Metals&Mining in Russia_eng_10s

Metals and Mining
Review of trends in the metals and mining industry – 2010
Metals and Mining
in Russia and the CIS

Welcome to this inaugural edition of Metals and Mining in Russia and
CIS, published by PricewaterhouseCoopers Russia. The metals and
mining sector in this region has always been a core driver of economic
activity. The health of the industry is essential to the creation of wealth –
through employment, infrastructure development, taxes to governments,
and profits to owners. For the last six years PwC has published a global
mining survey of the 40 largest public mining companies in the world,
which has become a flagship publication used by stakeholders in the
industry around the world. Over that period of time we have seen the
development of the sector in Russia and the CIS. As such we felt it was
time for a separate publication dedicated to this market place.
We have studied the financial statements of the twenty largest
companies in the region covering Russia, Kazakhstan and the Ukraine
which publicly issue financial information in accordance with either
US GAAP or IFRS. We then aggregated their financial information to
provide a snapshot of the industry over the two and a half years from
the beginning of 2007 to the middle of 2009. We chose these companies
because their financial reporting provides reliable information for
analysis. Transparency in financial reporting is critical to the development
of efficient capital markets, and we believe that providing an analysis
of this information may be a catalyst for others in the industry to aspire
to the level attained by these twenty companies.
What we found is not surprising in many respects. All these companies
were deeply affected by the economic downturn which occurred in the
second half of 2008 and continued into the first half of 2009. Commodity
prices dropped drastically as demand for metals and mining products
dried up. Profits in the sector declined 31% in 2008, and the level of debt
to total capitalisation ballooned to 62% from 37%. But the companies
in this sector have responded to the crisis by cutting costs and
restructuring operations. The rebound of commodity prices in 2009
is perhaps an indication of the beginnings of a return to more profitable
and sustained economic activity.
In addition to the financial analysis, we have included a number of
articles on topics of interest. We examine the challenges associated with
preparing a company for an initial public offering of its shares. With the
opening up of the capital markets, we expect many companies to follow
the lead of UC RUSAL and pursue a public share offering. Our article
identifies some of the pitfalls of the IPO path, and some strategies to avoid
them. We also look at the legislative and regulatory landscape in Russia,
Ukraine and Kazakhstan. Finally, we review the importance of sustainability
as well as tax incentives in the metals and mining industry in Russia.
We hope you enjoy reading this publication and welcome any comments
you may have. We look forward to continuing to study this industry and its
impact on our region in future publications.
John Campbell
Central and Eastern Europe Metals and Mining Leader
PricewaterhouseCoopers
Foreword

Financial hightlights
2 PricewaterhouseCoopers

Metals and Mining in Russia and the CIS 3
Financial Analysis
Income statement 5
Industry in perspective 10
Balance sheet 14
Statement of cashflows 16
Articles
Thinking of an IPO? Is your company prepared? 19
Russia: opportunities, and legislative challenges 21
Mining in Ukraine 23
Taxation of the mining industry in Kazakhstan 25
Sustainability in mining 27
Tax incentives in the Russian mining sector 28
Appendix 30
Content

Industry in perspective
Financial
analysis

Income statement
Revenue increased from $93 billion to $120 billion,
reflecting the significant impact of acquisitions made
by a number of companies during the year, particularly
the large integrated steel companies. However the
increase in revenues of 29% was more than offset
by an increase in operating costs of 45%. While
the first half of the year was characterised by high
commodity prices and robust volumes, the second half
of the year witnessed the most severe economic crisis
in Eastern Europe and the CIS countries since 1989.
The collapse of demand for steel and most other
commodities led to sharply decreased volumes.
Currency devaluation in many Eastern European
countries exacerbated the situation. High acquisition
prices paid during the peak of the cycle resulted
in significant asset impairment charges at the end
of 2008.
Across the 20 companies, asset writedowns and
impairment charges amounted to $8.2 billion, up from
$2 billion, over half of which was attributed to Norilsk
Nickel’s writedown of its LionOre assets. Severstal
and Evraz also recorded large charges following earlier
acquisitions of businesses in North America.
Operating Costs were up from $58.1 billion to $84.4
billion. Globally, the growth in operating costs
exceeded revenues by 4%. In Russia and the CIS,
growth in operating costs outstripped growth
in revenues by 25%. In previous years one of
the advantages of operating in the region was the
relatively cheaper cost of inputs, especially labour and
consumables. 2008 saw costs in the region escalate
sharply as demand for skilled labour resulted in broad
wage rises, and higher energy costs which resulted
from record crude oil prices. While pre-tax profit was
17.8 billion, this is down 33% from the prior year.
This dramatic decline highlights the need for
management in the region to develop strategies
for effectively responding to the margin squeeze, while
ensuring operations are suitably positioned to respond
to the inevitable economic upturn.
Exploration Costs: rose from $290 million to $430
million, reflecting the optimism present in the
resources and metals sector during the first half
of 2008. It is noteworthy that even during the peak
of the minerals boom, expenditure on exploration is
insignificant compared to overall operating costs.
2008
$ million
2007
$ million
Change
%
Revenue 120,542 93,340 29
Operating expenses (84,399) (58,135) 45
Adjusted EBITDA* 36,143 35,204 3
Amortisation, depreciation (7,204) (5,701) 26
Impairment (8,199) (2,006) 309
PBIT 20,740 27,497 (25)
Net interest cost (2,910) (934) 212
PBT 17,830 26,563 (33)
Income tax expense (4,827) (7,773) (38)
Net profit 13,002 18,790 (31)
Aggregated income statement
* EBITDA adjusted to exclude impairment charges

Income statement
In the CIS region, the larger companies account for
a significant portion of industry revenues. The Top 5
companies by revenue accounted for 66% of total
revenues in 2008, consistent with 2007.
Severstal and Evraz revenue figures benefited from the
major acquisitions these two companies made during
the year. Severstal acquisitions included Sparrows
Point, Esmark and WCI Steel, all located
predominately in the eastern and northeastern United
States. Evraz acquired Claymont Steel in the US,
IPSCO in Canada, and various steel, iron ore and
coking plants in Ukraine.
With the collapse of nickel prices in 2008, Norilsk
slipped from 1st place in 2007 to 3rd in 2008.
Novolipetsk Steel (NLMK)’s revenues saw the benefit
of the full year contribution from Maxi Group (Russia),
acquired in December 2007, and Beta Steel (US),
acquired in October 2008. The proposed $3.5 billion
acquisition of John Maneely Company of the US
announced in mid 2008 was aborted late in the year.
Magnitogorsk Iron and Steel (MMK) revenues
increased in part due to its acquisition of an interest
in Belon, a coal mining company in Russia, and the
commissioning of a new steel mill in Turkey.
Company 2008
$ Billion
2007
$ Billion
2008 Net
Profit Margin
%
2007 Net
Profit Margin
%
Severstal 22.39 15.50 45 12
Evraz 20.38 12.86 3 17
Norilsk 13.98 17.20 26 31
NLMK 11.70 7.72 309 29
Magnitogorsk 10.55 8.20 (25) 16
Top 5 By Total Revenue

