KALAHARI, SOUTH AFRICA - In one of the great film comedies to have reached the world from South Africa, "The Gods Must Be Crazy", a member of the Bushman people of the Kalahari region is surprised to discover what he imagines to be a gift from the gods. It happens when a Coca Cola bottle, tossed carelessly out of a small plane by its pilot, lands intact in the sand. Since the Bushmen do not traditionally have the concept of individual ownership, which the bottle inspires, Xi, its discoverer, decides to return the bottle by tossing it over the edge of the world.

That magical promises can still drop from the sky continues to bemuse South Africans in the Kalahari region, not least of all when they drop from the hands of Russian oligarch, Victor Vekselberg. But what exactly Vekselberg is promising, and what he will deliver, are not the stuff of comedy, at least not for those South African (SA) government officials who are in charge of mining licences, and who have been saying quite different things about the fortune that has just befallen the Kalahari.

The recent award of an exploration and mining licence in the Kalahari region to Vekselberg's Renova group, and its SA partners, Chancellor House and Pitsa ya Setshaba, has been confirmed in Moscow by Renova officials. The farm areas identified in the licence, according to Renova sources, are Heuningdraai and Mooidraai; according to local experts, these are located in the southern zone of the Kalahari Manganese Field (KMF).

Jacinto Rocha, who supervises licensing at the Department of Minerals and Energy (DME) in Pretoria, told The russia Journal: "Renova has not been issued a licence". But he confirmed that Renova is the "technical partner" of Chancellor House and Pitsa ya Setshaba, and according to Rocha, the latter two companies have been awarded a KMF licence. Rocha was emphatic that "there is no relation between the DME and Renova."

Renova has told The Russia Journal it is planning to develop a major new manganese mine in the KMF, and if exploration and mining plans meet expectations after a year or two of preliminary work, Renova plans to lift about 2 million tons of manganese ore per annum, and to process this into a new ferroalloys plant in the Coega area. The plant is on the drawing-board to produce 500,000 tons of manganese per year, according to Renova.

About 80% of the world's commercially mineable manganese ores are located in the KMF, located in SA's Northern Cape province, where Samancor mines at sites around Hotazel. When alloyed with steel, manganese adds hardness and other valuable qualities to the fabrication of steel products. Samancor lifts up to 3.4 million tons of ore per annum. At a nearby plant, this is processed into ferro and silicomanganese. According to Samancor, it produces between 300,000 and 420,000 tons annually.

In addition, Assmang, which is jointly controlled by African Rainbow Minerals (ARM) and Assore Ltd., mines just over 1.5 million tons of manganese ore from the Nchwaning and Gloria mines in the same region. Last year, Assmang reports producing more than 200,000 tons of manganese alloys. It has announced a capital expenditure programme of R748 million to more than double its manganese output over the next five years.

For the time being, the Renova mine target is substantially larger than Assmang's, and at least in terms of alloys, on a par with Samancor. The alloy target may be difficult to reach if, as local experts believe, the farm areas Renova has been allocated by the DME hold relatively lower-grade ores than the areas already being mined in the northern zone of the KMF.

An industry report in July hinted that there has been rivalry for fresh KMF licences between the Assmang and Renova groups. But Jan Steenkamp, who heads ARM's manganese mining operations, told The Russia Journal this is not true. He said he is aware that Chancellor House and another group, Kalahari Resources, had recently received licence confirmation letters from DME, and that his group is still waiting on word. "We have submitted a prospecting permit application for Mukulu," Steenkamp said, adding that "it is not clear if we have been successful. [We] cannot get an answer. " Rocha told The Russia Journal on Friday that he had just "signed off on one of Assmang's applications," but he did not identify it. Rocha said that Mukulu had not gone to the Renova group.

The Mukulu farm territory is in the northern zone of the KMF, and borders Assmang's Nchwaning mine area. Assmang already owns the surface area. Below the surface, according to Steenkamp, it is a potentially high-grade manganese resource, and because of its proximity to the Nchwaning mine, it would "make a lot of business sense for us to extend over the farm boundary." Even if there were to be the potential for competition from the Renova group in the mining of manganese in the Kalahari, Steenkamp added, "we have the resources for supporting 25 years of mining. Mukulu would add another five years."

