IN THE NEWSBARRICK COVERAGE  •   Barrick Gold Corp. Subsidiary Minera ABX Exploraciones S.A. Signs Deal With      Paramoun...
Barrick Gold Corp. Subsidiary Minera ABX Exploraciones S.A. Signs Deal With ParamountGold130 words11 October 2005ReutersMi...
sanjuaninos encontraron la receta mágica para transformar el oro en progreso. Además del ministrode Planificación y del go...
"The Newmont case will be a benchmark for current and potential future investors in the resourcessector to gauge what kind...
Jerkovic said terrorism and the Newmont case would have little impact on Straits ability to raisefunds for its Indonesian ...
While many analysts expect that Inco will ultimately be successful, there was speculation that Incomay have to increase it...
Rio Tinto PLC and Anglo-American PLC consolidated a fragmented industry in the 1990s and nowdominate global mining.But yes...
Hand, 63, has one last shot before retirement or an Inco takeover closes his career to actuallycreate what he kept describ...
So how are investors to make sense of all these contradictory signals?The trial of Mr Khodorkovsky is now seen as falling ...
The downsides include an economic reform programme that has now largely stalled.Partly that reflects a shift in the balanc...
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Test Presentation Barrick IIS 7

  1. 1. IN THE NEWSBARRICK COVERAGE • Barrick Gold Corp. Subsidiary Minera ABX Exploraciones S.A. Signs Deal With Paramount Gold - Reuters • Argentina: Veladero kicks off – La Nacion • Inauguran una mina de oro – INFOBAE Diario • Inauguran mina de oro y plata en Argentina de Barrick Gold – Agencie EFEINDUSTRY/OTHER • FOCUS:Mining Cos In Indonesia View Newmont As Test Case - Dow Jones International News • Canadian Mining Company Buying Rival for $10 Billion - The New York Times • Hand must fulfil new Incos promise - The Toronto Star • NORILSK NICKEL to Lose Preeminence - Novecon • Rich rewards for riding rollercoaster - A new model for participation by foreign companies has been seen in recent months, driven by political priorities - Financial Times
  2. 2. Barrick Gold Corp. Subsidiary Minera ABX Exploraciones S.A. Signs Deal With ParamountGold130 words11 October 2005ReutersMinera ABX Exploraciones S.A., a subsidiary of Barrick Gold Corp., announced that Paramount GoldMining Corp. has entered into a Letter of Intent with to acquire a minimum 51% interest in theLinda property, located in the Department of Ayacucho, South Peru. The agreement calls for a two-year work commitment including a total of 6000 meters of drilling, of which 2000 meters is a firmcommitment during the first year of the deal. Once Paramount has completed the aboverequirements, they will have acquired a 51% interest in the Property and will remain the operator ofthe project as long as they maintain a majority interest.Argentina: Veladero kicks off98 words11 October 2005La NacionThis week the mining project Veladero starts up, run by Canadas Barrick Gold. The mine is not farfrom the Chilean border in the province of San Juan and possesses estimated reserves of 12.8million ounces of gold. In whats left of 2005, the aim is to extract 55,000 ounces whilst over thenext three years Barrick Gold will move up to 700,000 ounces annually. Veladero becomes theproject number 140 in mining exploration and development in Argentina with sector investment ofUS$5bil expected over the next decade.Inauguran una mina de oro459 words12 October 2005INFOBAE DiarioEl ministro de Infraestructura, Julio De Vido, y el gobernador de San Juan, José Luis Gioja,inauguraron oficialmente ayer la actividad de una mina de oro en Veladero, que producirá duranteeste año entre 50.000 y 55.000 onzas, lo que significará ingresos anuales calculados en u$s200 Mde exportaciones. La mina, ubicada en la localidad de Veladero, a 350 kilómetros de la capitalsanjuanina, tendrá 17 años de vida útil. El proyecto se llama Minería Responsable, y es la primeraoperación de la compañía Barrick en el país. En el acto de inauguración, De Vido destacó que lamina, que demandó una inversión de u$s540 M, empleará a cuatrocientas personas en formadirecta y a otras 4.000 de manera indirecta.En total, el proyecto generó 3.000 empleos directos, y para la etapa de producción estiman otrossetecientos