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. Last Updated: 07/27/2016

Miners Assail Plan to Limit Metals Tenders

Russia's perceived hostility toward foreign investors has upset Western mining companies keen to tap its vast natural resources, but players say they have not yet lost their patience.

The government's plan to bar foreign firms from bidding for big mineral assets, surprise tax checks at local and foreign firms, and growing concerns about Russia's commitment to a market economy have seriously alarmed Westerners.

"Many people find the current mood here quite upsetting. But we are tough," said an executive at a Western mining company working in Russia.

"I don't think anyone is seriously thinking of leaving."

The ban, if approved, will affect the huge Sukhoi Log gold lode in Siberia -- Eurasia's biggest undeveloped gold deposit -- and a number of copper and oil fields that have attracted the interest of foreign majors.

"The foreign investment community [is] already quite wary of the Kremlin's apparent desire to 'Russify' the natural resources sector," Renaissance Capital said in a note.

Surprisingly, the move embittered domestic players as well.

"You should not think this decision will necessarily play into the hands of Russian companies," said Yevgeny Ivanov, head of the gold unit of Norilsk Nickel.

"We all know that if such limitations on foreign participation are introduced, Russian natural resources will ... remain underestimated," he told an Adam Smith conference.

The stability of President Vladimir Putin's first term convinced many Western players that he has succeeded in turning Russia into a place where foreign investors are welcome. But the mood changed as the politically loaded attack on oil major Yukos.

"Russia is still a small part of the world ... But Russia is part of a competitive world. Russia must compete for capital and it must compete successfully," said Rod Beddows, head of Hatch Beddows metals consulting company.