Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Lebed Steps In on Mine Privatization

In his drive to retain control over his area's rich open pit coal mines, Krasnoyarsk Governor Alexander Lebed has moved to take the mines from under the control of Krasugol holding, which is lined up for privatization, an official said Wednesday.

A plan has been agreed to by the administration, the mines' management and coal trade unions to take effective control of the mines away from Krasugol's management, Svyatoslav Petrushko, Krasnoyarsk deputy governor in charge of economics, said in an interview Wednesday.

The trade unions have been fervently opposed to the privatizations, which were agreed to with the World Bank as part of a restructuring of the coal industry being funded by World Bank loans.

The World Bank will not make any statement regarding the scheme until after any concrete steps are taken, said Vadim Voronin, a representative at the World Bank's Moscow office.

"This is their business," he said. "Maybe they want to privatize something else."

Nevertheless, the move looks likely to leave Krasugol an empty shell.

Lebed has been in talks with the federal government bartering for better investment terms for Krasugol and guarantees that the privatization would not lead to outside ownership of some of the area's richest resources.

Meanwhile the three mines united under Krasugol have announced they will hold shareholders meetings in mid-September that would vote on new charters providing for additional share issues that could dilute Krasugol's stake in the mines, which currently stands at 60 percent.

The mines involved in the scheme are Borodinsky, Beryozovsky and Nazarovsky.

The meetings are to vote on pre-approval for a series of share emissions. If approved, the shares can then be issued by the board of directors, without needing further approval by shareholders.If approved, the amendment will also make the directors independent from Krasugol and its potential new owners.

Petrushko did not say how many unissued shares the mines were hoping to approve but that they will be enough to dilute Krasugol's controlling stake.

The new shares will be handed over to the administration in lieu of the mines' debt to the budget, he said.

Petrushko said the scheme was legal and that he expected the Federal Securities Commission to register the issues.

Lebed's move came as a complete surprise to both the State Property Ministry and the State Coal Committee. As recently as Tuesday, the coal body's deputy head, Sergei Klimov, said that the program for the privatization of Krasugol had already been almost completely agreed upon with the Krasnoyarsk administration.

Petrushko said he expected a positive one since the mines would remain in the state's hands.

But the State Property Ministry's issued a statement Wednesday saying that it will "call the Krasugol management to account if it permits the company's shares put up for sale to be devalued."