Last year, Renova indicated that it intended to raise all of the funds required for the SA manganese project, but would hold just 40% to 45% of the joint venture company. The balance of the shareholding would be held, Renova now says, by South African companies belonging to black businessmen. These include Chancellor House, headed by Netsianda Mamatha; and Pitsa ya Setshaba Holding, whose president is listed as Mbethe Lazarus Modijame, and legal counsel, Larry Sternbuch. Pitsa ya Setshaba was registered in SA on September 4, 2004.

"I know the companies," Rocha told The Russia Journal. "I know they are South Africans." Asked what mining experience they have for the manganese project, Rocha said that "in looking at a company, there must be someone who knows." Sternbuch told Mineweb that "certain members [of Pitsa ya Setshaba] might have [mining experience]." But he identified Mbethe as an "entrepreneur". In putting the manganese mining project together, Sternbuch said "it was his [Mbethe's] initiative. He put the deal together."

Renova is owned by Victor Vekselberg, a Russian whose control of oil, bauxite and aluminium assets have raised him, in terms of net worth and economic power, to Russian oligarch status. But Vekselberg has registered Renova in the US, where he himself holds immigrant status. Renova's headquarters remain in Moscow, and in South Africa, the group's business is led by Mark Buzuk, a former aluminium trader whose company serves as Renova's consultant in SA. Buzuk emphasizes that he is not an employee of Renova.

Like his fellow aluminium oligarch Oleg Deripaska, Vekselberg has been looking for some time in Africa to find a safe haven for his mining and mineral assets. Last year, Vekselberg visited South Africa at least twice, according to those he met. The first time was in February, and the second in November, when he left an adventure safari arranged with Mikhail Fridman, a partner in their former Tyumen Oil Company business, and the oligarch who heads the Alfa Bank group. In addition, those who have met him say Brian Gilbertson -- since last August, Vekselberg's appointee as chief executive of the Siberian Ural Aluminium (SUAL) Group -- has been calling or meeting with every major South African mineral company, looking for takeover or merger targets. SUAL mines bauxite in northern Russia, and produces alumina and aluminium. It trades its metal according to Russian tax optimization schemes that have come under increasing scrutiny from the tax authorities in Moscow in recent months.

Through Gilbertson, SUAL has made a public bid to substitute for Alcan to build a billion-dollar aluminium smelter at the Coega industrial area in southern SA. But as Alcan of Canada appears the more likely candidate for that project, Renova is now offering its ferroalloys plant instead. This is estimated by Renova sources to cost about $200 million.

What exactly the SA government knows about Renova, or expects from it, is unclear, as senior DME officials have made differing public statements. During a visit to Moscow last September, Lulu Xingwana, Deputy Minister of Minerals and Energy, told The Russia Journal she had met with Renova officials, and in a public speech she endorsed what she claimed was Renova's intention to invest in SA. In November in Pretoria, Russia's Minister of Natural Resources, Yury Trutnev -- who also serves as co-chairman of the SA-Russia intergovernment commission -- mentioned Renova, after meeting with Xingwana. Less than three months later, this time in Moscow, Trutnev's ministry issued an official communique reporting on a meeting which Renova had arranged for Pitsa ya Setshaba at the ministry's office. A press release, posted on the ministry website on February 1 in Moscow, claimed that Deputy Minister Valentin Stepankov had personally endorsed Renova's SA mining bid. " One of the major tasks for [the Ministry]," Stepankov was cited as saying, "is the creation of optimum conditions for the activity of Russian mining companies abroad, with a view to maintain the development of the Russian economy." When asked why Stepankov, a former prosecutor and politician in the Perm region, would endorse a foreign mining project, he refused to respond. Trutnev's s pokesman, Rinat Zinatullin, also declined to clarify why a commercial negotiation between Renova and the newly formed SA company had attracted his ministry's attention and endorsement.

