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Reuters
16-07-2025
- Business
- Reuters
High interest rates in Russia could prompt distressed asset M&A surge, study shows
MOSCOW, July 16 (Reuters) - Prolonged high interest rates in Russia may drive mergers and acquisitions of distressed assets, a study by leading law firms showed, though Western-led sanctions and a liquidity shortage among buyers are likely to restrain growth in deals for now. Russia's M&A market grew by just 2% in 2024 to $39.2 billion, the study showed, hampered by interest rates climbing to their highest in more than 20 years at 21% and Moscow tightening exit terms for Western companies selling their assets in the wake of the conflict in Ukraine. Increased investor uncertainty due to trade wars sparked by U.S. President Donald Trump's tariffs has added to M&A market pressure so far in 2025, according to the study, which collated the views of around 20 Russian law and M&A advisory firms. The study noted that 84% of 50 respondents expected a rise this year in the number of deals involving businesses being forced to sell to larger players capable of servicing their high debt burdens. The problems are most acutely felt in capital-intensive industries like real estate, infrastructure and heavy industry, the study said. That could include Western companies still looking to dispose of Russian assets. Russia's benchmark interest rate remains high at 20% after a 1% cut last month and government officials and business leaders are exerting pressure on the central bank to reduce borrowing costs more quickly. Some companies are trying to sell certain projects to reduce their credit load, said Anatoly Klinkov, director of investor relations at A101. "But here, the market is completely on the buyer's side," Klinkov said. "Money is very expensive." With rates so high, buyers face less competition and have increased leverage in negotiations. Some industries, such as the coal sector, have noted rising bankruptcies and entities being forced to close. Major exporters have cut the planned volume of exports they send by rail, a Russian Railways document showed in May, as Russia's economy slows. "In tight monetary policy conditions we will likely observe growth in deals for problem assets and restructuring projects," said Pavel Terentyev of Advance Capital.
News.com.au
01-07-2025
- Business
- News.com.au
China's dominance of the gallium market is near total – but there's opportunity for Western disruptors
RFC Ambrian report shows scale of China's control over gallium production Metal is key to Western semiconductor industry, defence, AI and tech China still driving the car, but Western companies are seeking to break its hold How can the West break China's hold on the gallium market? A new report from Perth-based corporate advisory firm RFC Ambrian on the commodity, critical for its use in semiconductor wafers, has shone a light on the challenges ahead for Western consumers hoping to break their reliance on the Chinese supply chain. While the market, globally, is in a state of oversupply, this is almost entirely contained within the Chinese market. Prices peaked at US$580/kg in June 2022 before tumbling as Chinese refiners pumped out material and local LED and rare earth magnet markets were crunched by Covid lockdowns. Gallium consumption has accelerated from just 4t in 2005 to 335t in 2024, according to RFC. But in the same time, China's output of low purity gallium has risen from 22t to 750tpa, thanks to demands from its government that aluminium smelters produce the high-tech material as a by-product. Now China holds around 98.4% of the market despite being a major importer of bauxite, the material from which most gallium is extracted, reliant on ores from Guinea, Indonesia and Australia. Russia produces a further 0.8% of primary gallium, while South Korea and Japan, the two Western-aligned countries in the list, share output of just 0.8% between them as a by-product of zinc refining. And while China produces ~98% of the world's gallium it consumes just 62%, giving it great leverage. That's why export restrictions in 2023 and a subsequent ban in December 2024 on shipping product to the US – which puts around 83% of its gallium consumption into semi-conductor wafers needed for applications like lasers, security sensors and AI data centres – sent prices surging to US$455/kg by November 2024. It's currently trading above US$400/kg, with Western consumers almost entirely dependent on Chinese suppliers of low purity gallium. And the market is forecast to remain tight while this situation remains, though Chinese companies could be sitting on large (but unverified) stockpiles. "With only limited new production in the West likely in the foreseeable future, China holds nearly all the cards in this commodity," RFC's analysts said. "This is a significant problem for Western markets, and