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Roman Abramovich

Roman Abramovich
Based in Moscow, London, Cyprus, British Virgin Islands
Active in Russia
Targeted base metals, coal, gold

Roman Abramovich is probably the best-known Russian "oligarch" outside of his native land. He has a significant number of large mining and mineral-related interests and, since late 2012, has been acquiring control of even more. He is known to be a personal friend, if not a direct political ally, of Russian president, Vladimir Putin.

There is something of a mystery over the precise sources of his investments and the degree to which he personally profits from them.

Until 2008, there was little doubt that his main investment vehicle was a UK-listed firm called Millhouse Capital UK Ltd, of which he owned an unknown stake and which he established soon after arriving in London in 2001 to set up home in the UK capital.

Since then, however, his prime "cash shell" appears to have be Millhouse LLC, which is registered in Moscow [Novayagazeta, 16 February 2011]. Abramovich set up MHC (Services Ltd) in August 2008, located at west London's Chelsea football club - the team Abramovich bought in 2003 through Millhouse Capital UK, whose only shareholder at that time wss a Cypriot firm called Electus Investments [The Observer 6 July 2003].

The only currently-registered UK company known as Millhouse Capital UK Ltd is a separately-owned entity.

According to a January 2013 report from BHP Billiton, Cyprus-based Aristus Holdings manages some of Abramovich's group assets, including ones in mining [Statement by BHP Billiton, 25 January 2013]. As of 16 May 2013, Bloomberg ranked Mr Abramovich at number 74 in its list of global billionaires, estimating his fortune to be around US$ 13.1 billion.

Said Bloomberg: "Based on an analysis of dividends, asset sales and market performance,[Roman Abramovich] probably has more than $9 billion in cash and investable assets. Through Cyprus-based Lanebrook and Moscow-based Millhouse, he controls stakes in publicly traded Evraz, Highland Gold, and Kinross Gold. Abramovich's stake in Sibneft is disputed".

During the first decade of this century, Abramovich sold many of his key holdings – including those in RUSAL and Gazprom, in turn the country’s biggest aluminium and gas producers – in order to buy the London-based Chelsea Football Club.

However he held on to around 41% of the huge Russian steel producer, Evraz plc (see Delong Holdings), which he majority co-owns with another oligarch, Alexander Abramov, and which is listed on the London Stock Exchange.

In 2007, and within the space of two months, the Evraz group was held responsible for negligence which led to the deaths of no fewer than 148 Russian mineworkers [1].

Then, on 23 December 2009, at least a further eight people went to their deaths when transporting a consignment of explosives that detonated at another Evraz iron ore mine.

On the very day of this disaster, Abramovich was reported by the Russian-owned London Evening Standard as having purchased "perhaps the world's most impressive holiday home" - a £54 million estate in the Caribbean where he would spend the Christmas "hosting a lavish party" [2].

In May 2008, Millhouse sold 8% of its shares in Highland Gold Mining Ltd, through its nominee company Primerod International Ltd, to Abramovich’s then-partner in Evraz, Evegeniy Shvidler (another “non dom”) [Integrum, Russia, 8 May 2008]. Primerod then went on to acquire 32.57% of Highland Gold, which is registered in the Channel Islands' tax haven of Jersey. Highland had been used as a vehicle by Barrick Gold in an attempt to become the leading gold mining company in Russia and Central Asia. Barrick itself acquired a 20.37% stake in Highland, with Fleming Family & Partners holding 4.8%.

Schvidler himself is the head of Millhouse LLC; a non-executive director of Evraz; and the non-executive chair of Highland Gold (see below). Another long-standing friend of Abramovich, Eugene Tenenbaum, is currently the managing director of MHC Services Ltd; a non-executive director of both Highland Gold and Evraz; and a director of Abramovich's Chelsea Football Club. (In May 2013, Mr Tenenbaum was listed on that company's website as being "currently the managing director of Millhouse Capital UK Ltd" [Highland Gold website, accessed 17 May 2013]. This entry had been changed by July 2013).

All goes well with Coke?

In March 2011, Russia's largest coking-coal producer, Raspadskaya, was put up for sale by its two shareholder groups - one of which was Evraz: by this time the steel giant was carrying a net debt of US $7.2 billion.

One of Raspadskaya’s mines had suffered a double methane blast only 10 months earlier (on 9 May 2010) - one that reportedly sent more than 90 workers to their deaths.

Evraz had originally bought 40% in Raspadskaya in 2005 with the aim of merging it with the group’s other coal production assets. But, as veteran Moscow journalist John Helmer pointed out, the merger negotiations failed and Raspadskaya remained a separately listed company - 20% of whose shares were "free floating" as listed securities on both the Moscow and London stock exchanges [John Helmer, Dances with Bears, 11 March 2011].

