Gold mining company Polymetal has made a firm commitment to sell its Russian assets, which are subject to U.S. sanctions, no later than the first quarter of next year. The CEO of the company, Vitaly Nesis, informed investors about this during a conference call on the production results for the third quarter last week.
“When we relocated to Kazakhstan in August, we signed an official commitment stating that the company will sell its sanctioned Russian subsidiary, which is listed on the Specially Designated Nationals and Blocked Persons List, within nine months. This document serves as a preliminary condition for changing jurisdiction. While we cannot be excluded from the Moscow Exchange, we believe that this commitment represents a contractual obligation for us. Violating this obligation would have serious consequences for the company,” said Nesis.
In September, Nesis predicted that the Russian division of Polymetal International would be sold within the next 6-9 months.
Nesis also highlighted that if the deal is not completed within the required timeframe, there may be significant consequences.
“If we fail to meet the deadline, we will lose a substantial amount of political capital in Kazakhstan. Political capital is crucial in the mining sector. I don’t want to draw any inappropriate parallels, but it’s worth considering what happened to ArcelorMittal in Kazakhstan after multiple security failures. While we hope to avoid such a scenario, it is evident that managing potential problems arising from the loss of political reputation is of utmost importance,” he noted in response to a question about the potential issues that may arise if the company’s Russian assets are not sold within the promised period.
According to Nesis, obtaining official approval from Russian authorities for the planned deal is unlikely to be necessary. However, repatriating the proceeds from the sale to Kazakhstan may face challenges due to currency restrictions imposed in Russia. This is particularly relevant as some of the current shareholders of Polymetal, who may benefit from the sale through dividends, are residents of countries considered unfriendly by the Russian government. The decision on dividend payments for this year will depend on the progress of the sale of Russian assets. If the deal with the Russian subsidiary cannot be completed, the company may consider the previously discussed option of establishing a separate entity in Kazakhstan, although this could have tax implications.
One of the conditions for finalizing the deal, as discussed with potential buyers, is Polymetal’s requirement for strong assurances that toll processing of low-carbon concentrate from the Bakyrchik deposit in Kazakhstan at the Amursk hydrometallurgical plant will continue. The matter of preserving these supplies from the Kazakh mine is still under discussion with the Office for Foreign Assets Control (OFAC) of the U.S. Treasury’s Foreign Assets Control.
LATEST NEWS
-
U.S.-Kazakhstan Strategic Energy Dialogue Concludes Successfully
24/07/2024
-
Serbia and EU Sign Strategic Partnership for Sustainable Raw Materials and EV Supply Chains
24/07/2024
-
World’s Largest Gold Consumers Struggle to Meet Demand with Mined Production
24/07/2024
-
Anglo American Restructures Trading Operations Post-BHP Bid
24/07/2024