In March, Sandile Nogxina, the DME's director-general, was in Moscow to meet Trutnev, and also officials from the Russian Foreign Ministry and Ministry of Economic Development and Trade. His was a "technical mission," Nogxina told The Russia Journal. He also confirmed that in Pretoria his department had started to review an application for a mining licence from Renova and Pitsa Ya Setshaba. According to Nogxina, it was as part of this review that he had despatched t hree experts from DME to the central Russian region of Sverdlovsk, where SUAL owns a bauxite mine, aluminium smelter, and plants for rolling aluminium sheet and foil. Their purpose, Nogxina said, "was to assure themselves that Renova has the technical capacity."

According to Nogxina, as of March Renova had yet to make an investment in South Africa. If and when it did, he said there would be a further SA government review of the Russian group's financial status . Referring to the February 1 statement by Stepankov endorsing the planned venture in SA between Renova and Pitsa Ya Setshaba. Nogxina responded: "it is not the policy of SA government officials to endorse particular companies."

When Rocha was asked last week to say what assessment he had made of Renova, in connexion with the award of the KMF licence, he said: "since Renova did not apply for a licence, we didn't have to assess it." Asked if Renova or the Russian Minister Trutnev had been lobbying for the award of the KMF licence, Rocha replied: "I take decisions on whether [applicants] comply or do not comply. Whether they are lobbying or not is irrelevant."

Outside South Africa, Renova has serious legal problems, which have been reported in detail in The Russia Journal and in the Russian press. The Vekselberg holding is a defendant in a US court case, in which it is one of several defendants, who are accused of stealing crude oil and oilfields belonging to a Canadian oil company. Late last month, a federal appeals court in New York overrturned a lower court ruling that there was no US jurisdiction to try the case. The charges against Renova will now proceed to trial. In addition, Vekselberg and Renova are accused of stealing an aluminium smelter in the city of Volgograd in proceedings now under way in Moscow.

Rocha dismissed these claims as "irrelevant for us. In South Africa Renova has not committed a crime."

SA officials are also unclear on what investment Renova is likely to bring to the KMF. Renova sources have told The Russia Journal they are estimating the first-stage geological exploration of its licence territory will take about 12 months, and cost between $10 and $20 million. Depending on the exploration results, Renova says that after 24 months, it may start building a mine for a cost of about $50 to $70 million. The ferroalloys processing plant would follow after about 48 months, and require an investment of about $200 million. The timing, costs, and capital expenditure required remain to be decided after the prospecting studies are completed.

Asked to specify what financing Renova intends to bring into SA, company sources suggest this will be limited to the first-stage exploration and preparation of a feasibility study. The company then intends to seek financing from other sources for the project. Although fund-raising awaits exploration of the KMF, Renova told The Russia Journal, it has already agreed on a "strategic partnership" with SA mining consultancy, Bateman.

Cheryl Langbridge, a spokesman for Bateman, which is now owned by the Israeli diamantaire Beny Steinmetz, told The Russia Journal in a prepared statement that "in order to advance the development of joint South African – Russian projects, Renova Group of Companies have signed a Memorandum of Understanding with Bateman Africa, a leading South African company providing integrated project-management and process engineering services to mining and processing companies. The document, signed on June 24, 2005 by Pieter du Plessis, CEO of Bateman's Minerals & Metals division, and Mark Buzuk of Renova [sic] provides for a long-term cooperation between the two companies to promote and develop Renova's projects in the South African mining and metallurgical industry." Langbridge hinted that Bateman's primary role will be to persuade SA banks to lend money to the project. " As Bateman is not only a process engineering company but also an experienced financial consultant," Langbridge said, "cooperation with Bateman on this aspect will allow Renova to exploit financing opportunities for joint projects, including «Manganese of Kalahari»."

Steinmetz declined to say if he has been dealing with Vekselberg on this, or related business. A Renova source told The Russia Journal: " "We don't know. It's Vekselberg's personal matter." But is there an agreement between Renova and Bateman, or between Steinmetz and Vekselberg, to drop a fortune on the Kalahari? According to the Renova source, the answer is "no."