To Africa for diamonds: Alrosa might increase its stake in Angolan joint venture

The company wants to buy a stake of the Brazilian partners in Catoca and create a trading house, but the Ministry of Finance is in doubts.
21.12.2016
Forbes
Origin source
Board "ALROSA" offers to increase participation in the Angolan JV "Catoca", he told Forbes the president of "Alrosa" Andrey Zharkov. According to him, the company is interested in the share, "which later would make it possible to consolidate the revenues and reserves."

Now "Alrosa" owns 32,8% "rink". The company is engaged in mining and selling of diamonds in Angola from the Catoca kimberlite pipe (Catoca). The partners of "Alrosa" is the Angolan state company Endiama (32,8%), China China Sonangol International (18%) and Brazil's Odebrecht (16,4%). Annually "Catoca" produces more than 6 million carats of diamonds, and the reserves are estimated at 60 million carats. During 2015 the company received 36.4 billion rubles. revenue and the payment of "ALROSA" 2.56 billion rubles. dividends.

Management of "ALROSA" offers to increase stake in "Catoca" by Brazilians package, Forbes said Deputy Finance Minister Alexei Moiseev. On the structure of the transaction and its participants it is too early to say Zharkov says: "You can have 55%, but did not have a single representative on the supervisory board. Maybe 45%, and at the same time through the Supervisory Board to control decision-making. " "The company believes that this is a profitable investment. But while this declaration, - said Deputy Prime Minister Yuri Trutnev in an interview with Forbes. - On government (which controls 33% "Alrosa" through the Federal Property Management Agency), the question will not be imposed. "

Increasing the share of "Catoca", "Alrosa" will get more dividends, says the expert sectoral agencies Rough & Polished Sergey Goryainov. But corporate control "Alrosa" for the joint venture are unlikely to intensify, expert doubts: "In countries such as Angola, this question is of minor importance only work in direct agreement." But participation in the sale of Angolan diamonds will make the project more transparent and add "ALROSA" weight management, said Goryainov.

"Alrosa" Access to sales of Angolan diamonds - one of the conditions for increasing the share in "Catoca", says a source familiar with the negotiations. "Alrosa" now claims only to "ice rink" dividends. And the exclusive right to sell all Angolan diamonds reserved for Sodiam - «daughter» Endiama.

"Alrosa" invites the authorities of Angola to join the "Catoca" new project "Luashe» [Luaxe] and to provide for the rights of not only exploration but also in the production and sales of diamonds, says Zharkov. Inventories "Luashe" estimated at 350 million carats of diamonds production volume will be about 10 million carats per year. The project can be launched in 2019-2020 gg., Zharkov said. it can get "Alrosa" Up to 30%.

Between the "ALROSA" and the Angolan authorities have agreed on the establishment of a trading house, said a source familiar with the negotiations. According to him, it will be a joint venture with Angola "50 to 50", and the volume of its sales will match the "ALROSA" share in the "Catoca".

To increase the share of "Catoca", requires the approval of the Ministry of Finance. But so far the agency has not agreed a deal, Moses said. The Ministry of Finance "cautious" refers to projects in Africa, the deputy minister admitted in an interview with Forbes earlier: "We do not want companies with significant state participation shares invested outside Russia, if this is not necessary."

In principle, the Ministry of Finance do not mind, says negotiator "Catoca". But Finance Minister Anton Siluanov is not ready to take all the risks themselves, says Forbes said. According to him, a solution is found: a further consent of the parties will be represented by the Ministry of Natural Resources Minister Sergei Donskoi, and the Russian Foreign Ministry, represented by the Special Representative of the President for Africa. Until the end, Don has to visit Angola and hold talks with local authorities, says Forbes said. Ministry of Environment is ready to provide support to the project within the framework of Russian-Angolan intergovernmental commission (Don is a co-chair), said the representative office. The Foreign Ministry did not respond to a request Forbes.

The Finance Ministry has another condition, said a source familiar with the agency's position: an agreement with the Angolan authorities on the sales of investments and guarantees should be "recorded on paper." This will require political support "at the highest level," says Forbes interlocutor: "It's the president-level issue." Without such support, the deal is unlikely to happen, Goryainov agrees: "In Angola, the entire legal practice is tied to the country's leadership."