It seems that - despite the recent egregious disasters for which Mr Abramovich can be held, at least partly, responsible - his confidence in mining hasn't substantially been shaken.

Far from it.

In 2010, GDK Baimskaya - part of the Millhouse Group - completed test drilling at the Peschanka copper-gold-molybdenum deposit in the indigenous Russian territory of Chukotka. According to the Mining Journal, in mid-2011 reserves in this lease area are "on par with the Pebble project in Alaska and Oyu Tolgoi in Mongolia" - containing an estimated 27 million tonnes of copper and 50 million ounces of gold [MJ 26 August 2011].

A year and a half later, BHP Billiton also expressed interest in participating in this venture [BHP Billiton, 25 January 2013, op cit].

In 2010, too, the Evraz Group, having turned round its loss-making performance in 2009, increased its crude steel output by 12% - putting Russia in fourth global place after China, Japan and the USA. As of that year, the company's share of Russia's market in steel beams reached 86%. Although Evraz's coking coal production declined 27%, its 2011 mining revenues rose by 72% [MJ ibid].

So long as Abramovich was coming up with figures like these, all that seemed likely to rattle him was a string of Big Match losses by Chelsea, his very own premier football club.

Battle of the Oligarchs

However, in early October 2011, London's High Court saw commencement of what the Independent newspaper dubbed "Britain's legal battle of the year".

The case "hinge[d] on a web of labyrinthine deals and promises made following the collapse of communism and the privatisation of former Soviet state assets in the 1990s" [The Independent 2 October 2011].

In brief, 65-year old Boris Berezovsky ("once arguably the most powerful of Russian oligarchs" [The Independent, ibid]) accused Abramovich of having intimidated him into selling his assets in RUSAL and Gazprom at below-market prices, after he (Boris) was granted asylum in Britain in 2000.

Berezovsky had fled Russia following an explosion which killed 118 crew members of the nuclear submarine, Kursk, and for which he was held partly responsible through negligence: the oligarch claimed that serious threats were being made against his life by president Putin and other officials.

The case was heard in London because of a March 2000 meeting there, at which the two men were joined by Mr Schvidler [see above], and where - according to Berezovsky - Abramovich agreed to place his RUSAL stake in a trust governed by English law. Abramovich was alleged to have "breached" this agreement by selling the shares covertly, then walking off with a tidy stake in RUSAL - soon to become the world's largest integrated aluminium producer.

For his own part, Abramovich counter-claimed (inter alia)that he himself had to pay "large sums" to Berezovsky for his own "protection" [The Independent, ibid].

In the event, Abramovich won the case against Berezovsky,who was later found dead in his London flat, apparently having committed suicide.

Evraz's attempts to secure control of Raspadskaya (see above) had also advanced a step further by early October 2012, when Evraz indirectly purchased a 40% stake in the coking coal producer, thus raising its holding to 82%.

Evraz additionally agreed to buy a further 50% stake in Corber Enterprises Ltd, a firm equally-owned by Evraz and Raspadskaya management. The deal was done through yet another investment outfit, the Cyprus-based limited liability company Adroliv Investments Ltd which, until that point, itself held an 82% interest in Raspadskaya [MJ 5 October 2012].

At virtually the same time, another of Abramovich's funds - Cyprus-based Ervington Investments - was putting almost £9 million into an industrial fuel company, AFC Energy, to secure a 15% stake. (The UK government cannot have been displeased with the transaction: the chairman of AFC is Tim Yeo, then Conservative Member of Parliament for South Suffolk, as well as being chair of the British parliament's energy and climate change select committee [CityAM, 12 October 2012].

A financial coup d'etat

Meanwhile, yet another oligarch, RUSAL's Oleg Deripaska was trying to take control of Russia's biggest dedicated mining company, OJSC MMC Norilsk Nickel (Norilsk) (SeeInterros Holding).

Finally, as 2012 drew to an close, Deripaska announced that he'd reached a deal with Vladimir Potanin (See: Interros Holding) in their battle for control of this, the world's largest nickel producer. The two warring parties agreed that Potanin would become Norilsk's CEO, while Roman Abramovich would acquire 7.3% of the company's "quasi-treasury" stock.

The Russian brokerage firm Renaissance Capital greeted the arrangement as "positive" for both Norilsk and RUSAL, presumably considering it good for Abramovich as well. However, it said that the agreement "provided no significant relief" for RUSAL's debt, which "was about US$10.7 billion as of September 30 (2012)" [MJ ibid].

