Russia Fails Again to Sell Majority Stake in Gold Miner UGC Amid Budget Pressures
Failed Auction and Its Implications for Russia's Budget
Background: Seizure and Nationalisation of UGC
MOSCOW, May 26 (Reuters) - Russia has failed for a second time to auction a stake in gold producer Uzhuralzoloto (UGC) that it seized last year, the federal property management agency said on Tuesday, dealing a blow to the government as it seeks to ease budget pressures.
A Russian court ruled last July that a majority stake in UGC, previously owned by businessman Konstantin Strukov, should be seized and transferred to the state, part of a broader pattern of nationalisation of Russian corporate assets.
Details of the Latest Auction Attempt
The latest auction follows an attempted sale earlier in May, when no bids were received for Strukov's assets. The lot, with a starting price of 162.02 billion roubles ($2.22 billion), included a 67.2% stake in UGC.
Budget Pressures and Auction Outcome
BUDGET PRESSURES
This time, the auction was declared invalid because only one bidder submitted a complete application and paid the deposit. A second contender failed to pay the deposit and provide the required documents, the agency, Rosimushchestvo, said in a statement.
The agency has not said whether it will hold another auction.
Impact on the Finance Ministry and Future Prospects
As budget strains deepen, the failed sale is a setback for the finance ministry, which had planned to sell the stake by the end of 2025. It did not reply to a request for comment.
Challenges in Attracting Qualified Bidders
The lack of qualified bidders was despite the sale being structured as a Dutch auction, in which the price is gradually lowered until a bid is placed. This could have seen the stake sell for as little as 50% of the initial asking price.
Comparison with Other Asset Sales
Another court-confiscated asset, Moscow's Domodedovo Airport, was sold via Dutch auction for the minimum price of $869 million in January, with only one bidder participating.
Shares were down 7.67% on the Moscow Exchange in afternoon trading.
(Reporting by Anastasia Lyrchikova. Additional reporting by Darya Korsunskaya. Writing by Alessandra Prentice. Editing by Guy Faulconbridge and Mark Potter)