puestos de trabajo en forma permanente. El primer lingote que produjo la mina, de1.780 gramos, fue donado a la gobernación "como homenaje a los logros de tantas voluntades alservicio del desarrollo minero y económico del país", indicaron los directivos de la compañíalicenciataria en una carta enviada al gobierno provincial. En su discurso, De Vido dijo que "ya estáen ejecución" el plan para la construcción de 10.000 viviendas en la provincia para los próximos tresaños, junto con obras de cloacas y rutas en todo el distrito provincial."La prioridad es el trabajo, la inclusión social y el medio ambiente", aseguró De Vido, en respuesta alas quejas de un sector de la población que estaba en contra de la implementación de la mina. "Hoyes un día de fiesta para San Juan y la Argentina, porque este proyecto genera expectativa de mástrabajo y más inclusión social", expresó el ministro. Y agregó: "Esto es posible en el contexto de unpaís que se está desendeudando, que tiene superávit fiscal primario y que toma aldesendeudamiento y el superávit como políticas de Estado", destacó el funcionario.Consideró también que la "Argentina está viva y en progreso, y los anuncios se concretan", y lepidió a la empresa que "cuide el medio ambiente, pero fundamentalmente al pueblo". Por su parte,Gioja recalcó que se protegerá el medio ambiente con una ley inviolable y sostuvo que los
  3. 3. sanjuaninos encontraron la receta mágica para transformar el oro en progreso. Además del ministrode Planificación y del gobernador, en la ceremonia estuvieron presentes también el gobernador deCatamarca, Eduardo Brizuela del Moral; el secretario de Minería de la Nación, Jorge Mayoral, ydirectivos de la empresa Barrick, encargada de la explotación de la mina.Inauguran mina de oro y plata en Argentina de Barrick Gold267 words11 October 200517:07Agencia EFEBuenos Aires, 11 oct (EFECOM).- El ministro de Planificación de Argentina, Julio de Vido, inauguróhoy las operaciones del proyecto minero Veladero, en el que participa la firma canadiense BarrickGold y que demandó una inversión de 600 millones de dólares.El yacimiento, situado en la provincia de San Juan (oeste de Argentina), a 4.000 metros sobre elnivel del mar, tiene una vida de unos 17 años de producción y se prevé que genere en promedio700.000 onzas anuales de oro y plata durante los primeros tres años de operación.De Vido destacó la importancia del proyecto en cuanto a la "generación de empleo, la preservacióndel medioambiente y el desarrollo con inclusión social"."Para Argentina la minería es una política de Estado", comentó el ministro.Subrayó que "Veladero aportará ingresos por 200 millones de dólares anuales vía exportaciones yconstituye el primer proyecto minero de tamaño internacional" que se pone en marcha bajo elgobierno de Néstor Kirchner y el tercero de estas características en la historia del país.Greg Wilkins, presidente de Barrick Gold, recordó que Veladero fue descubierto hace 10 años "enuno de los entornos físicos más desafiantes del mundo" y dijo que en la iniciativa se aplican"tecnologías de última generación en materia de producción y preservación del medioambiente".El proyecto ha generado 4.000 empleos en su período de construcción y dará trabajo a otras 850personas en la inminente etapa de producción, cuyo destino será el mercado externo en sutotalidad. EFECOMFOCUS: Mining Cos In Indonesia View Newmont As Test CaseBy James AttwoodOf DOW JONES NEWSWIRES889 words12 October 2005Dow Jones International NewsSYDNEY (Dow Jones)--Despite a string of terrorist attacks against western interests in Indonesia,foreign mining operators and prospective investors in the country are more concerned about legaluncertainties than security risks, industry participants said Wednesday.According to multinational mining companies and analysts, a criminal trial involving NewmontMining Corp. (NEM), the worlds biggest gold producer, is of greater significance to Indonesiasappeal as a mining destination than terrorism.In the trial, which reconvenes Friday, Denver-based Newmont is charged with dumping mercury andarsenic from its Minahasa Raya mine into Buyat Bay, on the northern tip of Sulawesi, making localvillagers sick.Newmonts Indonesia country manager, Richard Ness, faces up to 10 years in jail if found guilty.
