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. Last Updated: 07/27/2016

Lebed's Power Tested in Mine Dispute

Krasnoyarsk Governor Alexander Lebed may lose another valuable asset to the region's powerful industrial elite he tried to take on after winning public office.

Hundreds of Lebed supporters held a rally in Krasnoyarsk on Thursday to back their governor in a dispute over the Borodinsky open pit mine, the largest in Russia. Lebed wants the region to control the mine, while Anatoly Bykov, the influential head of the Krasnoyarsk Aluminum Factory, or KrAZ, has apparently made other arrangements for Borodinsky.

Rallies are not the only unusual weapon in this economic dispute. A local businessman involved in the Borodinsky battle recently challenged Lebed to a fistfight in televised remarks. The war of words and deals is getting ugly because Lebed is frustrated by having lost some battles to Bykov before.

Last month, the head of Krasugol, the state holding company that owns the mine, transferred to another local firm the right to collect a 42 million ruble debt from Borodinsky. The firm, called the Krasnoyarsk Fuel Company, or KTK, promised to supply Krasugol mines with fuel in exchange for being allowed to collect the debt.

KTK is affiliated with the Tanako group, controlled by Bykov. Last week, it sold the debt to another company, based in the neighboring region of Novosibirsk. Now the Novosibirsk firm, which Tanako representatives refuse to name, can try to bankrupt Borodinsky and grab its assets. Insiders speculate that the firm is a Tanako affiliate.

A bank linked to Tanako has already filed a bankruptcy suit against Krasugol over a 600,000 ruble debt.

Adding to Lebed's frustration is the fact that he helped Bykov set up KTK, the main intermediary between the region's coal mines and power plants.

According to Lebed's office, the debt transfer took place after Lebed agreed with Anatoly Chubais, CEO of the utility monopoly Unified Energy System, that the region's major power supplier, Krasnoyarskenergo, would pay Borodinsky's debt.

An enraged Lebed demanded that the right to claim the debt be returned to Krasugol by Friday and that KTK be banished from Krasnoyarsk. Local tax officials searched the offices of KTK and Borodinsky. Lebed also demanded to see the chiefs of Borodinsky, Krasugol and KTK, but they had all left town.

On Thursday, Lebed told the rally in front of his office building that the debt transfer would prevent Krasnoyarsk residents from receiving their salaries and pensions.

Tanako spokesman Sergei Borisov argued that the money could not be spent on salaries anyway, since it had to be used to pay the mine's debts.

The dispute over Borodinsky could actually degenerate into a fistfight. After Lebed used profanity as he lashed out at KTK chief Marat Saitov in a recent televised speech on regional television, one of Saitov's partners in KTK, a former boxer like Lebed, said he wanted to fight it out with the governor in the ring.

"It's good that it's only a boxing match at this point, not something else," said Misak Nashkaryan, director of the Krasnoyarsk TV station.

The loss of the mine is likely to cost Lebed the support of the local miners' trade union and, by extension, miners' votes, said Marina Ionova, chief analyst with the investment company Aton.

Late last year, Lebed lost another dispute to Bykov as KrAZ managed to retain control of the Achinsk Alumina Combine, the main supplier of raw materials to the plant.

Lebed is putting on a brave face, but he is fighting a losing battle, Ionova said.

"When Lebed tried to pressure local businesses, they immediately made mincemeat of him, and this is only the beginning," she said. "He is not playing on his own turf."