Rostec is liquidating a holding with foreign raw materials projects

Rostec is liquidating the RT-Global Resources holding, created to manage projects abroad, including a gas pipeline in Pakistan and the first oil refinery in Uganda. The reason is that, against the backdrop of Western sanctions, it is inappropriate to develop such a business .

Rostec decided to liquidate the RT-Global Resources (RT-GR) holding, created in March 2013 to implement and manage raw materials and related infrastructure projects in RUSSIA and abroad. This follows from the data of the Unified State Register of Legal Entities (USRLE) and was confirmed by a representative of the state corporation.

The liquidation must be completed by January 19, 2024, as stated in the Unified State Register of Legal Entities certificate.

The decision to create RT-GR was made in connection with Rostec’s participation in a number of large-scale Russian and foreign raw materials projects for their support and management, as stated in the state corporation’s 2013 report. Among the activities of the holding is the implementation of a “package” integrated approach to linking access to deposits with the EXPORT of products from Rostec companies and its partners, as well as the transfer of various technologies. The company was supposed to ensure the “dynamic development” of the corporation’s raw materials projects with the attraction of funding from extra-budgetary sources and innovative technologies and equipment produced by Rostec organizations.

“The RT-GR company was created for specific international projects, the obligations for which have now been fully completed. Further development of this asset in the current geopolitical conditions is inappropriate,” a Rostec representative explains the reasons for the closure. RT-GR came under sanctions from the US Treasury back in 2015, after the annexation of Crimea to Russia. But due to the start of a military special operation in Ukraine , the American authorities tightened restrictions, banning all transactions with the “subsidiaries” of the state corporation concluded after August 11, 2022. According to SPARK, in 2022 the holding’s revenue amounted to 2.2 billion rubles, net profit - 820 million rubles. The company received its maximum profit in 2019 - 1.89 billion rubles.

What is known about the RT-Global Resources megaprojects

Among the largest foreign projects in which the holding participated: the construction of the first oil refinery in Uganda with a capacity of 3 million tons per year with an initial cost of $3 billion (then it grew to $4.7 billion), a tender for which it won in 2015 in a consortium with Tatneft and VTB Capital, as well as the North-South gas pipeline with a length of 1.1 thousand km and a capacity of up to 12.4 billion cubic meters. m in Pakistan ($2 billion). This gas pipeline was supposed to connect liquefied natural gas (LNG) terminals in the city of Karachi in the south of Pakistan with the city of Lahore in the north of the country, where it was planned to build power plants running on LNG.

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The Ugandan authorities stopped negotiations with the consortium in the summer of 2016 after the Russian side put forward additional demands for concluding an agreement. The main complaints were that the East African country did not provide licenses for oil production , tax breaks, and also changed regulations in oil refining, which significantly worsened the situation for investors, explained the Rostec subsidiary. Pakistan decided to abandon the services of RT-GR in 2019 due to Western sanctions, but the holding finally withdrew from the project only in 2021. It was replaced by a company established by the Federal State Unitary Enterprise Center for Operational Services of the Ministry of Energy - the Eurasian Pipeline Consortium and the Pipe Metallurgical Company (TMK).

The liquidation of RT-GR is a reasonable step, because now the state corporation is not very interested in working outside of Russia, notes independent industrial expert Maxim Shaposhnikov: there are international sanctions that limit Rostec’s ability to participate with capital, technology and personnel in the development of raw materials assets. Most likely, Rostec will focus on Russia, since the country has high resource potential that needs to be developed, he believes.

In Russia, RT-GR also had large raw materials projects. In 2013, his joint venture with the ICT group of Alexander Nesis and partners won an auction by the government of the Sverdlovsk region for the purchase of 82 thousand tons of monazite concentrate stored in the Uralmonazite warehouses in the Krasnoufimsk region. They also created the Vostok Engineering company to develop the Tomtor rare earth metal deposit in northwestern Yakutia, which is one of the largest in the world. The Rostec subsidiary, which owned 25% in this joint venture (JV), withdrew from the project in 2019. In 2015, she agreed with the Mangazeya group of companies to create a gold mining enterprise in the Trans-Baikal Territory, which two years later received a license for the Itakinskoye gold deposit. But the very next year, RT-GR also left this joint venture.

For the longest time - about eight years, since 2014 - the Rostec structure was a co-owner of coal assets: the Ogodzhinsky coal project in the Amur region and the Vera port in Primorye. The Chinese Shenhua was going to become its partner in these projects with an investment estimate of $8–10 billion, but considered them unprofitable. As a result, a share in both enterprises was first acquired by businessman Dmitry Bosov, and after his death in May 2020, by Albert Avdolyan’s A-Property, which consolidated these assets in April 2022.

After the liquidation of RT-GR, there will be no shocks - neither social nor economic - according to a Rostec representative. “Valuable specialists are employed at other enterprises within the state corporation,” he added. At its peak, the holding employed about 30 people.

At the end of August, it became known that Rostec would by the end of the year liquidate its other subsidiary, RusIT Export, or RITE (Russian Information Technology Export ), which was created in 2017 to promote domestic software abroad. Its development under sanctions is also inappropriate, explained a representative of the state corporation.