newspaper Adevarul’s website. He said “society is rightfully reacting to this” because Romania had suffered from the Baia Mare spill.

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Ring of Fire: Chromite Crumbs or Stainless Steel for Ontario? [Part Two of Two] – by Stan Sudol (Sudbury Star – August 31, 2013)

Outokumpu Stainless Steel Plant Tornio, Finland. Outokumpu Group is the largest stainless steel producer in the world.

The Sudbury Star is the City of Greater Sudbury’s daily newspaper. 

This was originally published in the Sudbury Star on August 31, 2013 under the title “From ore to steel“.

Canada is the only G-8 country in the world that does not have a “major” stainless steel sector. There is one speciality steel producer, ASW Steel Inc. in Welland, Ontario, that dedicates 30 per cent of its production capacity to stainless steel. Employing  about 95 people, the company manufactures roughly 30,000 tons of stainless steel ingots and billets. By comparison, Outokumpu, the biggest international producer, produces almost 3.6 million tonnes of stainless steels worldwide, slightly over ten per cent of the 35.4 million tonnes of global production last year, according to International Stainless Steel Forum preliminary figures.

We do have world-class carbon steel plants mainly concentrated in Ontario at Hamilton, Nanticoke and Sault Ste. Marie.

Stainless steels are more valuable than carbon steels due to their corrosion and rust resistance due to the addition of chromite. Nickel is added to some varieties of stainless steels to increase the hardness and strength, further corrosion resistance as well as enabling the material to withstand extreme cold and hot temperatures without becoming brittle or deforming.

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Russia escalates dispute with Belarus after [potash company] CEO’s arrest – by Timothy Heritage (Reuters U.S. – August 30, 2013)

http://www.reuters.com/

MOSCOW – (Reuters) – Russia banned pork imports from Belarus on Friday, stepping up a diplomatic and trade war over the arrest of a Russian businessman and threatening to deepen the isolation of its former Soviet ally.

Russia is one of Belarus’ few diplomatic backers after 19 years of authoritarian rule by President Alexander Lukashenko but has responded furiously to the arrest this week of Vladislav Baumgertner, head of Russian potash company Uralkali.

Baumgertner was seized on Monday at the airport outside the Belarussian capital Minsk after being invited to talks with the prime minister, and then humiliated by television footage showing him being searched in his prison cell.

Since then, Russian officials have announced a 25 percent drop in oil supplies to Belarus in September, threatened to extend the cuts for several months and hinted at possible restrictions on imports of Belarussian dairy products.

Russia’s veterinary regulator said the restrictions on hog and pork product imports had been imposed over concerns about African swine fever in Belarus and would not be lifted until the virus was wiped out or brought under control.

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Russia orders oil cut to Belarus after potash clash – by Dmitry Zhdannikov and Vladimir Soldatkin (Reuters U.S. – August 28, 2013)

http://www.reuters.com/

MOSCOW – (Reuters) – Russia ordered its oil firms on Wednesday to cut supplies to neighboring Belarus by around a quarter, in a major escalation of a trade and diplomatic dispute following the arrest in Minsk of the boss of Russian potash firm.

Trade disputes between Russia and Belarus have affected oil deliveries in the past, causing knock-on disruptions to pipeline flows via Belarus to European countries such as Poland and Germany.

Memories of those cuts, which led to oil price spikes, resurfaced this week after a major diplomatic row erupted between Moscow and Minsk.

Belarus this week detained chief executive of Russia’s Uralkali (URKA.MM), the world’s top potash producer, accusing him of inflicted severe economic damage following the collapse of a Russia-Belarus sales cartel.

Russia demanded the release of Vladislav Baumgertner. Uralkali controls 20 percent of the world market and is partially owned by Suleiman Kerimov, a billionaire with close ties to Russian President Vladimir Putin’s administration.

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Uralkali CEO’s ‘bizarre’ arrest in Belarus will heighten potash tensions, analysts say – by Peter Koven (August 27, 2013)

The National Post is Canada’s second largest national paper.

TORONTO – The potash industry has become engulfed in political intrigue, as a Russian executive at the centre of a cartel-busting plan has been detained by the autocratic government he used to do business with.

OAO Uralkali confirmed on Monday that CEO Vladislav Baumgertner was detained by authorities in Belarus. He is accused of abuse of power, according to reports. The timing is not coincidental.

Just three weeks ago, Uralkali threw the potash market into chaos by dismantling Belarusian Potash Co. (BPC), a cartel-like marketing company controlled by Uralkali and Belaruskali, its state-owned Belarusian counterpart. Uralkali vowed to end its practice of withholding production to prop up prices, prompting speculation that potash prices will fall dramatically. They are already under pressure.

Belarus is very unhappy with this development, but industry experts suggested that this arrest will only push the two sides further apart. It is the most dramatic political intervention in the potash business since Canada rejected the takeover bid for Potash Corp. of Saskatchewan Inc. in 2010. “It is certainly a bizarre development. You’ve got to think Russia and [President] Vladimir Putin will respond,” said Joel Jackson, an analyst at BMO Capital Markets.

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