  4. 4. "The Newmont case will be a benchmark for current and potential future investors in the resourcessector to gauge what kind of risk theyre facing," said Standard & Poors principal sovereign analystfor Indonesia, Agost Benard.Meanwhile, Muslim fundamentalist terrorism against westerners in the country is unlikely to find itsway to remote mine sites staffed mainly by locals, said analysts and miners."If we assume its the same terrorists with the same aims, then I dont think mining interests will belikely targets," said Benard."Although conceivably, mining interests could become targets for other reasons, such as localinterests who for one reason or another are against projects or try to extract some kind of rent fromthe operators." Security Still A Big Risk For Mining CompaniesAustralias largest independent gold producer, Newcrest Mining Ltd. (NCM.AU), has firsthandexperience of Indonesian social unrest, with bloody clashes between Christians and Muslims duringthe construction of its mine on Halmahera Island, 3,000 kilometers east of Jakarta.Tensions have eased since then, but according to Tony Palmer, managing director of Melbourne-based Newcrest, "security remains the greatest challenge in Indonesia. I get concerned for ourpeople there...Who knows what could happen?"The recent terrorist attacks and the Newmont case, however, dont necessarily make Newcrest anyless likely to get involved in new projects in Indonesia, he said."One of the things weve done to mitigate risk is just to stay as low-profile as possible. If you go toJakarta, you wont find a Newcrest office there, and if I go there, I go practically unannounced,"Palmer said.But S&Ps Benard said the Newmont case, if perceived to be flawed, would have an impact on thecountrys investment risk.Newmonts Australian managing director, Paul Dowd, blames anti-mining NGOs for funding acampaign that sparked the case. He said scientific evidence shows that tumors, skin rashes anddizziness among locals are likely the result of poor nutrition and hygiene rather than any poisoning.No matter the outcome, Newmont is highly unlikely to vote with its feet on the issue, given its $2billion commitment in the Batu Hijau mine on Indonesias Sumbawa Island, analysts said.However, the worlds biggest gold miner may be less inclined to get involved in new projects in thecountry, especially if Ness is found guilty."What sort of mining company wants to put their employees at risk when the evidence is clear thatthere has been no breach of environmental laws?" said Haydn Dare, a partner in Freehills, a legalfirm representing Newmont.Others arent so convinced Indonesian authorities are acting capriciously in the case."Its unfortunate, but I think there is more to that story than were all hearing from Newmont," saidMilan Jerkovic, chief executive of Australias Straits Resources Ltd. (SRL.AU), which operates theSebuku coal mine in Indonesia.
