Polymetal International, a renowned producer of gold and silver, has caught the attention of various potential buyers for its Russian assets, according to its CEO, Vitaly Nesis. In a recent interview with the Financial Times, Nesis unveiled that the interested parties mainly hail from Russia and China.
Background
Polymetal International’s journey is notable. Initially domiciled in Jersey, the company later re-domiciled to Kazakhstan. Following this move, there was a consideration to spin off its Russian business. However, an unexpected wrench was thrown into the works when U.S. sanctions targeted its Russian assets. This development drastically complicated the envisioned spin-off.
In light of these events, during an investor call last week, Nesis stated that selling these assets was the most plausible course of action for the company. Furthermore, he shared the company’s intent to complete the sale in a timeline ranging from six to nine months.
Challenges Ahead
The sale won’t be smooth sailing. Nesis expressed concerns over Russia’s regulatory landscape, specifically its competition regulator. Such entities, alongside the prerequisites for foreign asset sales in the country, can potentially impede the sale process.
The Impetus: U.S. Sanctions
The trigger behind this entire series of events was the U.S.’ decision in May to sanction certain Russian businesses, including Polymetal’s Russian branch and Polyus (PLZL.MM) – both standing out as Russia’s major gold producers. These sanctions were part of Washington’s efforts to penalize Russia for its interventions in Ukraine.
The Financial Times reported on the unfolding situation, highlighting that majorities of the bidders are from the mining sector, and are predominantly Russian and Chinese entities.
Who Are The Interested Parties?
Recent reports have shed light on the entities showing interest in Polymetal’s assets. Russia’s reputed daily, Kommersant, relying on its sources, disclosed that Polyus was one of the entities keenly interested in Polymetal’s assets. This finding underscores the importance of the assets in question, especially given Polyus’s standing as one of Russia’s top gold producers.
Apart from Polyus, several other names have emerged in the conversation. The entities and individuals include:
- Structures overseen by Vladislav Sviblov.
- Seligdar, a prominent metals producer.
- Ural Mining And Metallurgical Company (UMMC), known for its significant stake in the mining industry.
- Ivan Kulakov, who has had previous business ties with the billionaire tycoon, Roman Abramovich.
It is crucial to note, however, that despite the buzzing rumors and speculations surrounding these potential buyers, Polymetal International has opted for discretion. A spokesperson from the company clearly stated that they would not be commenting on market rumors or speculations.
Assurances from Nesis
In the midst of all these developments, concerns naturally arise regarding the security of Polymetal’s assets. Reflecting on recent events, wherein Russian authorities confiscated assets from international companies like the French yogurt producer, Danone, and the Danish brewing giant, Carlsberg, Nesis felt the need to address such concerns.
He stated, with conviction, that he doesn’t anticipate a similar move by the Russian authorities on Polymetal’s assets. This assurance is significant, especially against the backdrop of increasing interventions by Russian authorities in various industries.
Conclusion
The journey of Polymetal International, concerning its Russian assets, reflects the intricate dance between business decisions and geopolitical developments. The U.S. sanctions, though aimed at penalizing Russia for its geopolitical actions, have had ripple effects, touching various sectors, including the gold and silver production industry.
As Polymetal International seeks to navigate these tumultuous waters, it will be crucial to see how the sale pans out, who the final buyers will be, and how this will impact the broader mining industry in Russia and beyond. While challenges are evident, Nesis’s leadership and assurances offer a beacon of hope for a favorable resolution for all stakeholders involved.
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