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Yakutia’s Coal Eyed by Korean Investors
The state-run stakes in Yakutugol and Elgaugol coupled with the railway infrastructure of the latter have the first challenger. It is Korea Resources Consortium that will be led by LG International. The analysts say the chances of foreign bidders will be very slim unless they ally with a Russian company.
On April 17, 2007, Russia’s Federal Property Fund, RFFI, announced that the public auction to sell Elgaugol (68.86 percent), Yakutugol (75 percent less a stock) and the 350km Ulak-Elga railway section (which construction hasn’t been completed) will be held October 5, 2007. The starting price of the lot is 47.4 billion rubles (roughly $1.8 billion); the increment equals 100 million rubles. The bidders may apply from August 20 through October 1.
Yakutugol produces coking and steaming coal from Neryungri mine; the annual output stands at 8.5 million. Regardless, it is not that company but rather Elgaugol that attracts the Koreans. Elgaugol is licensed to develop Elga coal deposit with the aggregate reserves of 2.2 billion tons of coal. Its holders are RZD (29.5 percent), Yakutia’s government (39.36 percent), Eastern Construction Contract Corp. (28.79 percent) and Yakutugol (2.35 percent). Under last year’s estimate of ALROSA analysts, the deposit needs investments of roughly $2 billion to $2.5 billion.
So, straight after announcement of the auction date, i.e. the same August 17, 2007, a vice president of LG International rushed to met with Yakutia’s first vice premier to express readiness of LG to join the number of holders of South Yakutia’s Development Corp. Moreover, according to Interfax, LG International has already set up a special Korean consortium to get shares in the corporation and in Elga project.
On April 16, Tekhsnabexport, ALROSA, Yakutia’s Coal–New Technologies and Yakutia’s government sealed an intention memorandum to establish South Yaktuia’s Development Corp., which will file a unified bid to Russia’s Investment Fund for Investment Project of South Yakutia’s Development.
In LG, they were unable to specify whether a new consortium, the so-called Korea Resources (that may also include Samsung and Hyundai) will independently bid at October 5 auction. According to the sources, the Koreans would prefer buying out a minority stake from a successful bidder, though they don’t cross out the participation option either.
www.kommersant.com
All the Article in Russian as of Aug. 21, 2007
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