  5. 5. Jerkovic said terrorism and the Newmont case would have little impact on Straits ability to raisefunds for its Indonesian operations but said the company will look to build its asset base in lessrisky Australia before pursuing anything else in Indonesia. Case Puts Focus On Indonesian LegislationThe legal uncertainties spurred by the Newmont case also put the spotlight on Indonesiaslegislative uncertainties for foreign investors.Jerkovic and others are looking forward to a long-awaited mining code, still under review, thatwould replace the current work contract system with lease status, thereby offering some tenurecertainty.The current system means some work contracts require foreigners to reduce their ownership inprojects to below 50% after a certain time. Investors also complain of nuisance taxes created byprovincial or local authorities.The new law, while apparently still at an early stage of the legislative process, is expected to boostthe appeal of mining projects to prospective financial backers and unlock more of the countrysgeological wealth.S&Ps Benard said the overall operating environment in Indonesia still compares unfavorably withthat of its neighbors but is slowly improving."Legal issues, tax uncertainties, security risks - these things dont change overnight," Benard said."Even if you have an administration that is serious about improving investment conditions - and thecurrent government is - you cant expect fast change."-By James Attwood, Dow Jones Newswires; 612-8235-2957; james.attwood@dowjones.comCanadian Mining Company Buying Rival for $10 BillionBy IAN AUSTEN557 words12 October 2005The New York TimesLate Edition – FinalOTTAWA, Oct. 11 -- Inco, a Canadian mining company, said Tuesday that it would acquire a rival,Falconbridge, to create the worlds largest nickel producer in a stock and cash deal valued at 12billion Canadian dollars ($10.2 billion).Inco will pay 34 Canadian dollars, or 0.6713 Inco shares and 5 Canadian cents, for each share ofFalconbridge. The transaction apparently thwarts the Swiss company Xstratas designs onFalconbridge. Xstrata acquired just under 20 percent of the company in August and said it plannedto increase its holdings.For a good part of our shared history, a lot of people have been saying, You know, if only thesetwo Canadian companies could get together, what a great company that could be, Scott M. Hand,Incos chief executive, said. Well, that day has arrived.Under the plan devised by the two companies, Inco will receive $320 million from Falconbridge ifthe takeover is not completed.
  6. 6. While many analysts expect that Inco will ultimately be successful, there was speculation that Incomay have to increase its bid, which already represents about a 21 percent premium over whatXstrata paid for its Falconbridge shares.Inco is going to get it largely because no other company can offer the same synergies, said GregBarnes, a mining analyst in Toronto for Canaccord Capital, which is based in Vancouver. But couldXstrata be difficult and force them to pay as much as possible? I dont discount that possibility.Mr. Hand, who will be chief executive of the combined company, and Derek G. Pannell, chiefexecutive of Falconbridge, suggested that they had not been in touch with Xstrata. However, Mr.Pannell, who will become president, said during the news conference on the deal, Xstrata will havemade a lot of money on this deal and they certainly should be very happy. A spokeswoman forXstrata, which is based in Zug, Switzerland, declined to comment.The takeover is subject to the approval of two-thirds of Falconbridges shareholders, but it will notneed ratification from Inco stakeholders.Stock in Falconbridge, which is based in Toronto, rose 3.77 Canadian dollars, or 12 percent, to34.59 Canadian dollars a share. The combined company will produce 735 million pounds of nickelthis year, the companies said. Russias Norilsk Nickel, the current market leader, expects to deliver540 million pounds.The two executives said they expected to see immediate cost reductions of at least $350 million ayear. Much of that will come from consolidation in Sudbury, Ontario, where both companies havetheir main nickel operations.In an interview, Mr. Hand, who has been with Inco for three decades, said the traditionalcompetitive rivalry between his company and Falconbridge probably delayed a merger manythought was desirable.But I dont have that hang-up and neither does Derek, he added.Hand must fulfil new Incos promiseDavid OliveSpecial to The Star847 words12 October 2005The Toronto StarThe Canadian mining business is reasserting itself as a global player after two decades ofcomplacency in which one