Income statement
Looking at the financial results for the first half of 2009
compared to the first half of 2008 even more clearly
shows the impact of the fall in commodity prices.
The full year results for 2008 were somewhat shielded
by the strong commodity prices enjoyed in the first half
of the year. What is interesting to note is that
companies continued to turnover significant volumes
in sales during the second half of the year, yet at
drastically reduced margins. The first half of 2008
contributed slightly less than 50% of sales revenues,
but nearly 100% of net profit for Severstal and Evraz.
Norilsk’s strong USD2.7 million first half result was
wiped out in the second half of 2008 with the collapse
in nickel prices. NLMK and MMK were able to build
slightly on their 1st half result. Revenues for these two
companies were consistent through both halves
of 2008, but similar to their metals industry rivals,
at greatly reduced margins.
The first half of 2009 has not been a happy one for
the Top 5 players. Revenues across the Top 5 are
down on average 50%, and bottom lines have been
significantly impacted. Interestingly it has been Norilsk,
strongest hit by the collapse in commodity prices,
which has been able to rebound the strongest.
The only one of the Top 5 companies to turn a positive
result, Norilsk has been able to take advantage of the
encouraging rebounds in nickel prices (discussed
in more detail in the next section). The effects of cost
saving measures implemented in response to the
commodity price crash were also noticeable.
Company Revenue
1H 2009
$ Million
Revenue
1H 2008
$ Million
Net Profit
1H 2009
$ Million
1H 2009 Net
Profit Margin
%
Net Profit
1H 2008
$ Million
1H 2008 Net
Profit Margin
%
Severstal 5,648 10,718 (989) (17) 2,019 19
Evraz 4,639 10,723 (999) (21) 2,039 19
Norilsk 4,078 8,311 439 11 2,682 32
NLMK 2,586 5,884 (242) (9) 1,531 26
Magnitogorsk 2,003 5,653 (51) (3) 816 14
A tale of two halves…

Many commodities saw peaks in prices in 2007, and continuing robust prices for the first half of 2008.
The decline in prices in the second half of 2008 was particularly severe for copper, zinc, aluminium and nickel.
The sharp decline in prices added to the pressure on margins, already squeezed by higher operating costs.
Copper
$/Tonne
Gold
$/oz
Nickel
$/Tonne
Aluminium
$/Tonne
2003 (Avg) 1,789 364 9,616 1,431
2004 (Avg) 2,868 410 13,840 1,717
2005 (Avg) 3,684 445 14,747 1,900
2006 (Avg) 6,725 604 24,270 2,568
2007 (Avg) 7,124 697 37,225 2,638
2008 (Avg) 6,938 872 21,048 2,567
2008 (Close) 2,902 862 10,808 1,454
2009 (Avg) 5,164 974 14,712 1,671
2009 (Close) 7,346 1,097 18,452 2,197
Income statement
Commodity Prices
0.000
0.500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
2003
(Avg)
2004
(Avg)
2005
(Avg)
2006
(Avg)
2007
(Avg)
2008
(Avg)
2008
(Close)
2009
(Avg)
2009
(Close)
Copper
Gold
Nickel
Aluminium
2008 was highlighted by significant decreases across a broad range of commodity prices:
Commodity Prices rebased since 2003
Key commodity prices: 2003 - 2009

Rebounds
During 2009, most commodity prices rallied,
gradually clawing their way back to levels
approaching the ‘happy times’ of 2007 and early
2008. While some of the increase in commodity
prices during 2009 can be attributed to the
weakening of the US dollar, producers will be
encouraged they remained robust throughout
the year and into 2010.
Copper: Started recovering in Q1 2009 to $4,000 per
tonne, and went on to average above the $5,000 per
tonne mark for 2009. Welcomed in the New Year above
$7,000 per tonne and in January 2010 is still
encouraging at $6,700 per tonne.
Nickel: Savaged in 2008, the collapse in the Nickel
price was enough to knock Norilsk from the position
of top revenue earner in the region to that of number 3.
Rose consistently during 2009. Now into January 2010,
Nickel is up 70% from December 2008 at 18,500 per
tonne.
Aluminium: Rusal’s high profile public offering
came to fruition in January 2010. Investors will hope
aluminium prices continue to recover, up 25% since
December 2008.
Gold: One of the few commodities to emerge
unscathed from the economic downturn. Gold has
continued its appreciation in value since 2003.
Historically gold has been subject to less severe
fluctuations than other commodities. Gold broke the
psychological USD$1,000 per ounce barrier in 2009.
Income statement

2007 Revenue 2008 Revenue
Steel segment contributors
The Metals and Mining industry in Russia and the CIS is dominated by the large integrated steel companies.
Pure mining revenue represents only 31% of the total, down from 38% a year earlier, as the steel companies
expanded their operations.
38%
47%
15%
The steel industry in the region is characterised by
a high level of vertical integration of operations. Most
large steel producers have both coal and iron ore mines
to provide the raw materials to feed their steel mills.
Supplies of these raw materials from subsidiary
companies to steel operations within the same group
amounted to approximately $3.2 billion in 2008,
up from $2.3 billion in 2007.
Steel
In 2007 and 2008, four of the top five revenue generating
companies operating in the metals and mining industry
in the CIS are steel producers.The steel segment alone
accounts for 52% of the total revenues generated
by the Group of 20 companies, up from 47% in 2007.
The steel processing segment is dominated by
a small number of large companies operating primarily
in Russia. Out of the Group of 20, only six are involved
in steel processing, yet these six are responsible for
such a significant percentage of industry revenue.
0%
5%
10%
15%
20%
25%
30%
35%
Evraz
Severstal
TM
K
M
agnitogorsk
Novolipetsk
M
echel
2008
2007

