ANTI CORRUPTION HOTLINE REPORTS

KAZATOMPROM. Must finally put in place the ongoing plunder of the national wealth of Kazakhstan

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ATOMREDMETZOLOTO-(ARMZ ) acquired its stake ini­tial stake in Uranium One in June 2009. The Russian state com­pa­ny acquired a 23.1% stake in Uranium One. Reportedly the deal gave ARMZ Uranium Holding Company a 19.95% stake in Uranium One in exchange for ARMZ’s 50% stake in Kazakhstan’s Karatau Uranium Mine. Alternatively, ARMZ had tak­en a 16.6% stake in Uranium One in exchange for the 50% stake.

On 16th November 2009 Kazakhstan’s Energy and Mineral Resources Ministry con­firmed the agree­ment between ARMZ and Uranium One over the Karatau Uranium Mine.

In 2010 ARMZ, the min­ing arm of Russian state cor­po­ra­tion Rosatom, acquired its con­trol­ling stake of 51% in Uranium One in a deal involv­ing $610 mil­lion cash and an exchange of Kazakh ura­ni­um assets. At the end of 2010 ARMZ had increased its stake to 51.4%.

On 7th December 2009 an arti­cle on atomnews.info/based on Newsweek infor­ma­tion report­ed that Zhivov was mar­ried to Shkolnik’s dau­ther and that the new­ly announced coop­er­a­tion between Rosatom and Kazatomprom on 20th November 2009 was a result of such links. The arti­cle quit­ed Bulat Abilov stat­ing that Shkolnik “was in the Russians’ pock­et and does what they tell him”.

In December 2010 it was announced that ARMZ’s acqui­si­tion of a con­trol­ling stake in Uranium One had been approved by US gov­ern­ment agen­cies includ­ing the Nuclear Regulatory Commission. The NRC safe­ty-eval­u­a­tion report stat­ed that day-to-day project devel­op­ment, oper­a­tions and any decom­mis­sion­ing activ­i­ties will be made by Uranium One’s two US-based sub­sidiaries- Uranium One USA Inc and Uranium One Americas Inc. The agency said that Uranium One and ARMZ did not have a license to export fuel and mate­r­i­al from the mines must be used in the US. The deal was also reviewed by fed­er­al agency, the Committee of Foreign Investments in the United States which reviews for­eign pur­chas­es which raise ques­tions over nation­al secu­ri­ty.

The Acquisition.

On 14th January 2013 it was announced OOO Atomredmetzoloto (ARMZ), a sub­sidiary of Russian state atom­ic com­pa­ny Rosatom (see Spark for exact own­er­ship), had bid for the remain­der 48.6% of Canada-based ura­ni­um pro­duc­er Uranium One Inc (“Uranium One”). At the time, ARMZ owned a con­trol­ling 51.4% stake in Uranium One. The offer put for­ward to minor­i­ty share­hold­ers was worth C$2.86($2.90) per share total­ing C$1.3billion,giving Uranium One an approx­i­mate total equi­ty val­ue of C$2.8billion. According to the Chicago Tribune, the deal sent the stock up 14% to close at C$2.76.

On 15th January 2013 ARMZ used mon­ey from Rosatom to buy-out Uranium One’s minor­i­ty sharhold­ers.

On 16th January 2013 a Rosatom press release announced that (SPV?) ARMZ Uranium Holding Co was to acquire 100% of Uranium One Inc. shares. The offer of C$2.86 per share cash con­sid­er­a­tion rep­re­sent­ed a 32% pre­mi­um to the 20-day vol­ume weight­ed aver­age price of the com­mon shares for the peri­od end­ing 11th January 2013 ( the last trad­ing day pri­or to the trans­ac­tion announce­ment). The PR quotes Zhivov describ­ing the trans­ac­tion as “friend­ly” and “unan­i­mous­ly sup­port­ed by the Uranium One Inc Board of Directors”. ARMZ’s finan­cial and legal con­sul­tants for the trans­ac­tion are Canadian firms BMO Capital Markets and Stikeman Eliott LLP.

On 8th March 2013 Uranium One’s share­hold­ers vot­ed in favour of ARMZ’s offer to take the com­pa­ny pri­vate. 96% of Uranium One’s minor­i­ty share­hold­ers vot­ed in favour of the going pri­vate trans­ac­tion that took place on 7th March 2013. The deal still need­ed to under­go reg­u­la­to­ry approvals. By Canadian two thirds of the votes cast by the hold­ers of com­mon shares had to be for the deal for it to pro­ceed.

In March 2013 ARMZ received approval from the Supreme Court of Ontario, Canada – because the deal involved the same par­ties as the 2010 trans­ac­tion and does not change the cor­po­rate struc­ture of Uranium One, and does not alter ARMZ’s major­i­ty con­trol over Uranium One, ARMZ did not need to apply for US reg­u­la­to­ry approval once again. In September 2013 Uranium One Inc said that it had received reg­u­la­to­ry approvals for going pri­vate.

