Norilsk, Black Earth Shares Rise on Move to Hire Putin Allies

By William Mauldin

July 30 (Bloomberg) -- OAO GMK Norilsk Nickel and Black Earth Farming Ltd. shares rose after the Russian companies moved to appoint associates of Prime Minister Vladimir Putin, whose rebuke of OAO Mechel sent the coal-producer's shares tumbling.

Black Earth, an owner and developer of agricultural land in Russia, hired Vasily Shestakov, co-author of a judo book with Putin, as an adviser, company spokesman Dmitry Lgovsky confirmed. The shares rose 0.8 krona, or 2.6 percent, to 31.8 kronor at 1:31 p.m. in Stockholm, their first gain in five days.

Billionaire investor Vladimir Potanin is in talks with other Norilsk shareholders on appointing Vladimir Strzhalkovsky, head of the federal agency for the tourism industry, as the mining company's chief executive, a spokesman for Potanin's holding company, Interros Holding Co., said by phone today. Norilsk shares jumped 5.7 percent to 4,786 rubles today.

``Strzhalkovsky has been reportedly approved by the Russian authorities, which is favorable at a time when the state is obviously increasing its metals and mining industry regulations,'' Moscow-based Alfa Bank wrote in a note to investors today.

Putin on July 24 criticized Mechel, a coal and steel producer belonging to billionaire Igor Zyuzin, for its pricing policies and called for an investigation. The company's American depositary receipts, which account for most of the trading of its stock, have lost almost half their value in New York since then.

``While we recognize that relationships with the state for an asset of Norilsk's importance are vital, we also are acutely aware that Norilsk is hemorrhaging its top echelon of management,'' Moscow-based Renaissance Capital wrote in a note to investors dated today.

Investigation

The Federal Anti-Monopoly Service, Russia's antitrust watchdog, this week started a formal investigation into whether Evraz Group SA and OAO Raspadskaya abused their ``dominant position'' in the market for coking coal, used in steelmaking.

Shestakov said his job at Black Earth will be to prevent Russian bureaucrats from ``putting sticks in the wheels'' of the company's progress, Vedomosti reported today.

Black Earth shares through yesterday declined 18 percent since Russian Agriculture Minister Alexei Gordeyev said on July 14 his ministry will ``look into foreign capital buying up farmland.''

Shestakov and Putin are co-authors of ``Learning Judo With Vladimir Putin,'' Vedomosti said. The book is listed at Amazon.com as ``Judo: History, Theory, Practice,'' where it is ranked as number 434,029 in sales.

``There should be no post-election doubt about the relative power of business and politics in Russia,'' Roland Nash, chief strategist at Renaissance Capital in Moscow, wrote in a note to investors July 25. ``Business has been firmly reminded that in a country where traditional institutional mechanisms for the implementation of policy are weak, the informal lines of communications should be respected.''

To contact the reporter on this story: William Mauldin in Moscow at wmauldin1@bloomberg.net.