Russia May Buy Metal to Buoy Producers, Medvedev Adviser Says

Feb. 26 (Bloomberg) -- Russia is considering buying metals to support domestic producers hit by the global financial slump, according to an economic adviser to President Dmitry Medvedev. The idea, proposed last year by the nation’s largest mining company OAO GMK Norilsk Nickel and the billionaire who controls Russia’s biggest aluminum producer, depends on balancing the budget, Arkady Dvorkovich said in an interview today. “It’s a perfectly good idea,” Dvorkovich said in Moscow. “If the budget has such opportunities, then it will be done. Whether there will be such opportunity is not yet clear.” Norilsk Chief Executive Officer Vladimir Strzhalkovsky and Oleg Deripaska, who controls aluminum producer United Co. Rusal, called on Russia to buy metals including nickel, aluminum and copper to help the industry and use in infrastructure projects. Russia is revising its 2009 budget based on an average price of $41 a barrel for Urals crude, Russia’s export blend, from $95. Priority in the budget will be given to fighting inflation and stimulating the economy, Dvorkovich said. The budget deficit may reach 8 percent of gross domestic product this year, after surpluses since at least 2000, the Economy Ministry says. The government hasn’t received any new merger plans for the industry and discussions between the nation’s largest producers on prior proposals will take place this week, Dvorkovich said. Deripaska and Norilsk’s main investor, Vladimir Potanin, in January said the government should oversee a merger of Russian metals and mining companies including steelmakers Evraz Group SA and OAO Mechel to help them repay debt. The proposal is opposed by Alisher Usmanov, another Norilsk shareholder, who aims to limit any transaction to a merger of the nickel company and his iron-ore producer OAO Metalloinvest. To contact the reporter on this story: Yuriy Humber in Moscow at yhumber@bloomberg.net; Lyubov Pronina in Moscow at lpronina@bloomberg.net.