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Sources: Sanctioned copper company UMMC is in talks with state-seized gold mining firm UGC to buy it.

Two industry sources said on Wednesday that the Russian copper producer UMMC was in talks with the Russian government about acquiring a majority stake of the gold mining company UGC, which the state had seized in July.

Sources confirmed a report in the Izvestia paper that said a company called Atlas Mining, which holds certain UMMC assets is negotiating the acquisition with the Finance Ministry.

Neither the UMMC nor Finance Ministry responded when asked for comment.

In July, the Russian general prosecutor’s office won a case to transfer the ownership of UGC, Russia’s fourth largest gold producer, to state. They claimed that it was acquired "through corruption."

Formerly owned by Russian billionaire Konstantin Strukov who bought gold-producing assets from a bankrupt Soviet era company in 1997 at a bargain-basement price.

Since the beginning of the military operation in Ukraine, the Russian state has taken over $50 billion in assets from Western companies and Russian owners. This is the largest redistribution in Russia since the privatisation of property in the 1990s.

These seizures have been justified by the government and courts for a variety of reasons, ranging from illegal acquisitions to national security. The government has pledged to sell some assets.

Sources said that other bidders had previously expressed interest in UGC assets but were no longer interested. Sources said that there would be a formal bid process but the outcome was "predetermined."

Both UGC and UMMC fall under Western sanctions.

The shares of UGC, one of the biggest public offerings in Ukraine since the beginning of the conflict, dropped by 8% on Tuesday due to fears that its shares could be delisted. This was described by a third party as a fear of possible delisting.

Izvestia cited anonymous sources to report that the government was seeking 100 billion roubles (US$1.23 billion) in exchange for its stake in UGC. UMMC offered half of this amount.

UMMC announced in 2022, that the previous owners of its company, billionaires Iskander Mahmudov and Alexei Bokarev no longer owned shares. The company has not disclosed its current owners.

In September, the Finance Ministry announced that it planned to sell 67% of its stake in UGC by the end October following an evaluation.

According to UMMC, the website, Gazprombank holds 22% of UGC and minorities own the rest. (Additional reporting and editing by Darya Corsunskaya, Elena Fabrichnaya, Gleb Bryanski)

(source: Reuters)