On 18th October 2013 Uranium One that the C$1.32 bil­lion going-pri­vate trans­ac­tion had closed. Uranium One’s shares were with­drawn the Toronto Stock Exchange on Monday 21th October 2013 and the Johannesburg Stock Exchange on 22th October 2013.Mining Weekly not­ed of the deal that: “ Within 30 days of the trans­ac­tion being com­plete Uranium One was to make an offer to buy the $259.98-million prin­ci­pal amount of its con­vert­ible unse­cured sub­or­di­nat­ed deben­tures due on 13th March 2015, as required under the terms of the deben­tures”. The 18th October 2013 Uranium One PR announced that Uranium One Holding NV (forme­ly Effective Energy NV), an affil­i­ate of ARMZ, had acquired all of the out­stand­ing com­mon shares of Uranium One.

AFTERMATH.

On 14th July 2014 it was announced that Vadim Zhivov was to be replaced as President of Uranium One’s share­hold­er Uranium One Holding NV vy Vasily Konstantinov, a Senior Vice-President at ARMZ share­hold­er OAO TVEL. The new appoint­ment was report­ed to have been moti­vat­ed by Zhivov’s fam­i­ly want­i­ng to move for the sake of his children’s edu­ca­tion ( although not clear from where to where). RIA NOVOSTI report­ed on his suc­cess­es as President at Uranium One Holding, stat­ing that in three years he had man­aged to make Rosatom one of the largest ura­ni­um min­ers in the world. Zhivov became Head of the Uranium One Holding Supervisory Board and Uranium One mem­ber. An ARMZ source quot­ed in a kursiv.kv report said that Zhivov had been respon­si­ble for the Uranium One acqui­si­tion:

ARMZ looked in detail at all pos­si­bil­i­ties on the mar­ket and fol­low­ing long nego­ti­a­tion decid­ed upon Uranium One. Zhivov of caurse was respon­si­ble for all this. Uranium One did not want be sold but we con­vinced them”.

On 17th July 2014 it was report­ed that Zhivov may be con­cen­trat­ing on run­ning his own pri­vate firms in Canada.

On 6th August 2014 Shkolnik left Kazatomprom to become Minister of the new­ly-cre­at­ed Ministry of Energy (for­mer­ly Oil and Gas Ministry). The new Energy Ministry has also been hand­ed the envi­ron­ment port­fo­lio. In addi­tion finan­cial police have replaced by a new anti-cor­rup­tion agency.

During Shkolnik’s tenure as Kazatomprom head, a num­ber of con­tracts between the Kazakh state firm and its Russian equiv­a­lent Rosatom. For exam­ple in February 2014 a joint ven­ture between Uranium One Holding, anoth­er Rosatom sub­sidiary OOO Intermiks Met and Kazatomprom.

ONGOING LITIGATION

On 27th March 2014 Uranium One announced that the Special Inter-District Economic Court for the City of Astana had issued an order inval­i­dat­ing the orig­i­nal trans­fers in 2004 and 2005 from Kazatomprom to Uranium One Betpak Dala and Kyzylkum joint ven­tures for the Akdala, South Inkai and Kharasan fields. The pro­ceed­ings with brought by the State Prosecutor of the Saryarka District of the City of Astana against Betpak Dala, Kyzylkum and Kazatomprom:

-“ Uranium One con­sid­ers the law­suit to be with­out mer­it. Neither Uranium One nor its share­hold­ers are par­ties to the pro­ceed­ings. Kazatomprom,has, how­ev­er, assured the Company and its share­hold­ers that their legal rights and eco­nom­ic inter­ests will be ful­ly pre­sent­ed. The Company and its share­hold­ers are now in dis­cus­sions with Kazatomprom with a view to obtain­ing new sub­soil use rights to the Akdala, South Inkai and Kharasan fields in the event that the order becomes effec­tive. The Company’s share­hold­er, Uranium One Holding N.V., and Kazatomprom have signed pro­to­cols to this effect and are tak­ing the steps nec­es­sary to ensure that sched­uled pro­duc­tion and deliv­er­ies to cus­tomers are not affect­ed.”

In June 2008 it was report­ed that Kazakh inves­ti­ga­tors were exam­in­ing the sale of a 30% stake in the Khorasan Mine, the country’s largest ura­ni­um mine, for a sup­pos­ed­ly token price of 15.6 mil­lion tenge, or approx­i­mate­ly $104.000. Uranium One claims to have paid mar­ket val­ue of $75 mil­lion for the 30% stake.

LINES OF ENQUIRY.

  • The rela­tion­ship between Zhivov and Shkolnik. Alternatively in Kazakh/Russian media, the rela­tion­ship is either referred to as Zhivov is mar­ried to Shkolnik’s dau­ther or Shkolnik’s son is mar­ried th the dau­ther of Zhivov or sim­ply as a rel­a­tive. Zhivov was also report­ed­ly respon­si­ble for Rosatom’s rela­tion­ship with Kazatomprom and that the joint ven­ture was super­vised by him per­son­al­ly.
  • The dates of the ARMZ_Uranium One trans­ac­tion (June 2009-Jan/October 2013) close­ly match Shkolnik’s tenure as head of Kazakhstan’s state ura­ni­um com­pa­ny Kazatomprom (May2009-August2014). Vadim Zhivov was Chairman of ARMZ Board of Directoers at time of acqui­si­tion in January 2013, left the role in July 2014-cur­rent­ly a board mem­ber. In addi­tion, on 20th November 2009 agree­ment signed between Kazatomprom and Rosatom.
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