Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Export tax is one of many factors that EUA and a buyer will be modelling when valuing the assets. Others being the exchange rate, infrastructure and equipment costs, labour costs, Mineral Extraction Tax rates and of course PGM prices, all over the life of the mine. It’s obvious that these costs will be modelled to include different scenarios and compared against projects in other parts of the world.
The other side is the state support and benefits given to the party that develops the Kola assets. Terskaya was (and still is) listed as a “resident” of the Arctic and amongst other things was to benefit from reduced Mineral Extraction Tax in an agreement running to 2031. I don’t know whether that agreement is still valid but I don’t see a buyer not getting the same sort of benefits as has been the case with other projects such as Russian Platinum’s project and FT. They want cargo for the Northern Sea Route after all.
Below likely with reference to the Lithium JV but good to see nonetheless.
https://invest.nashsever51.ru/list_item/news/prezident-nornikelia-vladimir-potanin-vysoko-otsenil-investitsionnyy-klimat-murmanskoy-Vladimir
Potanin highly appreciated the investment climate of the region.
"Friendly, effective in terms of attracting investments: the Murmansk region has one of the best investment climates in our country. It is much easier to achieve results in such interaction. We plan to place new projects that we have in the Murmansk region. Everything that is suitable for the region we do with great pleasure, and will continue to do. We intend to develop, design the production of materials necessary for the production of batteries together with Rosatom. And most likely we will do it at the Monchegorsk industrial site due to its production preparedness and the readiness of the region to support us in every possible way," said the head of Norilsk Nickel.
Vladimir Potanin also noted that cooperation between the Murmansk region and Norilsk Nickel can be considered an excellent example of public-private partnership.
"We are developing cooperation both in the field of training and in the field of sports events, we are ready to support the initiatives of the region and in terms of improving Murmansk as a successfully developing capital of the Arctic, necessary for the whole country. And in the spiritual sphere, education. You, Andrey Vladimirovich, can always count on us as a company in the support of all your initiatives," said the president of the company.
I’m sticking with the Mineral Extraction Tax appeal guess as to why the concentrate hasn’t been sold. That’s purely conjecture on my part.
In relation to selling WK, a buyer can’t know what his return will be without knowing how MET will be calculated so any offer would likely need to be based on the existing rate being applied unless some kind of additional payment was due in the event of an appeal being successful.
In my opinion it may be cleaner to get the appeal completed before selling WK depending on the timescales.
Hi B1ll, the concentrate needs to be sold. It’s part of the going concern assumptions. The auditor comments from the accounts as part of their sign off include :
“Making inquiries about management’s plans and available written communication with commercial partners for the processing and sale of raw platinum concentrate from the 2022 mining season to generate significant revenue for the Company and the Group and obtained an understanding on how the future expenditure at the West Kytlim mine and other assets will be funded.”
Personally, I think that the appeal against how Mineral Extraction Tax is now calculated is something that the BoD may want to be concluded before they sell it. I could be wrong.
“** Mineral extraction tax contains a provision of £1,652,122 reflecting a recent change to mineral tax legislation and its application to the product of the West Kytlim mine. This is made as a conservative measure as the Group is taking the necessary steps to have the decision reconsidered”
That is unless the process takes so long that the need for cash means they have to sell it before the appeal is concluded.
Either way, the BoD know what the cash flow requirements are, timelines for concluding the appeals process and the fact they are spending time on the appeal process in itself suggests they have a valid route to sell the concentrate in addition to the auditor being satisfied with the enquiries that they made when signing off the accounts.
There’s work going to increase investment which they recognise has slowed. Below is from 23/08 and outlines how Russia wants investment from China not primarily for the money but the technology.
EUA’s Kola assets could in theory be a good example and would have the additional benefit of feeding cargo into the Northern Sea Route.
“Chernyshenko in his greeting to the participants of the forum "Expo China - Northeast Asia" on August 23 said that the work on updating the plan of Russian-Chinese investment cooperation had reached the final stage. It is expected that this will make the working conditions for investors even more comfortable. "Cooperation between Russia and China is reaching a qualitatively new level. We also agreed to launch negotiations to update the agreement between the governments of our countries on the promotion and mutual protection of investments," said the Deputy Prime Minister.”
https://amp.ura.news/news/1052678664
Chinese investors could finance Murmansk LNG
Leader of natural gas company Novatek pushes for tax benefits for Chinese companies investing in the Russian Arctic.
June 07, 2023
According to Leonid Mikhelson, the companies CNPC and Silk Road Fund should be exempted dividend tax in project Yamal LNG. In return, the Chinese will re-invest the money in new LNG projects in the Arctic.
According to newspaper Kommersant, Leonid Mikhelson has already sent a request to the federal government about the issue.
The Chinese companies CNPC and Silk Road Fund own 20 percent and 9,9 percent respectively of the Yamal LNG. In the Arctic LNG 2 project, the CNPC and CNOOC both own 10 percent stakes.
They all pay a 10 percent tax on dividends.
Reportedly, the Chinese companies have long called for a reduction of the tax, and Mikhelson now calls on government to follow up.
