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De Beers in Alrosa talks as Russia-SA Jamboree concludes
By coincidence, De Beers and Alrosa held high-level talks in Moscow this week, while across town officials from Pretoria held a jamboree with their Russian counterparts
By: Polishedprices.Com
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Oct 9 2005 12:00AM
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Reference: 78  

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By coincidence, De Beers and Alrosa held high-level talks in Moscow this week, while across town officials from Pretoria held a jamboree with their Russian counterparts.

Russias Minister of Natural Resources, Yury Trutnev, who is the co-chairman of the Russia-South Africa intergovernment committee on trade and economic cooperation (ITEC) brought the two days of proceedings to a close with a 12-minute press conference in Moscow on Wednesday.

According to Trutnev, he and South Africas co-chairman, foreign minister Nkosazana Dlamini-Zuma, signed a "framework" for cooperation. But he declined to provide details of how this differed from the series of ITEC boilerplate documents that have been signed by the two sides before. Trutnev said Russia has interests in South African platinum and oil, but he did not go into details. He did not refer to diamonds.

Barry Davison, the Anglo American director and former head of Anglo Platinum, and Richard Duffy, head of Anglo Gold Ashantis new projects, participated in business discussions. Duffy has been negotiating to buy Russian gold assets, but so far he has been beaten to the punch by Russian and Canadian competitors.

South African energy investors Petro South Africa and Mvela are regular visitors to Moscow, and they reappeared this week. But so far, Russian oil majors say they are concentrating their forward investment in Africa in Libya, Algeria and Nigeria. South Africa purchases of Russian crude oil have been very small to date, and there is no sign that government encouragement of diversification of oil import sources has had any impact in Moscow.

Other South African miners who were represented at ITEC include Mintek, Xstrata, Rand Gold, and Sekoko Resources.

South Africa coal may be on the menu for Russian Aluminium (Rusal), which needs additional energy sources for its bauxite and alumina operations in Guinea. Rusal is currently under pressure from Chinese and North American rivals in Guinea, and has failed to follow through on promises to start operations in Nigeria and the two Congo republics.

South Africa government officials are coy about their Russian objectives, but emphatic that they have nothing to do with the major mining transactions that have dominated Russian-South African corporate relations over the past twelve months. According to Sandile Nogxina, director-general of the Department of Minerals and Energy, he and his ministry have had nothing to do with the Norilsk Nickel attempt to take control of Gold Fields, and they have no view on the issue.

He is equally non-committal and uninvolved, he says, about De Beerss attempt to retrieve its stake in diamond mining in the Arkhangelsk region for Archangel Diamond Corporation. There has been no South African government involvement in a multi-million dollar dispute between Bateman and Alrosa over payment for proprietary mining technology.

In parallel, but unconnected to ITEC or the South African business programme, Gary Ralfe and Gareth Penny, the two heads of De Beers, were also in Moscow this week. They had detailed talks with Alrosa CEO, Alexander Nichiporuk, and met briefly with Trutnev, Russian sources said.

De Beers is hoping to finalize the terms of its export agreement with Alrosa, which is in the final stage of approval by the European Commission in Brussels. It is also discussing with Alrosa how the two leading diamond-miners in the world may be able to collaborate in the development of new mines in undeveloped Russian diamond fields.

South African officials have justified the unusual expense and effort of the annual ITEC jamboree by saying publicly that it is intended to stimulate investment and trade. Two years ago, ITEC was the forum for the South Africans to secure Russian agreement to remove a 5% import duty penalty that had been applied to South African fruit and other foodstuffs, and allowed rival goods from Chile and Argentina to enjoy a market advantage. Fruit -- citrus, apples and grapes -- is the principal South African export to Russia, worth currently about $60 million.

Russian exports of steel have been hindered for several years by anti-dumping penalties sought by South African steelmakers, but these have now been dropped, and the southward trade is picking up, led so far this year by vehicles.

In her brief public appearance in Moscow on Wednesday, Dlamini-Zuma added her agreement with Trutnev, noting that South African exports to Russia reached $130 million in 2004. The value of both South African exports and Russian exports to South Africa has continued to rise this year, almost doubling in the six months to June 30, compared to the same period of 2004.

What made this weeks Moscow session unusual was the presence of the largest official delegation from South Africa ever to come to Russia, topping even the delegation that accompanied Nelson Mandela on his farewell presidential visit.

South African Embassy spokesman Sylvester Rascher refused to disclose details of the delegation, or its work.

According to Russian sources, 64 South Africanofficials flew to Moscow for the ITEC conference, including Dlamini-Zuma, Minerals & Energy Minister Hendricks, Health Minister Tshabalala-Msimang, Deputy Minister of Sport Oosthuizen, and groups of officials from the departments of Science and Technology, Transport, Water Affairs & Forestry, and Trade & Industry. A group from Northern Cape province was also included.

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