| Precious reserves of the Central Bank and Gokhran will be declassified In two or three years, Russia plans to declassify data on stones and reserves of platinum group metals located in Gokhran and the Central Bank of the Russian Federation. This was announced yesterday by First Deputy Minister of Finance Alexey Ulyukaev. The Ministry of Finance decided that first we need to see how the new procedure will work, which involves removing the secrecy stamp from data on reserves, production volumes and exports of rough diamonds and platinum group metals that are in commercial circulation. Let us recall that the amendments to the law “On State Secrets” developed by the Ministry of Finance, which do not apply only to the data of the Central Bank and Gokhran, were adopted by the Duma in three readings at once on October 15.
The removal of the secrecy regime, the Ministry of Finance believes, will improve the situation on the market, making it more transparent and predictable for investors. This will also contribute to the growth of capitalization of companies that will have access to cheaper loans. It is clear that this is primarily beneficial for the world's largest platinum producer, Norilsk Nickel, and the diamond monopolist, ALROSA.
The declassification of state reserves is the government's final step towards liberalizing the platinum and diamonds market. According to Mr. Ulyukaev, it will take two years to accumulate experience, and another year to develop new legislation on state secrets.
Experts believe that the “opening” of state reserves is generally a forced measure, conditioned by Russia’s accession to the WTO and joining the world community. According to unofficial data, more than 5 million ounces of palladium are stored in the state "stash", which corresponds to the annual consumption of palladium throughout the world. How and for what purposes the government disposed of these reserves is still unknown, which creates the ground for rumors about plugging unforeseen budget holes, financing political projects and speculative sales. It is the secrecy of Russian state reserves, believes UFG expert Alexander Pukhaev, that restrains palladium prices on world markets. When these data become known, the factor of uncertainty for foreign investors will disappear, agrees Brunswik UBS analyst Fedor Tregubenko. In Russia, he reminds, the consumption of palladium, which is used in the automobile industry for the production of catalysts, is zero: “AvtoVAZ” does not yet care much about the environment, and all the metal is sold to global concerns.”
The declassification of government reserves could result in the liquidation of Gokhran, since it was created to maintain a regime of secrecy.
For now, however, both the reserves and trade turnover of the companies remain unknown. Mr. Ulyukaev noted yesterday that the first data may appear at the end of this year: the Federation Council will consider the amendments adopted by the lower house next week, after which the document will go to the president for signature. If this process does not drag on, the data can be published immediately after the amendments enter into force. Companies will only need to publish statistics, which, according to sources within the companies themselves, are kept for internal use.
The threat of losing international markets is forcing Russian officials to hurry. Having joined the global diamond trade control system on January 1 of this year, Russia has still not fulfilled the main requirement of the countries participating in the Kimberley Process to disclose the volume of diamond production and export (import). At the next summit of the organization that counters the use of diamonds to finance anti-government and terrorist movements, on October 29-30 in Johannesburg (South Africa), the issue of immediate publication of statistics and the introduction of sanctions against violators will be raised head on. For Russia, where half of the raw materials produced cannot be processed domestically and are exported, sanctions will lead to the loss of markets for ALROSA. This, in turn, will create problems not only for the Yakut, but also for the federal budget.
However, Alexey Ulyukaev believes that Russia will not have any special problems, “since the members of the Kimberley Process see Russia’s interest and forward movement in this direction.” Nevertheless, officials decided to play it safe. “Since the mandate of the current head of the Kimberley Process, who is the representative of South Africa, expires at the end of the year, Russia, as one of the first and principal participants, nominated the former president of ALROSA and the current president of Yakutia Vyacheslav Shtyrov for this post,” said yesterday Mr. Ulyukaev. Mr. Shtyrov's candidacy was approved by the Russian government, but the Kimberley Process secretariat has not yet given an official response. Experts, in a conversation with a Vremya Novostei newspaper correspondent, were skeptical about the chances of Russia, which still remains one of the opaque market participants, to receive this post. Yana VIKTOROVA |
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