is expected to be maintained as some encouraging
signs of economic recovery begin to emerge. Is it just
a matter of time before Russian steel producers look
for more involvement in Chinese, and other Asian
markets?
Russian steel prices, $/tonne FCA
The contribution to total steel segment revenues by the
six companies has been consistent in 2007 and 2008.
No individual company in the segment has been more
adversely or advantageously affected by the economic
climate in relation to share of revenues.
Like almost every other segment in the industry, steel
prices were adversely affected by the global economic
downturn. Drastic falls in prices in the second half of
2008 forced significant production cuts in the industry.
Steel producers hope to see some positive effects
from these production cuts in 2009, but as can be seen
from our analysis of the Top 5 revenue earners, it looks
like the effects are more likely to be felt in the second
half. An advantage that most Russian steel makers
have is a high level of upstream integration into Iron
Ore, and to a lesser extent, coking coal. This has
at least allowed steelmakers to control these input
costs, to an extent.
1.200
1.000
800
600
400
200
0
Dec’07
Jan’08
Feb’08
Mar’08
Apr’08
May’08
Jun’08
Jul’08
Aug’08
Sep’08
Oct’08
Nov’08
Dec’08
Jan’09
RebarHot rolled coil (HRC) Cold rolled coil (CRC)
Source: Chermet,Troika estimates
New Markets?
China’s demand for steel has historically been
satisfied by producers in Japan, Taiwan and local
Chinese producers. As a result of the Chinese
government’s stimulus package, demand for steel
was up strongly in 2009, and this level of demand

Mining segmental analysis by revenue
0%
5%
10%
15%
20%
25%
30%
Fertilizer
group minerals
2008
2007
Copper Zinc Iron ore Diamonds Coal Nickel Platinum Gold
Mining
Despite relatively lower production compared to nickel
and copper, gold revenues increased on the back of
robust prices.
Unique to the CIS is the significance of the mining
of potash and other minerals used in the fertiliser
industry. Prices were not as adversely affected as
other base commodities and this sector of the mining
industry now ranks near nickel and above coal and iron
ore in terms of revenues.
Highlights
The story in the mining segment in 2008 is largely
about the decline in revenue of nickel, which dropped
from almost 30% of the total segment, to just over
15%, as prices declined.
As noted in our global Mine publication, iron ore and
coal prices remained robust as most deliveries are
made under fixed term contracts, and these are
negotiated in Q2 2009. Although prices eased during
those negotiations, they remained buoyant for the full
year in 2008.

Revenue by customer location
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Asia Pac N&S America Europe Other
2008
2007
Overall customer spread
in the years ahead more companies operating
in the CIS look to expand their markets into Asia.
We expect to see Asian industrial companies diversify
their supply of raw materials away from Australia
and Indonesia, to access the rich mineral resources
in Central Asia and Eastern Europe. However massive
investments in infrastructure, especially railroads, will
be necessary to fully take advantage of these
resources.
The mineral hungry Asian economies are primarily
served by significant commodity producers in the region
such as Australia and Indonesia. As industrialisation
and urbanisation continues in China and India,
we would expect Asian markets to continue to grow
in the medium to long term. While geographically well
placed to serve European markets, most of Europe is
only now showing the first signs of recovery from
a deep recession. It will be interesting to see whether
% of non mining revenue
Other
Highlights
The percentage breakdown of revenue in this sector remained relatively stable year on year.
Several companies involved in the industry in CIS generate significant revenues from energy and utility
operations, for example ENRC, Mechel and Norilsk all own significant power generation assets.

Balance sheet
2008
$ Million
2007
$ Million
Change
%
CURRENT ASSETS
Cash and cash equivalents 14,773 13,451 10
Inventories 17,561 13,676 28
Receivables 14,301 13,163 7
Other current assets 5,808 12,016 (52)
Total current assets 52,443 52,306
NON-CURRENT ASSETS
Investments 8,657 6,384 36
Property, plant and equipment 76,806 77,152 0
Goodwill 6,472 8,451 (23)
Other non-current assets 11,513 10,272 12
Total non-current assets 103,448 102,259
Total assets 155,891 154,565
CURRENT LIABILITIES
Payables (13,029) (12,480) 4
Borrowings (20,472) (15,272) 34
Other current liabilities (3,741) (1,809) 107
Total current liabilities (37,242) (29,561)
NON-CURRENT LIABILITIES
Borrowings (29,086) (19,069) 53
Deferred taxation liabilities (6,348) (10,158) (38)
Other non-current liabilities (3,868) (3,792) 2
Total non-current liabilities (39,302) (33,019)
Total equity 79,347 91,985
Net assets 79,347 91,985 14

Balance sheet
The companies included in our survey also
experienced a significant increase in borrowings during
2008. In the early part of the year these borrowings
were caused by the major business acquisitions made
by many of the companies in the sector. In the latter
part of the year borrowings for some companies were
required to fund cash flow shortfalls caused by the
sharp deterioration of business conditions. A further
complicating factor was that most companies have
borrowings denominated in US dollars. With the decline
in value of the Russian Rouble by approximately 20%
and the Kazakh Tenge by 22% (in February 2009),
this US dollar denominated debt suddenly became
much more expensive, creating an additional strain
on many companies. Overall, the ratio of debt to total
capitalization in the sector deteriorated from 37%
to 62%.
Highlights
Increase in inventories: During peaks in commodity
prices in 2007 and early 2008, the focus was
on production. Growth in volumes took precedence
over controlling costs. When the effects of the financial
crisis snowballed from being isolated to the banking
sector to triggering a general global downturn, demand
for commodities declined and many operations found
themselves with inventory levels at the end of 2008
much higher than anticipated.
Other current assets are comprised mainly of short
term deposits and financial investments. This number
halved during 2009 as entities drew down their
deposits to compensate for decreased cashflow
generation. The value of short term equity investments
held at year end was also significantly less than
in 2008 as global market indices fell to record lows.