material availability has become more challenging following China's export restrictions announced in 2023." Market growth While opaque, RFC estimates around 55% of gallium-based semiconductor production actually occurs in the West, heightening concerns around its exposure to a market dominated by China, which could be leveraged if a tech trade war escalates. As demand for gallium has increased in the West, weak economics has ironically prompted the idling of capacity from non-Chinese players in placed like the UK, Hungary, Germany and Kazakhstan. While around 280t of scrap recycling capacity does exist, mostly in China but also in places like Canada, the US, Japan and Slovakia, primary supply has been harder to establish. So far two serious contenders to supply gallium in the near term have emerged. One, a 50tpa plant proposed in Greece by Metlen Energy and Metals to complement its alumina operations in Agios Nikolaos, could supply 7% of the global market. Another is a 3.5tpa demonstration plant planned by Rio Tinto (ASX:RIO) at its aluminium ops in Quebec, Canada, which could be parlayed into a 40tpa commercial-scale facility should those studies prove successful. On top of that Trafigura-owned zinc refiner Nyrstar is studying a potential tailings operation that would produce both gallium and another critical metal, germanium, from waste at its Clarksville mine in the US, with a similar project also being studied at Lubumbashi in the DRC. "There may be other opportunities to establish new gallium capacity in the West at new or existing alumina refineries or zinc smelters; however, the technological and economic practicalities remain uncertain, especially considering that the amounts of gallium recovered are minimal and hold limited economic significance for alumina and zinc producers," RFC's report authors said. "Any construction of new capacity would need to be economically justified. Metlen's proposed new gallium plant in Greece and Rio Tinto's planned demonstration plant in Canada are both positive indicators that producing gallium in the West could once again be viable." But there could be significant benefits for any emerging players who can crack the code, with gallium production and consumption having risen sharply over the past two decades. Junior contenders Outside of those major players, a host of junior contenders have been identified by RFC in its roundup of the industry. MTM Critical Metals (ASX:MTM), where shareholders approved a name change to Metallium Ltd at a meeting on June 30, has demonstrated early success using a novel metal processing technology called Flash Joule Heating to improve gallium and germanium recover from scrap. RFC says the processing of gallium-bearing post-consumer scrap (used or old scrap) is not currently feasible due to the dissipative (small or scattered) nature of the metal in consumer products. But MTM has shown its ability to generated 90% gallium and 80% germanium recovery rates from semi-conductor industry waste. It has access to high-grade material grading up to 20% indium, 15% gallium and 18% germanium from US metals recovery experts Indium Corporation. Also looking to produce gold from e-waste, green cement from red mud (alumina waste) and potentially other critical metals like lithium, antimony and rare earths, a recent $50m raising recently placed MTM on track to become a commercial critical metals producer in the US domestic market within 12 months. In WA, RareX (ASX:REE) has identified high-grade gallium in historic drilling at its Cummins Range project in the state's Kimberley region, a deposit which already hosts a large resource of rare earths and phosphate. RFC noted those results were followed in May by a strategic collaboration agreement with Gega Elements, an Aussie company looking to develop a new gallium extraction technology. "This partnership with Gega Elements begins to position RareX as one of a select few large-scale potential gallium developments outside China. Gallium is critical for semiconductors, 5G, and defence – yet almost entirely controlled by a single jurisdiction," REE MD James Durrant said at the time. "Through this collaboration, we're working to change that, leveraging RareX's resource scale and Gega's science-driven approach to build a truly sovereign supply solution.' Nimy Resources (ASX:NIM) also cops a mention. Its Mons project includes the Block 3 discovery, a 3km by 1.5km wide target where chlorotised schist believed to hold gallium grades far exceeding those found in bauxite deposits has been identified by the junior. Nimy recently wrapped up resource drilling at Mons, having previously stated an exploration target of 9.6-14.3Mt at 39-78ppm gallium. Grades are estimated to be far higher in the schist portion of the exploration target (1-1.3Mt at 103-153ppm Ga), suggesting the project could be amenable to selective mining or ore sorting techniques.