of the few events to command world attention was the Bre-X MineralsLtd. scandal.Teck Corp. and Cominco Ltd. combined in 2001 to create a base-metals giant. Two years later,Montreal-based Alcan Inc. bought Frances Pechiney SA, eclipsing Alcoa Inc. as the worlds largestaluminum producer. Peter Munk has abandoned a disappointing foray in real estate to reclaim forBarrick Gold Corp. its world-leading status of the 1990s.Yesterday, decades-old Sudbury neighbours Inco Ltd. and Falconbridge Ltd. announced a proposedmerger worth more than $12 billion, by which the new firm regains the Number 1 ranking in nickelthat the old Inco lost in the 1990s to Russias OAO Norilsk Nickel.The proposed deal might not quite be "one of the greatest acquisitions in mining history," as wereurged to believe by Scott Hand, chief executive officer of the old Inco and expected to retain thepost at the new firm, pending shareholder and regulatory approval of the combination. Handsdescription would better fit the mega-mergers by which the British triumvirate of BHP Billiton PLC,
  7. 7. Rio Tinto PLC and Anglo-American PLC consolidated a fragmented industry in the 1990s and nowdominate global mining.But yesterdays deal, which will likelythwart 20 per cent Falconbridge owner Xstrata PLC ofSwitzerland from any further designs on the nickel miner, is a promising combination. Too manyCanadian miners have been on autopilot for years, with historic lows in commodity prices givinglittle incentive to expand capacity, and too little capital to participate in the late-1990s consolidationwave.Complicating matters were the managerial distractions at Falconbridge and the former NorandaInc., of which Falconbridge was a partly owned subsidiary. The process earlier this year by whichNoranda bought out the Falconbridge minority and then took Falconbridge as a name wasunnecessarily complicated.During that same period, Falconbridge was obliged to help Brascan Corp. (since renamed BrookfieldAsset Management Inc.) find someone to extricate it from a business with fundamentals Brascanwas never able to command, even 24 years after taking control of Noranda in a hostile takeover.Vancouvers Teck Cominco Ltd., for one, kicked the tires at Noranda but wasnt impressed enoughto buy; China Minmetals Corp. showed an interest in Noranda but was chased away by xenophobesin Parliament and the financial media before a deal could be consummated.Inco has its own distractions. For almost a decade, Inco suffered chronic setbacks in bringing itsmassive Voiseys Bay project into production, butting heads with the Newfoundland government,native groups and environmentalists. Meanwhile, the Goro development in New Caledonia was heldup by cost overruns.But its funny how the hallmark reassurances that make one gag about better times soon cansometimes be taken to the bank. In recent years, the booming economies of China and India havepushed metal prices to record highs. Inco and Falconbridge, long obsessed with cutting costs tofollow the sag in prices and protect dividends, are now scrambling to boost supply. Prices for mostmetals, while easing a bit of late from exuberant highs of last year, are forecast to remain strongenough to justify significant capacity expansion."The new challenge is to meet rising demand," Hand said.Inco finally has begun to generate cash flow at Voiseys Bay, and Goro should be on line by 2008.Inco now forecasts 35 per cent growth in nickel output to almost 1 billion pounds by 2090, and anear doubling in copper production to 2.6 billion pounds by 2011. Inco even sees a 14 per centjump in nickel production from the venerable Sudbury basin, where nickel lodged betweenFalconbridge and Inco properties can be cheaply exploited using existing ventilation shafts andother infrastructure.While reluctant yesterday to talk about asset disposals, Falconbridge is a grab bag of assets, alegacy of Brascans lack of interest. A global industry still gripped by consolidation fever offersample opportunity to shed such operations as a lucrative but peripheral aluminum fabricationbusiness in the United States.The focus could be nickel and copper, which would account for 82 per cent of the new Incosproduction and merit managements full attention.Meanwhile, the widely held new Inco would remain a takeover target, easy pickings for BHP, forinstance, which could buy the merged company with just two years worth of earnings.That should be all the impetus Hand needs to get long-stalled projects into production, get a dozenor so proposed expansion ventures off the drawing board and realize savings at the many sitesworldwide where the old Inco and Falconbridge already operate in close quarters.