Statement of cashflows
2008
$ Million
2007
$ Million
Movement
%
Net operating cash flows 26,243 22,303 18
Cash flows related to investing activities
Purchases of property, plant and equipment (17,491) (11,724) 49
Purchase of investments excluding controlled entities,
including advances
(4,601) (5,127) (10)
Purchases of, or increased investment in, controlled entities (10,073) (14,445) (30)
Purchases of financial assets (902) (4,005) (77)
Other (1,338) (2,869) (53)
Investing cash outflows (34,405) (38,169) (10)
Proceeds from sale of property, plant and equipment 458 588 (22)
Proceeds from sale of investments 1,179 988 19
Proceeds from financial assets 3,841 2,778 38
Other proceeds 3,475 1,330 161
Net investing cash flows (25,453) (32,485) (22)
Cash flows related to financing activities
Proceeds from ordinary share issues 237 4,807 (95)
Proceeds from interest bearing liabilities and borrowings 45,550 34,956 30
Repayment of interest bearing liabilities and finance leases (32,921) (20,534) 60
Transactions with shareholders
- Dividends paid (7,807) (5,561) 40
- Share buy back and other distributions to shareholders (3,287) 1,271 (359)
Other (300) (297) 1
Net financing cash flows 1,473 14,641 (90)
Net increase/(decrease) in cash and cash equivalents 2,262 4,459 (49)
Cash and cash equivalents at beginning of period 13,452 8,239 63
Effect of foreign currency exchange rate changes on cash
and cash equivalents
(940) 754 (225)
Cash and cash equivalents at end of period 14,773 13,452 10

Statement of cashflows
Highlights
Investing activities: Down from $19.6 billion to $14.7
billion – most 2008 transactions occurred in the first half
of the year, prior to the decline in commodity prices.
Overall, business acquisitions declined 30% in value
compared to 2007.
PP&E: Up from $11.7 billion to $17.5 billion – again
mostly in the 1st half of 2008 as producers scrambled
to improve infrastructure and capacity to take advantage
of record prices.
Financing: Gross proceeds from borrowings up 30%,
while gross repayments also up 60% as companies
repayed debt taken on as a result of transactions
in 2007 and 2008.
Share raisings: Down from $4.8 billion to $237 million –
very little in the way of capital raising in 2008.

Articles

Going public is a major challenge for any company
and not just from the point of view of increased public
scrutiny, enhanced market expectations and additional
reporting requirements post flotation. You may have
considered the implications of an IPO for your
business – from the benefits such as increased
shareholder value and wider access to capital
to the potential drawbacks such as a loss of control –
but what about the run-up to flotation?
In our experience, the most successful listings are
those that are well planned, have adequate resources
and benefit from clear leadership and ownership
provided by senior management. While each global
exchange has its own eligibility requirements, the key,
wherever you decide to list, is in the planning and
preparation. Indeed, there is always a significant
amount of work needed upfront to get the company
ready for an IPO; this is not simply about appointing
advisers but about ensuring that the company is fit to
be listed on a public market.
So what are some of these key challenges?
• Early planning and preparation – a company
should have a clear timeframe in mind for going to
market and a clear action plan designed to achieve
this. Even in challenging economic environments,
such as those experienced in the past eighteen
months, early and focused preparation will enable
a company to be ready to float when the markets
recover, potentially stealing a march on the
competition for the reopening windows of
opportunity. In addition, many flotations take longer
than initially envisaged; this is often due to issues
uncovered during the due diligence; changing
market conditions; unrealistic timetables and the
complexity of preparing the financial history.
The earlier the process is started the better.
• Quality of the team – assembling an experienced
and dedicated team, including the right executive
management team and first class external advisers,
is crucial for providing clear guidance and direction
as a company prepares itself for an IPO. As part
of this team, the company will normally be required
to engage reputable reserve engineers to prepare
a competent person’s report (‘CPR’) to assess the
quality of the company’s mineral reserves. Early
engagement and scoping is key to allow sufficient
time for completion, since this report has a direct
bearing on the valuation of the company.
• Awareness of the impact – an IPO process
consumes a significant amount of time and
resource from a senior management level down
through the organisation. The IPO preparation
process is in addition to everyone’s day jobs.
The impact of these extra demands is often
underestimated, from the implications for the overall
governance environment, increasing the risk that
day-to-day business issues are not addressed
in a timely fashion, to the impact on the morale
of the company’s employees as a result of the
increased workload. Awareness of this risk will
enable the impact to be managed, such as through
the development of an incentive structure aligned
with the IPO process that motivates and retains key
employees.
• Establishing robust governance and reporting
environment – before going to market, a company
needs to have in place a high quality corporate
governance environment underpinned by robust
management information and reporting systems.
Effectively, the entity should be operating as a
public company before it floats. This may require
significant changes to the current governance,
reporting and control environment with improved
transparency (such as around related party
transactions) and better corporate housekeeping,
including good documentation. Changes may range
from improvements in the budgeting and forecasting
function or internal control environment to
strengthening the executive management team and
establishing a new board of directors. Willingness
throughout the company to accept and implement
such change is crucial.
• Presentation of the financial history –
the requirement to provide historical financial
information in the Prospectus can often prove more
challenging than at first anticipated. This could
involve issues such as presentation of complex
financial histories in the event of significant
acquisitions in recent periods, consideration of
complex IFRS accounting and reporting issues and
choice of the appropriate IFRS accounting policies,
or sourcing additional information for disclosure.
Thinking of an IPO? Is your company prepared?

it will also greatly increase the prestige of the company
as well as provide an exit strategy for existing
shareholders, and funds to drive the business forward.
In short, the benefits usually outweigh the challenges
of getting there.
In order to achieve as smooth a listing process as
possible, careful thought and planning are required,
even before any detailed work on the flotation begins.
Companies that acknowledge this and prepare
accordingly are those that gain the most from the
process. By planning early and engaging the key
internal stakeholders as well as external advisers,
important issues can be highlighted and addressed
up front, thereby minimising any unpleasant surprises
and saving time and money.
Once a company begins its life as a listed company,
it faces a new set of challenges as it needs to maintain
effective communications with investors and analysts,
grow shareholders’ value by delivering on promises
made at the time of the IPO and fulfill its continuing
listing obligations. An IPO is only the beginning
of a long journey to excellence, market leadership
and business prosperity. Upon becoming a public
company, it is then that the challenge of being a listed
company begins!
In addition to the presentation of the financial
information, there is increasing focus in the markets
on non-financial measures, such as management’s
experience and the corporate strategy, as well as
integrity of the non-financial KPIs. Careful
consideration needs to be given to the compilation
and presentation of this data.
• An attractive investor ‘story’ – the preparation
of a well constructed, attractive investor ‘story’ is
crucial and a key ‘suitability for listing’ criterion.
This should clearly identify the unique features
of your company and articulate the objectives
of the offer, the rationale behind them as well as
future plans. More than ever, investors are placing
emphasis on a credible equity story together with
the potential to improve underlying operations.
Alongside the preparation of this ‘story’, the ability
to provide your potential investor base with timely
and reliable information about the company’s
progress and key business issues is vital during
the IPO preparation process.
However, despite the challenges associated with going
to market, a listing does give a company access to
significant pools of capital and a diverse investor base;
Thinking of an IPO? Is your company prepared?

