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INTERVIEWS |
 Russia’s En+ Group is holding talks with a number of potential investors seeking to invest in the group after VTB Bank acquired a 4.5% stake from multi-industry holding Basic Element for U.S. $500 million, based on the interview with En+ CEO Artyom Volynets released by business daily Kommersant.
“Absolutely. But it is all at the negotiation stage. No comment,” Volynets said answering a question on more possible investors into company.
“VTB acquired a small stake in En+, and it is a strategic investment for the bank. It is more important for us how much the company will be worth at the initial public offering (IPO) and after,” he said.
He also left without comment the question on the recent announcement that Russian Direct Investment Fund was ready to invest $500 million in the company.
Speaking about the company’s possible IPO, Volynets said that it could be made within two or three years, naming Hong Kong as the more appropriate exchange for the placement.
“Hong Kong is one of the most dynamically developing places for raising foreign capital. China is directly interested in products they don’t have, but which we have… I suppose that companies, which are interested in Chinese money, must be present in Hong Kong,” he said.
Answering a question on the future market value of such a multi-industry company as En+ before the IPO, Volynets said that the group had a clear strategy and focus, as opposed to other multi-industry companies that have no single structure, and which are difficult for investors to understand.
“If looking at the company’s structure, then En+ IPO won’t seriously differ from the placement made by (Swiss commodity trader) Glencore. There is a big investment into a large company, they have Xstrata (controls 35% in Glencore), and we have RUSAL. There are a number of small private companies, which can become public. There is a service that maintains them. In case of Glencore it is trading … we have logistics,” Volynets said.
Volynets also said that the holding might change its structure before the IPO.
“It will (be changed), but only because of new projects in the coal, iron ore, rare metals, and metallurgy businesses. We plan to invest mainly in East Siberia. In the next 15–20 years around $25 billion,” he added.
Speaking about the most the business with the brightest prospects, Volynets named the coal industry.
“From the point of organic growth it is surely coal. If not taking into account our “green field” projects, which will demonstrate a rapid growth in the future. If taking into account nonorganic growth, it is M&A,” he said.
Recently, the company announced plans to set up an independent coal division. Volynets said that En+ needed independent management to develop coal exports, mainly to China and other parts of Asia.
“We suppose if taking into account the current resources of Vostsibugol (1.2 billion tonnes) we can produce significantly more coal, up to 40 million tonnes per year (15 million currently). Within the next three yeas, we plan to increase output to 25 million tonnes. It is difficult to say if Vostsibugol will be spun off into a separate structure. We are considering different options,” he said.
En+ coal assets include Russia’s fourth largest coal producer Vostsibugol, Tuva Mining Company, and a controlling stake in coal producer Erchim-Than.
Speaking about the company’s other projects, Volynets said that En+ was also looking closely at iron ore and copper.
“Recently, we acquired the Agaskyr molybdenum deposit, which is to double the company’s reserves. There are a number of other licenses. There is also an interesting project on setting up a large rolling mill complex at Krasnoyarsk Metallurgy Plant with investments at about $500 million.”
En+ may also become an infrastructure partner of metals holding Metalloinvest in the project to develop large copper project Udokan, located in the Zabaikalsky Region.
“Currently, we are holding negotiations on construction of rail road and electric power capacities. Udokan needs 400 megawatts, and we need 200 megawatts. Generally, there are can be interesting ways of cooperation”, Volynets said.
The Udokan project is located close to En+ Chinea polymetallic deposit. “Currently, we are searching for companies that will act as strategic suppliers. There are several potential partners, but we are only at the negotiations stage”, Volynets said.
In December 2010, En+ Group has agreed to set up a joint venture with a consortium of South Korean investors to develop the Chinea deposit. Russian molybdenum concentrate producer Soyuzmetallresurs (SMR), which is part of En+, is to control 50% plus one share stake in the joint venture, while the rest is to be controlled by the South Korean consortium.
Under the agreement between the two parties, SMR is to transfer a 58.9% stake in Zabaikalstalinvest, which owns the license for the Chinea deposit and is already carrying out exploration, to the joint venture, while the South Korean party is to invest at least $1 billion in development of the deposit.
Speaking about the IPO of SMR, Volynets said the company was technically ready for the placement. “To our view, the company is not so large to receive a right estimate. And further, a liquidity of shares of such company is sooner of later to fall. The right decision for this business at the current stage is expansion by means of organic, as well as nonorganic development. Later we can think of public placements”, Volynets added.
En+ Group combines tycoon Oleg Deripaska’s power, metal, oil, and gas assets. En+ Group holds a 47.41% stake in the world’s largest alumina and aluminum producer UC RUSAL; it also owns Russia’s largest independent power producer EuroSibEnergo and one of the leading suppliers of ferromolybdenum to the global market, SMR; as well as significant coal assets and a logistics business.
End
13.09.2011 11:12
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