On course

Forbes, which rather confusingly also calls him Henadiy Boholyubov, puts his net worth in February at US$1.1 billion. That's not much of a reduction from the net US$1.2 billion it reckoned he was worth at the beginning of 2008.These details will be of more than passing interest to OM Holdings (OMH), the Singapore-based, ASX-listed company that Mr Bogolyubov seems to be stalking as part of his determined efforts to consolidate his grip on a big chunk of the global manganese business.Operating through his PrivatBank group, he already is the biggest private supplier of manganese. His sprawling conglomerate already accounts for about 10% of world manganese production. If he adds OMH to his portfolio that would rise to 15%.And, judging by Forbes' calculations, Mr Bogolyubov's strategy has not been knocked off course by the credit crisis, unlike that of some other oligarchs.He already owns about 12% of OMH, assembling the shares in various nominee companies at the end of last year. OMH quickly moved to put defences in place and in January shareholders agreed a resolution that would force anyone owning more than 20% of the company to make a full takeover bid.Mr Bogolyubov unsuccessfully attempted to stop the January meeting, insisting that, among other things, he was just a friendly investor in OMH and, as he “has no current intention” of increasing his OMH shareholding, the meeting would be pointless.Analysts suggest that Mr Bogolyubov's 12% gives him a solid start should another company come along with a bid for OMH. And, as he spent an estimated A$27 million acquiring his OMH shares, most expect that one day he will attempt to scoop up the rest.They point out that Mr Bogolyubov a couple of years ago built a 14% stake in Consolidated Minerals Ltd (ConsMins), Australia's biggest manganese producer – it owns the Woodie Woodie mine in Western Australia.Early in 2007 ConsMins accepted a takeover offer by Pallinghurst Resources, a specialist private equity vehicle headed by Brian Gilbertson, that valued ConsMins at A$752 million (US$512 million). Mr Gilbertson knows a thing or two about the manganese business – he is a former chief executive of BHP Billiton (BHPB), the world's biggest producer of the metal.Pallinghurst's move caused a flurry of competing bids – by Territory Resources Ltd, a company headed by Michael Kiernan, a former managing director of ConsMins, and from Tinfos AS, a Norwegian industrial producer of silico-manganese.Then Mr Bogolyubov entered the fray. One of his companies, Palmary Enterprises Limited, roared in with a cash offer. Palmary, based in Belize, was off to a good start as it had that 14.4% stake. Eleven months later – in January last year – Mr Bogolyubov won the battle with a cash offer increased to A$1.3 billion. That was double ConsMins' market value before the auction started.His opponent, Mr Gilbertson, had already crossed swords with the Ukrainian. That was when Ghana International Manganese Corp was privatised in 1997 – the Ghanaian government sold 90% to a Bogolyubov company. Mr Gilbertson was again the under bidder.So what's all the fuss about? Firstly, OMH's plum asset is the Bootu Creek mine (pictured left) in Australia's Northern Territory which currently produces about 5% of the world's manganese, mainly in the form of a siliceous ore which is favoured by those Chinese steel mills that make ‘long' products – girders and beams, materials used in bridges and railways.Manganese is sold via quarterly price-fixing arrangements between miners and metal alloy makers which then sell on to steel mills. It can be a highly profitable business. BHPB's latest half-year results showed that the 3.24Mt of manganese ore it mined in Australia and South Africa in the latest six months generated US$1.86 billion in revenue and pre-tax profits of US$1.26 billion. Of course, that 67% margin won't be repeated in a hurry because manganese prices have fallen sharply and the steel industry is looking battered and bewildered. But it shows what's possible in good times.Mr Bogolyubov also knows the manganese business well. An estimated 80% of the world's supply is sourced from Ukraine and Africa. Australia is a leading supplier of higher-grade ore that is suitable to mix with lower-grade supplies.Both he and Mr Gilbertson saw a price moving opportunity to blend relatively low-grade African manganese ores with the high-grade ore produced by ConsMins. Also, the bigger the market share, the better the chance of dictating future prices.During the past ten years, Mr Bogolyubov first snatched control of much of Ukraine's metal alloy business and its associated manganese mines and then acquired mines in Ghana and Australia. So OMH, seen as the last independent producer of high-grade manganese ore, was obviously