With an area of over 17 million square kilometres –
about twice the size of the US – Russia is one of the
most mineral rich countries on earth. Russia ranks
first in the world in nickel production, and boasts
the world’s largest known reserves of the metal.
Russia also ranks among the world’s top 3 producers
of platinum, gold, diamonds, iron ore
and coal. The abundance of diverse minerals has
also enabled Russia to develop a mature metals
processing industry. Russia is the world’s second
largest producer of aluminium and fourth largest
steel producer. Despite the highly attractive
prospects on offer, Russia represents a challenging
environment for mining companies. Bureaucratic
complexities, along with significant capital
investment requirements, present formidable barriers
to entry – especially for foreign companies.
Of significant concern to foreign mining companies
in Russia are bureaucratic delays and corruption –
these significantly escalate the costs of doing
business. The Russian state holds rights over all
mineral tenements. Historically, these tenements
have been auctioned to mining enterprises for
development. However, these auctions can be
unpredictable and non-transparent. Once a tenement
is obtained, mining license terms for the ongoing use
of the tenement can be onerous and inflexible.
However, the most significant recent legislative
development relates to the extent to which foreign
companies can in certain instances participate
in Russian mineral operations. In April 2008 the
outgoing President, Vladimir Putin, signed a law
restricting foreign investment in sectors of strategic
importance and amending the subsoil law. Among
other areas, such as defence, technology and
nuclear energy generation, this piece of legislation
also categorises certain mineral deposits as being
of strategic importance to the Russian Federation.
The law limits foreign investment in operations
related to developing such deposits. Minerals
of strategic importance covered by the new version
of the law include (among others): platinum, nickel,
cobalt, uranium, diamonds and large deposits of gold
and copper.
Impact on foreign investors:
The law restricting foreign investment in sectors of
strategic importance applies when a foreign investor, or
group of foreign investors, has direct or indirect control
over 10% or more of the total votes, as represented
by voting shares in the share capital of the strategic
subsoil user (in instances when a foreign investor
is controlled by a foreign state or an international
organisation). This is deemed as “control” over
an organisation of strategic importance using federal
subsoil. Alongside the legislation, a special
government body known as the Governmental
Commission for Control Over Foreign Investments
in Russia (the “Commission”) was created. Headed
by the Russian Prime Minister, the Commission grants
consent to the acquisition of control. In addition, the
Federal Antimonopoly Service (“FAS”) was empowered
to support the Commission. In order to obtain consent,
applicants must submit for consideration to FAS
necessary documents together with an application
for receiving consent to the acquisition of control. This
is followed by a final decision from the Commission
to refuse or accept the application. The Commission
is also authorised to approve the application provided
that the foreign investor assumes certain obligations.
Implementation of the law restricting foreign
investment
The law is still in its infancy and, as yet, there has been
relatively little in the way of implementation experience.
Since early 2009, the Commission has met on average
once every two or three months. In that time it has
ruled that a few dozen applications do not fall under
the provisions of the strategic law, and the Commission
therefore had no authority to consider them. While this
may be encouraging for potential foreign investors,
what is of concern is the backlog of applications which
still require processing. There are currently more than
a few hundred applications being considered by the
FAS, and with only an average of 10 – 12 being
reviewed at each Commission meeting, there is a risk
that the process could evolve into a complex
bureaucratic bottleneck that hinders the momentum of
transactions and creates uncertainty in the business
community. Frustratingly, there is no public information
available on the grounds under which applications
were rejected, as neither the FAS nor the Commission
are required to publish such information.
Russia is not only a country of great opportunities –
but also legal challenges

of this is foreign banks operating in the Russian
Federation. In order to protect the integrity of their
information systems, they use complex encryption
software and hardware for encrypting information.
Under the law, the use of such technology is deemed
to constitute grounds for considering the whole activity
of the entity as ‘strategic.’ Although this situation has
not led to any demands for these banks to lodge
applications for FAS approval, it serves as a vivid
example of how cumbersome the application
of the law can be in practice. Another trigger for
an application to the FAS and preliminary consent
from the Commission can arise where a group
structure, established and managed from Russia
and holding licences for strategic deposits, contains
foreign entities.
Conducting business in Russia, especially in the
extractive industries, is strewn with both opportunities
and challenges. To succeed, a clear understanding
of the often vague and broad sweeping legislative
requirements is a must. However, our experience
has shown that although this law places significant
additional requirements on potential foreign investors,
with the right support and knowledge these can be
overcome.
IIn addition to adopting the law restricting foreign
investment, significant amendments were made
to the subsoil law. In line with these changes, if during
the geological survey of a subsoil plot a foreign
investor discovers new mineral deposits which will
be recognised as being of strategic importance, then
the Russian Government will be entitled to terminate
the company’s right to further develop the discovered
deposits. In this case, the Russian Government will be
required to compensate the company’s costs incurred
in connection with prospecting and evaluating the
discovered deposits and pay a fee for discovering
the deposits of 30%-50% of the company’s costs,
depending on the type of the mineral.
PricewaterhouseCoopers is currently actively involved
in assisting several clients with applications to the FAS.
Our legal support group assists in preparing
documentation supporting the applications and liaising
with the relevant government agencies. From our
experience to date with this law, we have encountered
situations where foreign companies have become
‘accidentally’ caught up in the law restricting foreign
investment, as a result of the broad nature of the
industries defined as ‘strategic’; in fact, the law can
cover practically all Russian industries. An example
Russia is not only a country of great opportunities –
but also legal challenges

