1. 02.02.2012
Metals and Mining in the CIS: Development Prospects Amid Great Volatility
While discussing the lessons learned from the crisis, the speakers agreed that liquidity
management was key to helping companies successfully weather the crisis and create value. The
speakers also shared a positive view of the world economy and the prospects for both base and
precious metals. For Russia, resolving infrastructure bottlenecks was key to realizing the value of
its mineral endowment.
Ivan Glasenberg said that the level of debt was crucial during the crisis. Companies that had
massive amounts of debt not only had their positions threatened, but they also missed the
opportunity to create value via M&A in an environment of depressed valuations. Glencore had a
relatively good balance sheet but not a perfect one for deal-making. So, going forward, stress
testing of balance sheets should be key for companies. Also, regarding the prospects for metals,
the head of world’s biggest metals trader noted that he was not worried about demand, but rather
about supply. He is confident that demand will be fueled by China, which will continue to grow,
albeit at a slower pace, while the discipline of supply and constraints will be crucial for
determining prices. He likes copper and zinc as metals with tight supply.
Vladislav Soloviev said that UC RUSAL used the crisis as an opportunity. The company
optimized costs and while facing difficult issues with funding, it continued its growth projects.
He was optimistic on the prospects for aluminum given that prices are close to cash costs, and if
the economy is stable he sees meaningful price upside. At the same time, Mr Soloviev noted that
the electricity market is still evolving in Russia and reforms are not yet finalized. He hopes that
the Russian electricity market will stabilize and visibility will improve with regard to pricing,
which is crucial for UC RUSAL’s competitiveness.
Maxim Volkov of PhosAgro said that vertical integration and flexibility were key to the stability
of his business during the crisis – flexibility not only in production, but also in producing a
product the market demands. As highlighted by PhosAgro’s recent actions, in light of weak
demand for DAP, the company switched to producing NPK fertilizers. Regarding growth
options, the company favors organic growth over M&A, and Mr Volkov noted that addressing
infrastructure issues, such as railroad congestion and the availability of rail wagons, was key to
realizing the company’s plans.
Eduard Potapov said that Metalloinvest successfully weathered the crisis thanks to its low debt
level and cost base. But he noted that companies should worry about these factors not only
during a crisis, but also throughout the business cycle. On Udokan, one of the world’s biggest
undeveloped copper projects, he said that the project could churn out some 500 kt of output, but
access to infrastructure was key for implementation of the project, as it requires construction of a
railroad and power generator.
Nikolay Zelenski of Nordgold remains positive on gold given its safe-haven status during times
of turbulence. The company was built in a process of targeted M&A during the crisis, and he
said that focusing on execution and proper strategy was key to creating value. Nordgold was not
hesitant to acquire assets in other countries, since the key to its success is the quality of its assets,
and with its operational expertise, the company is confident it can improve asset performance.

2. Panel
Ruben Vardanian – Chairman of the Board of Directors, CEO, Troika Dialog
Ivan Glasenberg – Chief Executive Officer, Glencore
Eduard Potapov – CEO, Management Company METALLOINVEST
Vladislav Soloviev – First Deputy CEO, UC RUSAL
Maxim Volkov – CEO, OJSC PhosAgro