  8. 8. Hand, 63, has one last shot before retirement or an Inco takeover closes his career to actuallycreate what he kept describing yesterday as a "powerhouse."NORILSK NICKEL to Lose Preeminence99 words12 October 2005NoveconRussias NORILSK NICKEL will soon cease to be the worlds leading nickel supplier now that theCanadian INCO has announced the purchase of FALCONBRIDGE, another Canadian nickel supplier,for $10.6 billion.When the merger is finalised, INCO will become the world leader in nickel supplies and thus pushNORNICKEL to No. 2. The merger is to be finalised by early 2006. Russian NORILSK NICKEL hastargeted a 240,000-245,000 tonne nickel output this year and the integrated INCO LTD. a 333,400tonne output. Source: VEDOMOSTI, October 12, 2005Rich rewards for riding rollercoaster - A new model for participation by foreign companieshas been seen in recent months, driven by political prioritiesBy NEIL BUCKLEY1,486 words11 October 2005Financial TimesRussias main stock market index celebrated its 10th anniversary last month in appropriate style, byhitting a new record. Investors who had bought the RTS index at its launch - and held on - wouldhave increased their money nine times over.Look at the path of the markets progress, however, and it is clear just what a rollercoaster rideinvesting in Russia has been. Few world markets have offered such rewards, yet few have sufferedsuch reverses.The two years since Mikhail Khodorkovsky, the former Yukos oil chief, was arrested at gunpoint on aSiberian runway have been as volatile as any.Over that time, after all, Russia has sentenced its most successful post-Communist businessman toeight years in jail and partly re-nationalised his oil company, Russias biggest; its tax police haveslapped a Dollars 1bn back tax claim on its biggest foreign investor, the TNK-BP oil joint venture,and pursued many other companies with guerrilla-style tactics; and Russia has signalled restrictionson international companies investing in its most lucrative field - oil.Yet the past six months have seen one of those extraordinary mood changes so characteristic of theRussian market.President Vladimir Putin has made conciliatory gestures to Russias remaining oligarchs andpromised to improve the business climate and rein in the over-zealous tax police. TNK-BPs back taxliability has been slashed by 70 per cent.With oil at over Dollars 60 a barrel boosting the earnings outlook for Russias oil companies andpromised moves towards lifting restrictions on foreign investment in the free float of Gazprom, themonopoly state gas giant, set to bring billions of dollars of new money into the market, the RTSindex is soaring again and broke through the landmark 1,000 barrier at the end of last month.Robert Dudley, TNK-BPs chief executive, captures the mood. "I feel the situation has improved," hesays. "There is less uncertainty today than there was six months ago. As we are planning for thenext five years, we are not cutting back on investment. This is probably the best indication of ourconfidence."
  9. 9. So how are investors to make sense of all these contradictory signals?The trial of Mr Khodorkovsky is now seen as falling within the "rules of the game" Mr Putinestablished shortly after he came to power in 2000. By straying too far into politics, MrKhodorkovsky breached the presidents famous bargain with the oligarchs that he would overlookthe dubious ways they built their business empires in the murky privatisations of the 1990s. Inreturn, they had to stay out of politics, stop bribing officials and pay their taxes.The second part of the Yukos attack - the forced sale of its biggest production unit,Yuganskneftegaz, to state-owned Rosneft - does seem part of something new. That is the move bythe state to reassert control of strategic sectors of the economy - above all energy and naturalresources.Last months Dollars 13.1bn deal by Gazprom to buy Roman Abramovichs Sibneft, Russias fifth-largest oil producer, is part of the same trend, although Mr Abramovich, who had earlier tried to sellhis company to Yukos, seems a more or less willing seller.Another manifestation is the draft law restricting participation in tenders to exploit Russias biggestoil, gas and mineral deposits to companies at least 51 per cent Russian-owned. Officials say thenumber of fields affected would be in single digits. But these are, of course, the most attractiveassets.Gazprom and Rosneft, the state-controlled twin giants of Russian oil and gas, will have foreigninvestors - though in the minority. And that seems to be the rule. Few now believe a 50-50 deal likethat which created TNK-BP in 2003 would be politically acceptable now. Lukoil, where ConocoPhillipsof the US took a minority stake late last year, may be the model.However, officials