The history of coal company sales is proof that hatred between oligarchs is a far more reliable market foundation than the honesty of bureaucrats.
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They killed everybody from mine directors to the governor's aides. There was even an incident when a bus carrying foreign specialists was stopped and bandits brandishing axes got on. The foreign specialists' impressions -- those that were still in one piece -- were pretty special.
There were also the World Bank loans, which you may recall, were for closing the mines. And they were indeed closed. For example, a mine would be closed and the next day a new mine would be opened with the same employees, only now the mine would be debt-free and the World Bank money taken.
For some reason the World Bank did not go to check where its money was going -- probably because it heard about the incident on the bus with the axes. They made complaints from a safe distance.
And God knows how long this saga would have dragged on if the most progressive players had not come to realize that coal is the height from which metals enterprises can be stormed. Among the first to grasp this were the Zhivilo brothers and, of course, Iskander Makhmudov's Urals Mining and Metals Co., or UGMK, allied with Yevrazholding.
To start with there was not much of a crush. The players came to an arrangement with the authorities and with one another. The money saved went toward investment and workers' wages. They made sure that the bandits were taken care of by the prosecutor's office.
Then it transpired that the coal sector had been carved up and that major metals enterprises, such as Lipetsk, Magnitogorsk and Severstal, were without coal and faced the real prospect of being swallowed up by the far-sighted and highly aggressive UGMK.
This is when the fight began. The director of Kuzbassugol, who had been loyal to UGMK, was fired and in his place the deputy chairman of the property fund was appointed. Yevrazholding tried to bankrupt the best parts of Kuzbassugol but got its wrists slapped and slapped pretty hard.
Severstal's general director, Alexei Mordashov, started stalking Kremlin corridors and complaining about Makhmudov. It was at this moment that Mordashov's abandoned wife came into the public view and Santa Barbara ? la Cherepovets was launched.
The result is that Magnitogorsk and Severstal were triumphant at the auction. However, the victory may well prove to be a Pyrrhic one. First, Magnitogorsk and Severstal had to pay over the odds for a pretty average company, while two years ago they could have bought much better companies at knock-down prices. Second, Yevrazholding and UGMK did not bother to buy expensive Kuzbassugol shares because they already hold company debts. And I doubt they will deny themselves the pleasure of devaluing the purchase of another by bankrupting the company's juiciest parts.
One other thing is clear. Kuzbassugol is the first battlefield on which Magnitogorsk has fought. The battle lines have already been drawn and the really interesting part will begin only after the auction.
Yulia Latynina is a journalist with ORT.
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