Friday, June 22, 2018

Russian Magnesium prepares to be shuttered

Russian Magnesium is likely to shutdown its project in the Sverdlovsk region but it is unlikely that the concept of extracting metal from serpentinites will be abandoned forever.

The company's project began in 1998 when managers of the Uralasbest complex and Solikamsk Magnesium Works came together to develop the technology for producing metal from refined asbestos-ore waste found in Uralasbest's tailings. In April 1999, the company obtained its first metal from serpentine asbestos in Solikamsk, Rus Business News reports.

In 2004, they became a company after Swiss firm Minmet Financing Company S.A. received a 50 percent stake in Russian Magnesiu OJSC. Uralasbest, OJSC and the Sverdlovsk region government owned another 25 percent. The company's outlook was positive as there was a rise in global magnesium consumption.

Construction of the company began in 2007 and lasted through mid-2011 when Russian Magnesium was only running a small pilot operation.

The company is known for its development of the industrial technology, making it possible for a high percentage of magnesium to be extracted from the serpentine rock and for silicon dioxide to be obtained in addition to the metal, all while making the process easier on the environment. The costs of the research work were covered by a loan from Minmet, according to Rus Business News.

Maksim Shchelkonogov, the director of production at Russian Magnesium OJSC, said the process developed for the plant took advantage of completely original technology. Much of machinery was built from scratch involving 20 research institutes and engineering firms around the world.

The company required more financing in order to turn its innovations into real production. Minmet, Uralasbest and the Sverdlovsk region government could not fund this step. The government negotiated with Vnesheconombank as well as Rusnano and MBC Corporation LLC in order to launch the project.

One option considered would have given Rusnano 66 percent of shares in the company, but this option was halted after the internal reorganization of the state corporation. Vnesheconombank also failed to provide funds and eventually, in November, Minmet stopped financing the project, Rus Business News reports.

Russian Magnesium, OJSC, began to fall into debt in 2012 with liabilities reaching $1.9 million, most of which is for payments due to Uralgipromez OJSC for its design of the magnesium production project. There are also unpaid wages and taxes.

Minmet tried to recover its investment in the project, selling most of its shares to a firm called Solimag, owned by American Mark Lisyansky. Additionally, Aleksei Ginsburg took over as CEO and the board of directors became headed by Joel Lautier, a French chess player. Two weeks later, employees were given the choice of resigning or taking four months of unpaid leave, according to Rus Business News.

Solimag LLC currently owns 50 percent in Russian Magnesium OJSC plus two shares. The government owns 25 percent plus four shares. Uralasbest owns 25 percent minus eight shares and Minmet Financing Company S.A. owns two shares.

Uralgipromez OJSC and its owner AFK Corporation have both expressed interest in taking part in the project. Regional officials have also announced the possibility of negotiations with Vnesheconombank and Rusnano, Rus Business News reports.