Polymetal is Russia’s largest silver producer. In addition, it ranks second in the country in terms of gold smelting. Polymetal’s production assets are concentrated in Russia and Kazakhstan, while the parent company is hiding offshore. But the main thing is that the owners of Polymetal, the Nesis brothers, wanting to save their capital, are now trying in every possible way to distance themselves from their belonging to the Russian Federation.
Last week, Polymetal came under US blocking sanctions. But they only touched upon a Russian legal entity – the parent company Polymetal International plc and enterprises in Kazakhstan can operate on international markets as before. It is noteworthy that after the start of the CBO, large American investors increased their stakes in Polymetal International.
Since its founding in 1998, Polymetal has been closely associated with the Nesis family that came from St. Petersburg. The elder brother Alexander was the key beneficiary of the company, and the younger Vitaly was directly in charge of the business. In March last year, Polymetal International plc made a public statement: the company does not consider itself a legal entity owned or acting on behalf of or at the direction of a “Russian-related person”.
The statement noted that Alexander Nesis is a resident of Switzerland with citizenship of Russia, Malta and Israel. It was also clarified that Russian shareholders have small shares in the company. After that, Polymetal International plc announced that it was going to register in a jurisdiction friendly to Russia. It can be said that for some time the Nesis brothers tried to sit on two chairs. And quite successfully. However, the new US sanctions have somewhat complicated this task.
Meanwhile, tension is growing around the assets of the Russian Polymetal (and these are deposits with huge reserves of rare and precious metals). Some of them can hypothetically be arrested at the suit of the bankruptcy trustee of the bankrupt company Otkritie Holding. The story there is quite confusing, so we will retell it in general terms.
Various assets of Alexander Nesis (including Polymetal International) were included in the ICT Group he created. Among them was Nomos-Bank. In 2012, Nomos-Bank merged with the Otkritie investment group, which was backed by an associate of Anatoly Chubais Boris Mints and Vadim Belyaev (Wolfson). A number of other transactions led to the fact that Mintz and Wolfson ended up outside the Russian Federation with millions of dollars, and Otkritie Bank fell under the reorganization of the Central Bank with a hole in the capital of 300 billion rubles. Part of the debt was inherited by the state-owned Trust Bank, which, with the help of lawyers, is trying to get Boris Mints in London. And now another injured party, Otkritie Holding, considered that it was damaged by the actions of the ICT Group. We are talking about two transactions to withdraw assets from Otkritie in favor of ICT for billions of rubles. The lawsuit was filed in March. It is difficult to say now whether the plaintiff will be able to seize gold assets as an interim measure, the ownership of ICT and Polymetal is too complicated. The Russian part of the ICT Group completed the liquidation process at the beginning of the year. But in Cyprus there is a parent company of the holding ICT Holding Ltd. It is she, in particular, who owns a large stake in Polymetal International.
In March last year, Polymetal International plc made a public statement: the company does not consider itself a legal entity owned or acting on behalf of or at the direction of a “Russian-related person”
Sell or hide?
Special mention should be made of the status of Polymetal International. For a long time the company was registered on the island of Jersey. Now this jurisdiction is recognized in Russia as unfriendly. And although Polymetal International emphasized in its latest statements that it is located in Cyprus, the abbreviation “plc” in its full name remains to this day. And she points to the “registration” in the United Kingdom, to which the island of Jersey formally belongs.
Meanwhile, the other day there were reports that Alexander Nesis planned to re-register Polymetal International in Kazakhstan. In its appeals to shareholders, the company’s management says that it has enlisted the support of the Kazakh authorities in exchange for investments. The transfer of the hydrometallurgical plant project to Kazakhstan has already been announced. At the same time, earlier such a facility worth 500 million rubles was planned to be built in the Khabarovsk Territory, and this production was to become the largest of its kind in Russia. However, now the company is silent about the prospects for construction in the Khabarovsk Territory, but talks about a similar plant in Kazakhstan. At the same time, the amount of investments increased to 730 million dollars.
It is easy to assume that one of the motives for moving from the island of Jersey to Kazakhstan was getting rid of the status of a resident of an unfriendly Russian jurisdiction. This could be required for a more profitable sale of Russian assets. After all, it is known that investors from hostile countries are released from Russia only with a 50% discount. Apparently, Alexander Nesis is not ready to put up with such a loss and will try to sell the Russian mines and processing plants that have become “toxic” for him at a higher price.
True, the question arises, who is able to buy such a gold giant as Polymetal? The company’s assets in Russia and Kazakhstan are worth more than $5 billion and are distributed between the countries approximately equally in terms of profitability. It is clear that in this situation it is more profitable for Alexander Nesis to find a suitable frontier for his Russian business and make a cashless deal with him (for example, by exchanging shares).
Who claims the Nesis gold
So far, two contenders for the Russian assets of Polymetal have appeared in the information field. The first is Highland Gold Mining by Vladislav Sviblov. Sviblov is a new man in non-ferrous metallurgy. His career began more than 20 years ago in a completely different field – in Rosbuilding. The structure was known for its ability to acquire plots of land in large Russian cities and resell them to developers. Then the co-founder of Rosbuilding, Sergey Gordeev, became a shareholder of the PIK Construction Group. He was followed by Vladislav Sviblov. The businessman began to invest the money earned at construction sites in a variety of projects, and in recent years he has reached non-ferrous metallurgy. The first asset in this series was the Ozernoye polymetallic deposit in Buryatia. Under this deal, Sviblov’s company received 70 billion rubles from VTB Bank, an old partner of PIK.
Then Sviblov owned for some time about 5% of the shares of the large gold miner Petropavlovsk. This happened just at the height of a corporate conflict, during which Pavel Maslovsky, co-founder of Petropavlovsk, was forced out of business by the structures of the Ural Mining and Metallurgical Company (UMMC). Representatives of Sviblov drowned Maslovsky with their vote, and then Sviblov sold his package with a threefold profit.
Another high-profile investment by Vladislav Sviblov is the purchase of 40% in Highland Gold in 2020. The seller was the structures of Roman Abramovich. The transaction price is $574 million. The loan was again provided by VTB.
In 2021, Sviblov’s structures gained control over the Trans-Siberian Gold (TSG) gold miner. Prior to this transaction, the ownership scheme was closed to the UFG group of funds. The co-founder of UFG was the late Boris Federov, who headed the State Tax Service under Yeltsin. He had foreign partners, including Deutsche Bank. It is estimated that, in total, at the end of 2021, Sviblov consolidated assets that allow his group to enter the top five leaders in domestic gold mining, and at the same time in the top 30 global gold miners.
Last year, the international company Kinross Gold sold its Russian gold mining operations to the structures of Vladislav Sviblov for $340 million at a 50% discount. As a result, Forbes placed the businessman in second place in the ranking of the largest acquirers of assets of companies leaving Russia.
Another contender for the Russian mines of the Nesis brothers is the UMMC already mentioned above. Until March 2022, the company was linked to billionaire Iskandar Makhmudov. The current beneficiaries are hidden, but the ambitions of the “copper giant” in the gold mining industry are known. It was reported that in 2022, UMMC began buying up gold mining assets, acquiring a controlling stake in Susumanzoloto and a stake in Petropavlovsk. In addition, UMMC tried to buy the company “Vysochaishy” (GV Gold).