The Novatek leader argues that the tax be fully exempted, alternatively reduced to five percent. French partner Total, which own 20 percent of the Yamal project, only pay 5 percent dividend tax.
In return, the Chinese companies will re-invest the money in new LNG projects, Mikhelson explains.
The request comes at the same time as Novatek announces plans for a new LNG project in the Kola Peninsula. The Murmansk LNG is to have a capacity of 20,4 million tons per year, and launch the first of three projected development trains already in 2027. The project will apply floating gravity-based structures built at Novatek’s Kola Yard in Belokamenka.
The project also includes a pipeline connection from Murmansk to Volkhov, the gas distribution hub located near St.Petersburg, and it will take advantage of cheap electric power from the Kola Nuclear Power Station, Kommersant reported.
https://thebarentsobserver.com/en/arctic-lng/2023/06/chinese-investors-could-finance-murmansk-lng
No links to EUA but this Chinese mining group looks interesting. Quite a spread of mines across the world (already has a Zinc mine in Russia) and ambitions to become one of the worlds largest mining CO’s with a focus on strategic and new energy metals.
https://www.zijinmining.com/about/about_us.htm
Seems the buyer has also agreed to pay €100m of inter company debt in instalments, keep the employees and won’t be able to use Heinekens IP apart from the Amstel brand for 6 months and some regional brands for 3 years they needed to order to make the business viable.
https://www.theheinekencompany.com/newsroom/heineken-completes-exit-from-russia/
Nothing to see here…
“In addition, eyewitnesses of the event said that two claps were heard before the crash of the board.”
https://m.lenta.ru/news/2023/08/23/what_happened/
No need to trade though 100s of posts just use the “ “ around the words you know were said.
From today:
“Toffers
Posts: 1,542
Price: 2.75
No Opinion
RE: Russian State
Today 11:58
Beast, I have not said the company will not get their AR signed off, I said I'm surprised the AR didn't mention the High Court cases, I did say that as the accounts were slightly late, that may be they hadn't been signed off by the auditors for some reason and that would be a worry if so.
I talked about shrapnel, not concentrate.”
And yet here we have…
“Toffers
Posts: 1,542
Price: 2.625
No Opinion
RE: Them there sanctions !
1 Jul 2023 10:56
You missed out the auditing regs that came in a short while ago which I reported on a week or so ago. That is why I made a complaint to the FRC for them to investigate, as the company which includes it's directors personally, are connected to Russia, the assets are in Russia, they employ Russian people to work at the mines, so as I see it, there is no way that their accounts can be audited by Grant Thornton or anyone else here and as they are a British company, that will be a massive issue. The addition now of legal services will be a further hammer blow. What are they going to do about the two High Court cases? are their legal teams going to withdraw? In my view, they shouldn't have taken the cases on in the first place! My views.”
Any comment to make on this Toffers?
Covering Putin’s visit to Murmansk last week:
In recent years, Russia has paid close attention to issues related to the Arctic region. Based on the previous reports of many Russian media such as TASS, Putin said on April 13 last year that despite the impact of sanctions, Russia's Arctic projects cannot be delayed because of this. The logistics and transportation to the northern region should be smooth and unimpeded to ensure sufficient goods.
Russia is open to all interested partners in Arctic projects, both current and future. The Russian Arctic offers very favorable conditions for both local and foreign companies. Under the current conditions, it is necessary to attract other countries and enterprises to participate in cooperation more actively. Russia sees the Arctic region not as a site of intrigue, but as a site of dialogue, stability, and constructive cooperation.
https://m.huanqiu.com/article/4DnStl3s2I0
For insulting the leadership. There was also the Colonel who was fired for criticising the leadership last week. No sign of Surovikin yet either unless I’ve missed it. Yet Mr Wagner was apparently not arrested and gets sent to Belarus with some of his crew. Bizarre.
Toffers: “but the US is being cautious in dealings, and what the US does, the UK will do.”
US Treasury - Office of Foreign Asset Control: “1104. Is Norilsk Nickel blocked as a result of the designation of Vladimir Potanin?
No. OFAC has not designated Norilsk Nickel and, based on information available to OFAC as of December 15, 2022, Norilsk Nickel is not owned 50% or more by blocked persons or otherwise considered the blocked property of Vladimir Potanin.”
https://ofac.treasury.gov/faqs/1104#:~:text=No.,blocked property of Vladimir Potanin.
Doubled down on the AIMO before spending 30 seconds googling to check facts of argument. 🤦♂️🤦♂️
Visited the Novatek LNG facility yesterday evening as part of his first visit to Murmansk since 2014.
https://www.interfax.ru/russia/912575
Interestingly, Mitsui and Jogmec are still invested in Murmansk in Arctic LNG 2 along with Total Energies and CNPC and CNOOC from China.
Below also says Mitsui and Jogmec have now (last night) signed contracts to take 2 million cubic meters of LNG per year to be exported to Japan as they are entitled to this under their contracts. They are also considering increasing that amount to take more gas from Novatek’s share.
https://www.interfax.ru/russia/912591
Shame it’s for LNG and not PGMs but hopefully shows Putin how international cooperation can be beneficial.