There will be no government assistance for Russia's biggest mining and metal businesses or their deeply indebted oligarch owners.
That was the clear message from the Kremlin this week after it scotched plans to absorb billions of dollars of debt to clear the way for the merger of two of its biggest mining and metals companies, United Co. Rusal and OJSC MMC Norilsk Nickel.
Norilsk's largest shareholder Vladimir Potanin and his Rusal counterpart, Oleg Deripaska (pictured), in January called on Moscow to support a deal that would have created a mining giant that Moscow newspapers had dubbed "Russia's BHP," a reference to the world's No.1 mining company BHP Billiton plc.
Instead, a meeting Thursday, which was attended by Prime Minister Dmitry Medvedev, Potanin and Deripaska, concluded with an unofficial agreement that
no deal could be done along with some official platitudes in support of the mining and metal sectors, according to a Reuters report.
The talks focused on "issues of support to the metallurgical industry in the conditions of the global financial crisis," read a statement on the Kremlin's official Web site at
kremlin.ru.
Platitudes increasingly look to be the best that the overstretched oligarchs can expect from the Kremlin. Russia has spent about 40%, or more than $200 billion, of its foreign reserves since August to defend the plummeting ruble. In the meantime the country has dipped into recession, shedding about 800,000 jobs in December and January. Russia's finance minister Alexei Kudrin said Thursday that budget revenues are likely to fall 30% in 2009, principally as a result of the collapse in commodity and gas prices.
Russia, which last year boasted its reserves would protect it from the worst of the downturn, is feeling the pinch.
Rusal's Deripaska said earlier this month that he does not need state help to restructure his company's debt, which is estimated at about $16 billion. It appears now that he has no option. -
Paul WhitfieldGo to the story
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