MOSCOW, October 3 (RIA Novosti) Russia declares economic war against Georgia / RusAl, SUAL, Glencore to sign agreement to unite assets / Rosneft needs $15-20 billion to buy Yukos assets / Russia no longer dependent on weapons contracts with China
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Biznes
Russia declares economic war against Georgia
As of Tuesday, Russia suspended transport and postal links with Georgia, but this demarche is unlikely to create major problems for the South Caucasus republic, experts say.
Russian imports from Georgia had already diminished, and Georgian guest workers can find jobs in Greece, Italy and Israel. So far, Russia has not suggested stopping oil and gas deliveries, which would hit the Georgian economy hard. As for electricity deliveries, Russia stopped them half a year ago.
Experts say that current industrial and consumer exports and imports between the two countries are not crucial for either side. "The delivery of wines and mineral water, which had been the backbone of Georgian imports to Russia, has already been banned for a while," said Vladimir Zharikhin, deputy director of the Institute of the CIS.
Alexei Kalinin, a consultant with Business Systems Development, said trade with Georgia amounts to less than 1% of Russia's foreign trade. "Individual enterprises in Russia and Georgia may be seriously affected, and might have to reduce personnel or even stop production," Kalinin said. "The current events could provoke a decline in Georgia's economic growth, but not an economic crisis. Cuts in its export revenues will be compensated by financial assistance from the United States and the European Union."
The curtailment of Georgian labor immigration could be the most painful result of the economic blockade. But experts say this will not happen.
"Georgians no longer see Russia as a place where you can earn big money," said Zhanna Zaionchkovskaya, head of the migration laboratory at the Institute of Economic Forecasting, Russian Academy of Sciences. She said many Georgians are working in Greece and Italy. "There is a big Georgian community in Israel, and its members are ready to provide jobs for their compatriots," she said.
Vedomosti
RusAl, SUAL, Glencore to sign agreement to unite assets
RusAl and SUAL, Russia's two aluminum leaders, and Swiss company Glencore, one of the world's largest traders, have resolved their differences and may sign an agreement to merge their assets as early as tomorrow. The transaction will run under the terms coordinated a month ago: Viktor Vekselberg and his partners will control some 21.5% in the new RusAl, and Glencore about 14%.
The three companies signed a protocol of intentions to unite their aluminum and alumina assets late in August. Discussions on the final parameters of the deal did not go smoothly. SUAL's shareholders pressed RusAl owner Oleg Deripaska to ensure that under the final agreement RusAl hold an IPO within the first three years after the merger. After a technical audit of SUAL plants, Glencore claimed that Vekselberg' and his partners' stake in the potential union was too large.
Deripaska agreed to float 10% of RusAl shares on a stock exchange within the next three years, an investment banker close to the negotiations said. Another banker said Glencore's criticism was just another negotiating move and that SUAL's shareholders would not have to reduce their stake in RusAl or pay for it in cash.
The merger will create a global aluminum leader. Last year, RusAl plants produced some 3.85 million metric tons of aluminum, and Alcoa 3.7 million metric tons. Denis Nushtayev, an analyst from the Metropol brokerage, said the merger of the three companies would "establish the world's most expensive aluminum company worth some $30 billion," while Alcoa's capitalization is now $24.3 billion.
The new company will become one of the most profitable in the sector. Nushtayev believes the new RusAl's profit margin in terms of EBITDA will reach 30-33%. In addition, RusAl and SUAL will be able to increase their output under direct contracts, not through an exchange, and start seizing clients from Alcoa and Alcan, the expert believes. Currently, RusAl sells around 85% of its products under direct contracts, but it is seeking to increase this share. SUAL does not disclose such data.
Kommersant
Rosneft needs $15-20 billion to buy Yukos assets
Russian state-controlled oil company Rosneft has appealed to Deutsche Bank and several other Western banks from which it has been borrowing for a syndicated loan of $15-20 billion.
According to a source close to Deutsche Bank, Rosneft may need the funds in early 2007 to buy the auctioned assets of the bankrupt oil company Yukos. If it gets the money, it might curtail the ability of other Russian companies to secure loans in 2007.
The assets and property of Yukos, which was declared bankrupt, is to be sold off by August 2007. Rosneft wants to take over the bulk of it, the source said.
According to a source in the banking community, it is difficult even for a major Western bank to syndicate such a significant sum in November or December, but doing so would be much simpler at the beginning of the year. "It would take six to eight weeks to collect the money," he said.
Branch experts say the Yukos assets and property will not be sold soon. If several valuators are hired to assess them, "the process will take from one to three months, whereas one valuation company would have to work for more than a year," said Karen Martirosov, the bankruptcy receiver of the Paveletsky bank.
According to analysts, if Rosneft gets $20 billion next year, it will effectively preclude major borrowing by other Russian companies. In particular, the sale of the Russian stake in the Russian-British joint-venture TNK-BP could be postponed.
"Foreign banks have a total limit of loans they give to Russia," said Pavel Mamai, an analyst with the Renaissance Capital brokerage. "Russian companies may borrow a total of some $20 billion a year, and another $10 billion might be provided by state-controlled banks."
Vremya Novostei
Russia no longer dependent on weapons contracts with China
St. Petersburg-based Severnaya Verf, a leading Russian ship builder, delivered the second Mk 956EM destroyer to China last week under the contract signed on January 2, 2002.
Experts had predicted a slump in bilateral arms trade after the closing of this major deal.
Konstantin Makiyenko, deputy director of the Center for Analysis of Strategies and Technologies, said Russian arms sales to China peaked in 2004-2006. He said China had received 24 Sukhoi Su-30K2 Flanker fighters, eight submarines [an all-time high], two destroyers and numerous aircraft engines since 2004. "There has been a pause in our contracts because China has now stopped buying new weapons systems and platforms," Makiyenko told the paper.
Beijing has every reason to demand that Russia improve weapons quality; but Moscow now pays more attention to its own interests, said Makiyenko. In the 1990s, the entire Russian defense industry was kept afloat only by Chinese and Indian contracts.
But Russia no longer relies heavily on Chinese purchases because of burgeoning state defense orders.
The state owns a 20.96% stake in Severnaya Verf, which will build new-generation ships, i.e. Mk 22350 frigates, Mk 20380 corvettes, an Mk 18280 communications ship and an Mk 21270 harbor launch, for the Russian Navy, under contracts worth over $2 billion.
This year, Russia has concluded two major deals worth $7.5 billion and $3 billion with Algeria and Venezuela, and also has other contract options.
