MOSCOW (ResourceInvestor.com) -- This week, the unlisted Russian aluminum giant Rusal reportedly indicated its IPO plans for next year may be put off due to market conditions. Rusal also dismissed market rumors that Rusal was facing margin calls on its loans, raised earlier this year to acquire a 25% stake in Russian major miner, Norilsk Nickel (NILSY; MNOD), as Nickel shares nosedived. However, Rusal was said to concede that its plans to raise its stake in Norilsk up to 30% and more may be adversely affected by market volatility too.
Last month, Norilsk board Approved $2 billion buying back 4.17% of its stock, a decision opposed by one-quarter owner Rusal. On September 18, Norilsk board chairman Vladimir Potanin announced the company could consider buying back more of its stock in an apparent bid to prop up falling share prices -- rumored plummeting due to margin calls.
Earlier this week, Russian stocks fell and skyrocketed amid market volatility, never seen before on Russian exchanges. On September 16-18, Russia's major stock exchanges, RTS and MICEX, repeatedly halted trading. In an unprecedented move, trading was suspended by the Russian regulator to limit panic-selling, following MICEX 17.45% daily drop and RTS 11% fall on September 16. On September 19, Russian exchanges re-opened and stocks rallied 22.35% on RTS and 28.69% on MICEX, causing the markets' regulator to halt trading once again.
However, Norilsk, the world's top nickel and palladium miner, appeared struggling to gain a positive momentum on domestic exchanges. In contrast with other Russian companies, Norilsk shares were reported weak on September 19, loosing up to 6% at some point.
Earlier this month, Rusal and Norilsk apparently missed a chance to give their respective share price much needed boost as both commodity giants withdrew their bids from an auction for the huge Udokan copper Udokan copper field, located in the eastern Siberian region of Chita.
Subsequently, another Russia's leading miner lost little time to seize the opportunity. On September 10, Mikhailovsky GOK, a unit of Russia's biggest iron ore producer Metalloinvest, won the Udokan auction for some $590 million. Metalloinvest's success became apparent ahead of the time as the winner was originally due to be declared on September 17. Udokan has 5.5 million tonnes of estimated C2 reserves, and 14.4 million tonnes of B+C1 reserves, as well as 14,000 tonnes of silver.
Following its successful bid, Metalloinvest announced plans to invest some $4 billion to develop Udokan. The company also pledged to build the mines and the smelter at Udokan deposit to produce 150,000 tonnes of cathode copper by 2014, and nearly 475,000 tonnes by 2016.
In the meantime, Metalloinvest has been in a tie-up talks with Russia's largest copper miner Norilsk Nickel. The proposed merger was designed to create a new global commodity player. Earlier this week, Metalloinvest was rumored to potentially control up to 5% in Norilsk.
However, the planned alliance between Metalloinvest and Norilsk has been slow to materialize, seemingly due to adverse market conditions. Metalloinvest was also understood to put off its IPO, originally planned to take place later this year, till the first half of 2009.