Ukraine, the country with the largest territory
in Europe after Russia, holds significant amounts
of diverse mineral resources. It is among the largest
holders of proven reserves of iron, manganese,
titanium, uranium and zirconium ores, kaolin
and coal. Ukraine has developed a strong iron ore
extracting and steel processing industry, with large
mining groups servicing the European, Middle
Eastern and Asian markets. The diversity of the
minerals and their abundance, as well as Ukraine’s
favourable geographic access to markets in Europe,
provides incentive for further development of the
mining industry.
The Ukrainian mining industry has great potential
and attracts attention from outside Ukraine. It is
notable, however, that after 18 years of Ukrainian
independence the previously state-owned mining
industry is now substantially concentrated in the
hands of tycoons and politicians. This, along with
sometimes vague and inefficient legislation raises
challenging barriers for foreign investors wishing
to enter Ukraine.
Operations related to the mining of natural resources
are subject to the Government’s regulation and
approval. Here arises the key problem of obtaining
and holding special permits for the exploitation
of mineral deposits and fields. The process of
granting mining permits is quite opaque and
bureaucratised. The permit can be obtained via
participation in a special auction organised by the
Government. From a practical perspective, only legal
entities registered in Ukraine are allowed to
participate in these auctions. A serious drawback
of the system is the right of state-owned entities to
receive mining permits without such a requirement.
Only a relatively small number of permits have been
granted to private companies in recent years.
On the other hand, foreign investors can participate
in the Ukrainian mining sector via joint venture
agreements with local entities (independent of the
type of ownership) holding valid permits. In spite of its
apparent simplicity, this mechanism bears certain
risks. Ukrainian tax authorities use legal imperfections
to try to restrict the use of joint venture agreements
and claim that only the permit holder is obliged to pay
rent and other obligatory payments. The tax
authorities disallow any further recharging of these
payments to the joint venture. The Ukrainian business
community operating in this segment has repeatedly
raised this issue with government officials, however to
date no significant change has been introduced and
the legal and tax treatment of joint venture agreements
remains unclear.
In the field of taxation of mining companies,
no substantial changes took place in 2009.
Currently mining companies are obliged to pay:
• payments for the use of mineral resources
(established primarily as fixed rates applicable
to the amount of resources mined);
• a duty for geological surveys in cases where they
were financed from the state budget;
• charges for the issuance or re-issuance of permits
(separate from the payment made for the purchase
of such permit); and
• rental payments, such as additional charges
for producers of oil, gas and gas condensate.
There are no indications that mining payments and tax
rates are going to increase significantly, however some
changes may be introduced with the adoption of the
Law on State Budget for 2010. Taking into consideration
the continuing financial market uncertainty, economic
slowdown and growing budget deficit, the currently low
rates of mining payments might be increased with the
aim of balancing the state budget. There is also a draft
law on rental payments suggesting replacement of
payments for the use of mineral resources with rental
payments which will be linked to the market price of
minerals. Due to the strong lobbying power of the
mining industry it is unlikely that this draft will be
adopted anytime soon. It is also difficult to judge how
the outcome of recent Presidential elections will
influence the Ukrainian mining sector.
Recently, the Ukrainian mining industry has been faced
with the substantial and growing redistribution and
concentration of natural resources by the government.
The intention of politicians is to improve their position
in the mining sector by reinforcing the position of state
companies and establishing State-owned specialised
holdings. At the same time, certain state-owned
companies are likely to be privatised in the near future.
The presidential election has sharpened the struggle
for these entities.
Mining in Ukraine

Both legal and illegal methods are used by various
mining groups to establish their control over the main
companies subject to privatisation in mining and
related sectors.
Recent developments related to KGOKOR (Kryvyi Rih
Oxidized Ore Mining and Processing Plant, one of
Ukraine’s more strategic entities in the mining industry)
highlight these challenges. Construction of KGOKOR
began in 1985 and after the dissolution of the USSR it
was closed down. Construction still has yet to be
completed and Ukraine is obliged to repay about
USD500 million to investors. Recently a joint venture
including the participation of Russian mining groups
was established for the purpose of completing
construction. At the end of 2009 the project was
restructured whereby a part of the assets of KGOKOR
were transferred to a private firm. The Government
responded quickly, declaring the sale void and
cancelling the resolution establishing the joint venture.
PricewaterhouseCoopers is the leading firm providing
professional services to energy, utilities and mining
companies. Our Tax and Legal team has extensive
experience in provision of services to mining
companies both in Ukraine and other jurisdictions,
including due diligence services, tax support during
business restructuring, compliance with tax law
requirements, assistance to clients in preparing
documentation required for auctions and support
during tax litigations.
Mining in Ukraine

a significant challenge to develop the secondary and
service sectors of Kazakhstan’s economy into efficient
and commercially successful enterprises without the
assistance of major foreign (Western) companies.
2009 was a turbulent year for the Kazakhstan
economy due to it being largely dependent on the
export of mineral commodities. The oil, gas, and
mining industries were hit hard by the sharp decline
in commodity prices, exaggerated by an increased
taxation burden. This situation spurred talks within
the industries and in government circles of lowering
taxes. This is, however against the official policy
of the Kazakhstan Government of generally increased
taxation of subsurface users. This stance was
manifested in the “new tax code” which was
implemented in the midst of high commodity prices
and record industry revenues in 2008. At the time,
increased taxation of these revenues seemed logical.
With lower revenues and rising cost pressures forcing
miners to cut production and in many cases employee
numbers (ArcellorMittal Temirtau alone has sent on
unpaid leave 4,200 of its employees2
), the Government
went ahead and lowered the Mineral Production Tax,
but only to mining companies that were forecasting
to have ‘zero profitability’.3
This initiative has received
a mixed reaction, with mining companies concerned
that the ‘zero profitability’ qualification is vague. They
also point out that if the project is not profitable it would
make more sense to be subject to zero percent tax.4
Recent times have been challenging for subsurface
users in Kazakhstan. With diminishing revenues
from royalties and taxes, the Government has been
more aggressive in finding new sources of state
revenues. New initiatives have been enacted which
obliges subsurface users to purchase at least
a quarter of their inputs from Kazakhstan producers.
Through this mechanism, the Government is hoping
to capture a sizeable portion of the twenty two billion
US dollars that leaks from the Kazakhstan economy
in the form of foreign purchases by subsurface users.
Subsurface users are concerned however, as local
producers are often relatively new to the market
and users are reluctant to invest with untested
partners.
Kazakhstan is one of the world’s most mineral rich
countries, with reserves of many commodities ranging
from coal to uranium. After the break up of the Soviet
Union in the early 1990’s, Kazakhstan initially
struggled to lure foreign investors into the country,
however it was not long before international mining
companies and investors made their presence felt
on the Kazakhstan steppe. Today, oil, gas, and hard
minerals make up the lion’s share of Kazakhstan’s
exports (roughly 70% of total exports, with 17% being
metals). The mining industry value alone is estimated
to become 21.69 billion US dollars by the end of 2010.1
Despite being such a significant contributor to the
Kazakhstan economy, there are certain areas within
the mining industry which require further development.
Such areas include the development of the processing
capabilities of the mining industry, together with
the use of efficient, up to date technology and the
associated training and skill enhancement necessary
with such technological implementation. This matter is
currently receiving attention at official levels, with the
Kazakhstan Government proposing the lowering of the
Mineral Production Tax by 50% for mining companies
who will process their raw minerals into final products
within the territory of Kazakhstan.
Such policy direction is one example of how the
Government is seeking to diversify the largely
commodity-based economy. A significant amount of
investment is required to develop such large scale
value add capability within the mining industry, but the
Government is committed to its policy of encouraging
industrial innovation in an effort to transform its largely
extractive industry based economy into a more
balanced one. For this policy to succeed, the
Government understands that it needs to encourage
expertise and financial resources that only major
Western companies are able and willing to bring.
Kazakhstan feels strongly about developing the
expertise of its own national mining companies
and to take a leading role in all significant projects.
The Government recognises however, that it will be
Taxation of the mining industry in Kazakhstan
1
Business Monitor International, Kazakhstan Mining Report Q1 2010, January 2010
2
Sergei Domnin and Aizhan Shalabayeva, “Running with obstacles”, www.expert.ru, 23/11/2009
3
Karina Nurtayeva, “Metalurgists Would Not Be Helped”, www.kursiv.kz, 16/04/2009
4
Salauat Rakhmetov, “Small receive little”, www.expert.ru, 25/03/2009