and many foreign observers con-cede that Russia, having had an unusually open oil industry in the past decade, is only moving backinto line with most of the worlds biggest oil-producing countries."Its just catching up with the bad practice of the rest of the world," says Stephen Jennings, chiefexecutive of Renaissance Capital, the investment bank.A bid by Siemens of Germany to buy a big stake in Power Machines, a turbine maker, which wasblocked on national security grounds as Power Machines supplies nuclear submarines, wouldsimilarly have been blocked in the US and many other countries, analysts add.These, then, are the new rules. Foreign investors look likely to be allowed only minority stakes in oiland gas, metals and minerals, and some defence and aerospace industries.But in much of the economy - manufacturing, telecoms and the booming consumer goods, retailand autos sectors there seem no such barriers.With those rules in mind, just how attractive a place is Russia to invest?The picture, as always, is mixed. Record oil prices and the governments fiscal discipline havetransformed public finances.Seven years after the 1998 financial crisis, Russia has Dollars 150bn in gold and currency reserves,including Dollars 30bn in a "stabilisation fund" containing windfall revenues from oil taxes. A budgetsurplus of 7 per cent is projected this year and one of 3.2 per cent next year.Economic growth has averaged 6.7 per cent a year over six years, and in spite of lower forecastsearlier in 2005, many economists now believe it could pass 6 per cent again this year.
  10. 10. The downsides include an economic reform programme that has now largely stalled.Partly that reflects a shift in the balance of power in the presidents entourage from liberals to moreconservative former members of the security forces, the siloviki. Partly, it stems from the botchedimplementation of social benefits changes that provoked demonstrations by pensioners in January.With parliamentary elections in 2007, and presidential elections in 2008, Mr Putins team isshrinking from further, potentially unpopular, reforms."What was done from 2000 to 2002 was genuinely positive and important," says Yegor Gaidar,Russias former deputy prime minister. "Now the ability and willingness of the authorities topromote reform are minimal."Also with an eye on the elections, the government is increasing spending significantly next year.While that will see some of Russias new-found wealth at last being spent on schools, hospitals andhousing, it risks fuelling inflation, still above the governments double digit target.Corruption and bureaucracy, meanwhile, remain a drag on businesses, particularly small andmedium sized ones.Yet many investors have decided the rewards outweigh the risks. In addition to the Moscow stockmarket rally, foreign investors appetite for Russian equities has been proved by a wave of highlysuccessful initial public offerings - mostly on the London and New York stock exchanges. Russiancompanies have raised Dollars 4bn in IPOs in 12 months, compared with Dollars 1.3bn in theprevious 10 years.The latest IPO, a Dollars 1bn offering by Novatek, an independent gas producer, was more than 10times oversubscribed.Foreign direct investment in the first half was a record Dollars 9.3bn, against Dollars 11.8bn for thewhole of last year. Coca-Cola and Heineken have made acquisitions in consumer goods;DaimlerChrysler and Toyota have announced plans to build car assembly plants. Dixons, the UKelectrical retailer, took an option to acquire Eldorado, a Russian chain, for Dollars 1.9bn by 2011."You have to really try hard to stop people doing business here," concludes Al Breach, economist atBrunswick UBS, "because it is just so damned profitable to do it."Five years into Mr Putins presidency, Mr Jennings of Renaissance Capital believes the president hasshown himself to be a stabiliser, more than a moderniser. Business, however, has gained amomentum of its own.Many Russian companies, he says, are now extremely well run, and there is a growing pool oftalented and internationally trained Russian managers. Young people who were streaming out of thecountry after the 1998 financial crisis are coming back.Ultimately, the developing generation of businesses, not the oligarchic capitalism of the 1990s, andexpanding middle class will bring irresistible pressure for a better business environment - andperhaps for political loosening too."The chances are high that things will keep moving in the right direction, because of the changes insociety," says Mr Jennings. "At some point these conditions will demand a much more liberal andmodernising leader. We just dont know whether that is going to be the next one or the one after."

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