Reuters also parsed the details of the deal, concluding that, not only had Abramovich got the best of it, but that ordinary shareholders in Norilsk had been cheated of their fair share in Abramovich's windfall. [[ According to Reuters Moscow correspondent, Polina Devitt, Roman would pay his cash straight to Vladimir Potanin and Oleg Deripaska]], "depriving other investors of the windfall" . Devitt called this "one of the biggest prizes handed to insiders in the post-Soviet carve-up of Russian industry that created a clique of politically powerful tycoons" [Reuters, 11 December 2012].

It would, said Devitt, probably "force Norilsk to borrow to fulfil promises to increase its dividends", while JP Morgan Cazenove in a research note added that Norilsk Nickel (as well as its minorities) would not receive any cash from Abramovich's arrival as minority shareholder.

Under the original deal, "Abramovich was to buy a 7.3 percent stake in Norilsk from the company itself for $2 billion, and also be given voting power over some of Deripaska's and Potanin's shares, representing a total of 22 percent" [Reuters ibid].

However, under a revision, announced on 11 December 2012, "Abramovich [will] buy a 5.86 percent stake for $1.5 billion and be given voting control over about 20 percent". Moreover, "Alexander Abramov, Abramovich's partner in Evraz, Russia's largest steelmaker,could become the new board chairman at Norilsk Nickel..."

Under the new terms, according to RUSAL, Abramovich "would acquire 9.29 million shares from Potanin and RUSAL at $160 per share, implying an 11 percent discount to Norilsk's market price of 5,380 roubles ($180) at Monday's close".

Abramovich would thereby "hold 5.87 percent of Norilsk Nickel, RUSAL would hold 27.8 percent and Potanin's Interros Holding would hold 30.3 percent...To ensure Abramovich's role as enforcer of the peace, the other two billionaires will give him voting power over some of their shares, so that his voting stake amounts to about 20 percent. That would leave the three billionaires with nearly equal voting stakes, meaning Abramovich can impose a resolution in any dispute between the other two" [Reuters ibid].

Then, on 25 April 2013, Vladimir Potanin's Interros Holding announced it had completed the sale of 5,420,464 shares of OJSC MMC Norilsk Nickel to Cyprus-registered Crispian Investments Limited (Crispian), "affiliated with Roman Abramovich (and replacing Millhouse as a party to the transaction) at a price of $160 per share. This transaction was part of the agreement between Interros, Millhouse and RUSAL to settle the situation at Norilsk Nickel.

Added Interros: "Under the agreement, Crispian's total stake in Norilsk Nickel will amount to 5.87%. In addition, the company will have the right to vote with 15% of shares owned by Interros and Rusal held in an escrow account at the agent bank2.


In recent years,Norilsk's operations have come in for heavy flak from environmentalists over pollution and toxic emissions from its mines and processing plants; it remains delisted by Norwegian Government Pension Fund.

Whether the minority shareholders in the company (some of whom are listed on this database) have done much to address the company's unacceptable behaviour is questionable. The major influence over Norilsk seems to be firmly in the hands of the "Roman emperor".

Meanwhile Oleg Deripaska (whose RUSAL aluminium company in the interim reportedly climbed to $10.7 billion in debt) must have cracked open a few vodka bottles,as he seemed to become the second key beneficiary of the deal: "...Norilsk Nickel will stick to a pledge to pay dividends, another key demand by Deripaska, in the amount of $3 billion per year for 2012-2014" [Reuters ibid].


In early April 2013, Evraz also served to further advance Abramovich's fortunes when it purchased a 51% stake in the Timir iron ore project in the southern part of Russia's Yakutia region; the state-run diamond giant, Alrosa, would own the minority 49% equity share [cityAM, 3 April 2013].

That month,Bloomberg typified the strategies used by Mr Abramovich "to build and control his $12.9 billion commodities fortune", as "a maze of offshore entities"

Citing the lawsuit, brought against Abramovich by Boris Berezovsky (See above), the news service said the Chelsea football club owner "shuffled assets, including stakes in oil, aluminum, automobile manufacturing and airlines, between holding companies in Gibraltar, Cyprus and the British Virgin Islands" [Bloomberg 30 April 2013].

And, as 2015 wound down to a close, Evraz's revenue also fell steeply away, causing the company to enforce a cost-cutting programme, including shutting-down "unprofitable" mines. This was, in part, due to the imposition of EU sanctions against Russia, because of its invasion of Crimea and backing for "rebels" in Ukraine [Investors Chronicle, 4-10 September 2015].

As of May 2016, control of Evraz remained in the hands of Lanebrook (see above) with a 63.79% share holding, and its ultimate benefical owners identified as Abramovich, Alexander Frolov and Eugene Shvidler, while the key voting shares were apportioned 31.03% to Abramoich, and 21.61% to Alexander Abramov.

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