resources sector. Looking back it is clear that the
Government did not reach its goals, mainly due
to the global financial crisis which adversely impacted
Kazakhstan as a whole.
One of the main taxes for subsurface users,
the Mineral Production Tax (which replaced
the royalty regime) has proven to be a main
Government revenue raiser and the people see it as
a mechanism for clamping down on the profits of the
oil, gas, and mining companies. Another significant
tax on the industry is Excess Profits Tax (whose
calculation methodology has changed along with
the Kazakhstan Government’s changing priorities).
Such taxes set the tone for how the Government
views the role of the extractive industries: on the
one hand, as a rich industry requiring taxation
and regulation; but also as a significant contributor
to national development requiring certain fiscal
incentives.
As taxation and regulation evolve in Kazakhstan,
it will be important for the government to develop
a consistent strategy and approach to the industry.
The subsurface users are asking for a reduction
of the Mineral Production Tax or other taxes in order
to offset the effects of this legislation but indications
are the Government is not planning to back down.
The Government is planning on enforcing the
legislation through a system of fines, penalties, and
even through annulations of subsurface use contracts.5
The Government is sensing that a recovery from the
global financial crisis is far off, and with it will come
robust commodity prices. Subsurface users are
bracing themselves for a return to a higher tax
environment. The Kazakhstan Prime Minister Karim
Masimov recently stated that due to the global financial
crisis the Government had been soft on subsurface
users, however in near term the taxes will be raised as
the natural resources belong to the people.6
With the adoption of the new version of the
Kazakhstan Tax Code late in 2008 (with effect from
January 2009), the taxation burden on companies
developing the natural resources sector was set to
increase so that the Government of Kazakhstan could
get their fair share of revenues generated in the natural
5
Asan Kuanov and Aleksei Khramkov, “Oil companies: Give us preferences, then we will buy domestically”, www.liter.kz, 25/11/2009
6
Kazakhstan Today, “The Government of the Republic of Kazakhstan in the near future is going to raise taxes in the subsurface sector –
Massimov”, www.kt.kz, 29/12/2009
Taxation of the mining industry in Kazakhstan

Mining companies in Russia have all taken up the
challenge of sustainability reporting, perhaps more
than many other industries. But has this flurry of
reporting led to generation of value in companies
or helped them to improve how they operate?
There is no doubt that the mining sector faces
numerous challenges that fall within the sphere of
sustainability. These include social issues operating
in remote regions, ensuring a supply of highly trained
professionals, local economic impact, environmental
management, climate change, mine closure and more.
And although some issues are specific to companies
operating in the CIS region, their challenges are not
unlike those facing all companies in this industry today.
Sustainability is more than just reporting. There is
no doubt that all of the issues noted above are being
actively managed by mining companies operating in this
region. Likewise, information about all or most of these
issues is being published by companies in their annual
reports. But for sustainability to really get traction it must
be integrated into the overall strategy of a company, as
well as in its day to day management and operations.
Robust management of sustainability in any company
must come from the top. This is accomplished in many
companies by the formation of a sustainability
committee at the level of the board of directors. This
committee has responsibility for setting the overall vision
and strategy of the company’s sustainability activities,
within the context of its overall business goals.
The fact that this plays a crucial role in the effective
management of sustainability in a company is evident
by the large numbers of companies who employ such
a practice, despite the fact that there are no legal or
regulatory obligations to do so. In fact, the trend of late
is to appoint a Chief Sustainability Officer, or CSO,
in order to highlight the important role this plays
in a company.
In order to support this board level entity and the CSO,
best practice dictates the need for a team of people
forming a sustainability department. This group is
a cross-functional team that plays a key role in
coordinating all the various efforts that are undertaken
in sustainability. While specific departments may be
responsible for implementing these programs, the
sustainability department acts to coordinate actions
to ensure that all the possible benefits are achieved
across the whole company. This is especially important
for companies whose operations cover more than one
region or country.
Sustainability in mining
The current practice of many companies of placing
sustainability activities in one department or another
(typically HR, Investor Relations or Environment) is one
that cannot bring the entire benefits of strongly
embedded, cross functional sustainability management
represented at the highest levels in a company.
Mining companies cannot work in isolation on this
issue. Robust sustainability management is an
important first step, but collaboration on this issue is
also vital, allowing companies to work together to solve
issues that face them all across a certain region.
Public pressure has led the mining industry to work
perhaps more than most industries to address
sustainability issues over the past decade. Although
its products are necessary for everyday life, strong
criticism around poor environmental management,
lack of social contribution, local economic impact
and corruption forced the industry to come together
to work out ways to improve its reputation, but also
work to improve how the industry operates.
From 2000 to 2002 a landmark study, the first of its
kind, was undertaken called Mining, Minerals and
Sustainable Development (MMSD). This independent
study for the mining industry looked not only at the
contribution to society of the mining and minerals
sectors, but also at how these sectors’ contribution to
society could also support sustainable development.
During this process, the International Council on
Metals and Mining (ICMM) was formed, and has since
developed a range of voluntary standards and
guidelines for the industry, as well as position papers
and guidance documents on a range of issues facing
the industry today.
In many countries around the world where mining
plays an important role there are also country level
organisations that serve to promote good practice
in sustainable mining, as well as knowledge sharing
and, in some cases, voluntary standards. Canada,
South Africa and Australia all have such organisations,
generally supported by industry, governments
and NGOs.
Given the size and impact of the Metals and Mining
industry in Russia and the CIS, the time is right for the
creation of a similar organisation in the CIS region.
This would not only benefit the industry, but also allow
it to work together to solve many of the social and
environmental challenges facing the mining sector
in the region today.