going to be his next target.Forbes describes Mr Bogolyubov as a “self-made billionaire”. And his is very much a classic post-Perestroika success story. In 1988, when he graduated from the Civil Engineering Institute in Dneprodzerzhinsk, where he was born and grew up, moves to privatise much of Soviet industry were just getting started.He quickly changed from being a construction worker to become a construction entrepreneur and already by 1992 had the equivalent of US$1 million ready to set up PrivatBank – with business partner Igor Kolomoisky - when Ukraine became a separate country again. It is now Ukraine's biggest private bank and he owns 44% of it.His empire also includes Zaporizhia, Ukraine's second-biggest ferro-alloys producer; Stakhanov, a smaller company; Highlanders Alloys, a US producer; Ukrnafta, the largest oil and gas company in Ukraine; and Dnepropetrovsk Metallurgical, the ninth-biggest steel mill in Ukraine.For good measure, he has interests in Erlan, a chemicals producer, and the Ukrainian national construction venture, Aerobud. His property interests include hotels on Croatia's Adriatic coast as well as in Ukraine, office space in Moscow and Kiev, a football stadium for the 2012 European Championship, plus port facilities at Odessa and Illchevsk.Low profileMr Bogolyubov, now 47, does everything possible to avoid personal media attention but we do know he is married, with two children and apparently is a tennis fanatic. ConsMins people say he is approachable and speaks good English.Mr Kiernan, who met him during the ConsMins, battle, says: “He arrived with the usual cordon of security you associate with oligarchs. He looked pretty fit and suntanned, like a man without too many cares. I remember asking how he filled in his time. He said he spent four months a year on his boat in the Mediterranean, four months skiing and four months working.”Some suggest Mr Bogolyubov prefers to keep a low profile because of his religious beliefs. But he has put his name to the charity he finances – the Bogolyubov Foundation – which “supports Jewish education, pursues the eradication of poverty and promotes the Jewish religion and its cultural heritage”Mr Bogolyubov was forced to raise his profile during the battle for ConsMins, which was then a listed company, and late last year indicated he wanted to use ConsMins eventually to create a mining giant. He would start by vending into ConsMins his privately-owned mining assets. He regarded ConsMins as a “good vehicle for setting up a consolidation centre”Obviously OMH would fit neatly in such a vehicle but OMH says there has been no contact between the companies since the arguments about the January meeting when OMH put its ‘poison pill' in place. Help is close at hand What do junior mining/exploration companies do to raise money at a time like this when banks won't lend and most share prices are so weak it would be almost criminal to issue new stock? The solution, according to AIM-listed Namibian Resources Plc (NRP), is to have directors willing to fill the financing gap. The company has just raised Â£145,000 in the form of interest-free and unsecured loans from non-executive chairman Lord Sheppard and from another non-executive director, Brian Moritz.NRP's three other directors – chief executive Tony Carlton; Donald Sutherland, an executive director; and Oliver Plummer, finance director – did not contribute this time, but they did a year ago when the directors between them took all 1 million shares in a placing that raised Â£100,000. At that time, Lord Sheppard contributed Â£35,000, Mr Moritz Â£40,000, Mr Carlton and Dr Sutherland Â£10,000 each and Mr Plummer Â£5,000.They bought the shares at 10p each. The price is now 1.63p, much too low, according to Mr Carlton, for the company to consider issuing more shares – hence the use of loans to keep NRP going to July at least. Lord Sheppard and Mr Moritz are also standing by to lend another Â£100,000 between them if needed.Lord (Allen) Sheppard, a chartered management accountant, started his career in the UK motor industry before moving on to the drinks and hotels business – ending up as chief executive and then chairman of Diageo plc. Mr Moritz, also a chartered accountant, is well known in the mining industry because, as a former senior partner of Grant Thornton in London, he guided many juniors through the listing process.NRP is an alluvial diamond miner with a contract to mine on behalf of Namdeb, the joint venture between the Namibian government and De Beers. Because of the virtual collapse of demand for diamonds, NRP has put its operations on care and maintenance and has reduced costs in Namibia to “the minimum required to maintain the plant and equipment”.

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