U.S. sanctions hit Russian company controlled by Kazakhstani mogul

коллаж kursiv.media, бильд-редактор: Аружан Махсотова

According to the U.S. Office of Foreign Asset Control (OFAC), it has added GDK Baimskaya to its Specially Designated Nationals and Blocked Persons List (SDN) list. This means that no U.S. residents can cooperate with the company, while all its banking accounts in the U.S. should be blocked.  

GDK Baimskaya is controlled by Trianon Limited, a private company registered at the Astana International Financial Center and belonging to Vladimir Kim (890th place in the global Forbes list with a fortune of $3.6 billion or 1st place with $4.6 billion, according to Forbes Kazakhstan) and Oleg Novachuk (ranked 13th in the local rating with a fortune of $615 million).

Trianon Limited acquired Baimskaya from KAZ Minerals, a large copper producer also controlled by Kim (63.5%) and Novachuk (36.5%) through Nova Resources B.V. in July 2023.

«In July 2023, GDK Baimskaya was disposed to Trianon Limited, a Kazakhstan-based company owned by the ultimate shareholders of KAZ Minerals. Following this transaction, KAZ Minerals has had no operations in Russia,» KAZ Minerals said in a statement on July 24, 2023.

Trianon Limited was registered in June 2022 by the Astana Financial Services Authority as a holding company. For instance, Trianon Limited is the founder of Baimskaya Holding and Baimskaya Managing Company registered in 2022 in Moscow.

The full-scale Russian invasion of Ukraine in 2022 caused many difficulties for the Russian project of KAZ Minerals. VTB Bank, which provided financial services to the company has been targeted by Western sanctions causing KAZ Minerals to stop servicing its debt to the bank of $1.78 billion (the total debt was $3.62 billion). At the time, the company confirmed default risks due to «technical reasons.»

In November 2022, the media reported that KAZ Minerals may postpone the launch of the Baimskaya mining and processing plant and floating nuclear power plant for one year from 2027 to 2028. The latter was supposed to be built by Rosatom to ensure the mining complex has sustainable access to electricity. In December 2022, President of Russia Vladimir Putin authorized Trianon Limited to make deals related to the Baim project, associated with the rights of owning, using and managing stakes in GDK Baimskaya.

KAZ Minerals revealed the acquisition of the Baim project from Aristus Holdings Limited controlled by Roman Abramovich (235th in the global ranking and 15th in the list of the richest people in Russia with a fortune of $9.7 billion) and Alexander Abramov (443rd in the global ranking and 24th in the Russian list with $6.4 billion) in August 2018. The Kazakhstani company paid $675 million in cash with $225 million of deferred payment ($900 million in total). The acquisition process for 75% of the project was completed in January 2019. In 2021, KAZ Minerals delisted itself from the London Stock Exchange, which prompted it to «accelerate the completion of the deal.» After paying the deferred payment of 25%, the company has become the sole owner of the copper project in the Russian Chukotka peninsula.

KAZ Minerals planned to allocate $8 billion in investments for the project. For instance, the company was expected to build a 438-kilometer road between GDK Baimskaya and an ice-free port to export copper by the Northern Sea Route. The mining and processing plant planned to process 70 million tons of ore to produce 300,000 tons of copper per year during the first ten years. According to the company, the development horizon for the plant is more than 50 years.

The Baim deposit has been known since 1970, when 12 promising copper, gold and silver fields were discovered in the area. For instance, resources of the Peschanka field within the Baimskaya licensed area are estimated at 9.9 million tons of copper (0.39% of copper grade) and 16.6 million ounces of gold (0.21 grams per ton on average) under the JORC Code. The square floor of the licensed area is 1,300 square kilometers. After selling its Russian assets, KAZ Minerals runs the Bozshakol and Aktogay mines, three open-pit mines in West Kazakhstan and the Bozymchak copper and gold mine in Kyrgyzstan.