28
In recent years the Russian Government has
implemented a number of general tax incentives
to stimulate the development of the Russian
economy and help the recovery of national
industries from the economic crisis, which hit
Russia hard in the second half of 2008 and
caused a significant decline in demand and
prices for Russian mining commodities.
Tax incentives in the Russian mining sector
Key tax incentives included:
• reduction of corporate income tax rate from 24%
down to 20% from 1 January 2009;
• introduction of accelerated depreciation for newly
commissioned fixed assets (for example, the 10%
depreciation premium applicable starting from
1 January 2006, was increased to 30% on 1 January
2009 for certain types of fixed assets);
• faster recognition of expenses connected with
acquisition of subsoil licenses;
• loosening of statutory tax deductibility limits for
external borrowings aimed at aligning tax rules with
the realities of debt markets in crisis conditions;
• changing VAT recovery rules to allow faster recovery
of input VAT on acquired goods and services.
These incentives are relevant for all businesses operating
in Russia, including mining companies, allowing them to
free up cash-flows for investing and operating activities.
The reforms, however, were not implemented specifically
for the benefit of the mining sector.
The Russian mining sector is similar to the oil and gas
industry in terms of the commercial, infrastructural,
technical and political risks involved. Also presenting
challenges are certain administrative barriers in the form
of legislation limiting the access of foreign investors into
strategic industries. Interestingly, the Russian mining
sector has not enjoyed the same level of taxation
concessions which have historically been available
to oil companies*.
It is doubtful that taxation incentives alone would be
capable of restoring investor confidence in the mining
sector back to the levels, experienced prior to the
economic downturn. The introduction of industry specific
measures and simplification of taxation administration
rules and practices in Russia could, however, assist
in increasing the attractiveness of this capital intensive
sector for both domestic and foreign investors.
* Oil companies are granted tax incentives in the form of mineral resources
production tax (MRPT) holidays on new fields located in certain remote
undeveloped regions of Russia, lower MRPT charges on depleted fields,
as well as recently introduced export duties breaks for East-Siberian oil.

Tax incentives in the Russian mining sector
In order to help stimulate investment in the Russian
mining sector, the administration could consider
implementing a number of tax incentives and
measures such as:
• tax holidays for newly developed deposits,
especially where deposits are located in the
distant regions with minimal pre-existing
infrastructure;
• reduction of Mineral Resource Production Tax
payments for deposits with lower quality of reserves
and difficult geological conditions, as well as
depleted and smaller deposits, whose development
would not be economically justifiable under the
standard tax regime;
• introduction of efficient tax grouping and loss
utilisation rules to allow mining groups to utilise
tax losses from unsuccessful exploration projects
against profits generated on successful mining
projects;
• introduction of tax loss carry back provisions which
could allow minimising irrecoverable tax losses
at the liquidation/decommissioning phases of the
mining projects;
• extension of tax loss carry forward period would be
generally relevant for longer mining projects
(currently taxpayers may carry forward tax losses
for ten consecutive years after losses are incurred);
• more active granting of profits tax and property tax
incentives by the regional authorities in exchange for
a long-term commitment from mining companies to
make investments in local projects, to employ local
personnel and to use local suppliers and contractors;
• implementing less burdensome procedures
for the recovery of input VAT to assist cash flow
management for companies at the exploration
and development phases.
To increase the chance of taxation reform that is
meaningful and beneficial to the industry, mining
companies need a more clear and coordinated
approach to their communications with federal
and regional authorities. The onus is on the industry
to convince the authorities that such incentives will
not simply mean higher profits for mining companies,
but a more attractive and reasonable environment
for strategic investment which will spur development,
employment and benefits to the economy as a whole.

Appendix

The financial overview was performed using
the financial information of 20 companies which
operate in the mining and/or metals processing
industries in the CIS region. The companies
selected for analysis produce publicly available
financial information in accordance with either
IFRS or US GAAP.
The companies included in the analysis are:
Alrosa
Chelyabinsk Zinc Plant
ENRC
Eurochem
Evraz Group
Ferrexpo plc
Highland Gold Mining Ltd.
KazakhGold Group
Kazakhmys plc
Magnitogorsk Iron & Steel Works
Mechel
MMC Norilsk Nickel
Novolipetsk Steel
Polymetal
Peter Hambro Mining plc (now Petropavlovsk plc)
Polyus Gold
Raspadskaya
Severstal
TMK
Uralkali

Russia
David Gray
Partner, Energy, Utilities and Mining Leader
Russian, Central and Eastern Europe
+7 495 967 6256
dave.gray@ru.pwc.com
John Cambpell
Partner, Metals and Mining Leader
Central and Eastern Europe
+7 495 967 5142
john.c.campbell@ru.pwc.com
Yana Zoloeva
Partner, Legal Services
+7 495 967 5754
yana.zoloeva@ru.pwc.com
Alexei Smirnov
Partner, Tax Services
+7 495 967 5199
alexei.smirnov@ru.pwc.com
Robert Gruman
Partner, Advisory
+7 495 232 5031
robert.gruman@ru.pwc.com
Ukraine
Nilesh Lad
Partner, Assurance Services
+380 44 490 67 77
n.lad@ua.pwc.com
Ron Barden
Partner, Tax & Legal Services
+380 44 490 67 77
ron.j.barden@ua.pwc.com
Oleg Tymkiv
Partner, Advisory
+380 44 490 67 77
oleg.tymkiv@ua.pwc.com
Kazakhstan
Dana Inkarbekhova
Partner, Assurance Services
+7 727 298 0448
dana.inkarbekhova@kz.pwc.com
Courtney Fowler
Partner, Tax Services
+7 727 298 0448
courtney.fowler@kz.pwc.com
Key contacts

Acknowledgement
This publication would not have been possible without the drive
and enthusiasm of Tony Hanrahan, who led the project from start
to finish. Thanks also to the following professionals at PwC who
provided commentary and contributed articles to this publication:
Saltanat Suleimenova, Adil Mergaliyev, Daniyar Tulegenov,
Tim McAllister, Oleg Shudra, Vladimir Sokolov, Douglas Grier,
Andrey Soldantenko, Kirill Cherny, Irina Avdeeva, Irina Kostina,
Dmitry Skornyakov, Viktoria Kabala.

www.pwc.ru
.
© 2010 PricewaterhouseCoopers. PricewaterhouseCoopers. All rights reserved.
“PricewaterhouseCoopers” and “PwC” refer to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL). Each member firm is a separate legal entity and does not act
as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control
the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it control the exercise of another
member firm’s professional judgment or bind another member firm or PwCIL in any way.
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice.
You should not act upon the information contained in this publication without obtaining specific professional advice. No representation
or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the
extent permitted by law, PricewaterhouseCoopers, its members, employees and agents accept no liability, and disclaim all responsibility,
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