Wall Street Journal
26-06-2025
- Business
- Wall Street Journal
China Is Still Choking Exports of Rare Earths Despite Pact With U.S.
Two weeks after China promised the U.S. it would ease the exports of rare-earth magnets, Chinese authorities are dragging out approval of Western companies' requests for the critical components, a situation that could reignite trade tensions between Washington and Beijing. Western companies say they are receiving barely enough magnets for their factories and have little visibility of future supplies. Firms are waiting weeks as Chinese authorities scrutinize their applications—only to be rejected in some cases. And applications for raw rare earths, which are used to make magnets, are rarely granted.
Japan Times
30-05-2025
- Business
- Japan Times
Western businesses will not return to Russia
In recent weeks, Russian officials have promoted the idea that once the war in Ukraine ends, Western businesses — particularly American companies — would be welcome to return to Russia. The administration of U.S. President Donald Trump has responded with interest. But how realistic is that prospect? Would Western investments and joint ventures really come back? The Greek philosopher Heraclitus once famously observed, 'No man ever steps into the same river twice, for it's not the same river, and he's not the same man.' The same could be said of Russia. In the 1990s, following the Soviet Union's collapse, Western businesses poured into the country. Over the next 30 years, these businesses invested hundreds of billions of dollars in Russia, bringing not just capital but also expertise and institutional connections. In many ways, they helped integrate Russia into the global economy. That legacy has been largely erased. On paper, several thousand Western companies still operate in Russia, but most are little more than mailboxes or fronts for Russian business entities. The few remaining Western firms with meaningful operations are effectively trapped: they either cannot exit the market or are being pressured to sell their assets — often at huge losses — to well-connected Russians.
Russia Today
13-05-2025
- Business
- Russia Today
Putin sets conditions for return of Western firms
Russia is ready to welcome back some of the Western companies that left its market after the escalation of the Ukraine conflict, as long as it serves Moscow's economic interests, President Vladimir Putin has stated. Back in 2022, numerous US, European, and Asian companies pulled out of Russia, citing supply problems brought about by the sweeping Western sanctions imposed on Moscow, as well as fears of secondary sanctions or public relations fallout. Speaking during a meeting with Russian business leaders on Tuesday, Putin said that 'we need to look at how [these companies] have behaved.' Those who 'have been rude, insulted us' should be denied the right to re-enter the Russian market, he said. Commenting on suggestions that a simple apology from other firms would be sufficient, the Russian president replied, 'Well, no. This is clearly not enough.' He explained that shrewd Western business executives would readily offer apologies if they were interested in returning to the Russian market. 'This is not enough. We absolutely must consider all these issues from a pragmatic viewpoint,' Putin stated. '[If] it is in our best interest that some company or another comes [to our market], then we need to let it in. I'll put it simply: If not, we need to find a thousand reasons why it shouldn't be here,' he clarified, adding that the vast majority of such reasons would be in line with the World Trade Organization's guidelines. In March, Putin ordered the Russian government to draft clear, tight regulations for Western firms seeking to return to the country's market, that would prioritize the adequate protection of local businesses. Speaking to reporters last Thursday, President Putin's investment envoy, Kirill Dmitriev, revealed that 'some firms [that have left the Russian market] are already returning. It's just that there is no publicity around it.' Late last month, figures by Russia's patent office, Rospatent, indicated that McDonald's submitted more than 50 trademark applications at the end of 2024, covering food items and beverages. Some commentators suggested that it might point to the American fast-food chain's plans to return to the country. Also in April, TASS, citing Rospatent filings, reported that South Korean automaker Hyundai had also registered at least eight new trademarks in Russia. In March, LG Electronics confirmed it had resumed operations at its home appliance plant in Moscow. Italian household appliance manufacturer Ariston also announced its return to Russia around the same time.
