Russian billionaire Vekselberg eyes mining sector in Africa

Johannesberg, May 17 | Updated: May 18 2006, 05:30am hrs
Viktor Vekselberg, ranked Russias fourth-richest man by Forbes magazine, plans to invest in African mining projects as his Renova Group seeks to diversify.

Renova owns 49% of United Manganese of Kalahari, which is exploring the worlds largest manganese deposit in the desert of western South Africa, according to the companys web site. That may lead to the construction of a mine with an annual capacity of as much as 2 million tons and ferro alloy plant to process the ore.

We have a long list of projects that we are researching in Africa, Vekselberg said in an interview May 13 in Magaliesberg, 50 miles northwest of Johannesburg. Our priority is in the mining sector, he said, without providing further details.

Renova, which opened an office in Johannesburg in 2004, plans to use South Africa as a springboard for investment elsewhere on the continent, Vekselberg said. The company controls Sual Group, the No 2 Russian aluminum producer headed by South African, Brian Gilbertson, and owns gold mines in the Russian Far East. Forbes estimates Vekselbergs personal fortune at $10 billion.

Through South Africa, Russian capital can get access to other countries in Africa, Vekselberg said. We are ready to invest some significant capital in South Africa and I know that other Russian steel companies, coal mining companies and iron companies are looking at opportunities in South Africa.

Vekselberg was in South Africa to attend a meeting of President Thabo Mbekis International Investment Council, a forum for foreign business leaders and local government officials to discuss the countrys investment environment.

Russia and South Africa have strong historic links that stretch back into the apartheid era when the Soviet Union provided financial and military support to Nelson Mandelas African National Congress in its fight against white minority rule.

Renova is seeking acquisitions in Africa to take advantage of soaring commodity prices. Still, Vekselberg said he shared the concerns of market commentators who have called the recent rise in commodity prices a speculative bubble.

All commodities go through a cycle and while I believe that oil and aluminum specifically will never go back to the levels of five years ago, I think other commodities will be part of that cycle, he said.

Russian news service Interfax reported in February that Renova was in talks with Barrick Gold Corp of Canada over the sale of its Kamchatka gold mines, which may be worth as much as $500 million.

We were not and are not in talks to sell any of our gold interests because we have such strong cash flows from these business, Vekselberg said.

Were not selling.

Gold gained 33% this year as investors diversify away from other dollar-denominated assets amid speculation the US dollar may extend declines against currencies such as the euro.

Aluminum-maker Sual also plans to make a major international acquisition in line with Renovas plans to diversify, Vekselberg said.

The company said April 24 its in talks with a partner amid plans to double annual aluminum production to 2 million metric tons within seven years.

Sual is looking to become a more international company because we have all of our assets in Russia, he said. Were looking to grow the company through acquisitions and we have a number of opportunities that we are looking at worldwide, but the priority is mining.