THE world’s biggest mining companies can no longer afford to ignore Russia’s mineral riches, Brian Gilbertson, the former BHP Billiton chief executive, said yesterday.

But investors in Russia need to be prepared to work with a local partner, Mr Gilbertson, who is working for two Russian oligarchs, said. Investors would have to realise “they might not (emerge with) control in the traditional sense”, he added.

Unlike the world’s leading oil companies, the main mining companies, such as BHP Billiton, Rio Tinto and Anglo American, are yet to commit to Russia, despite the country’s abundant mineral wealth. The companies have cited concerns over the country’s investment climate after the Yukos scandal. Two months ago Chip Goodyear, Mr Gilbertson’s successor at BHP Billiton, described Russia’s business environment as “developing and still fairly immature ”.

Mr Gilbertson yesterday tried to play down the political risks, pointing out that the Russian Government’s protection of its natural resources was in line with similar stances taken by South Africa and countries in South America.

He said: “All I would say is that as a foreigner, if I were looking to invest in (Russia) as head of one of the major mining groups, I would seek a local partner. You have to look at it through a different set of lenses.”

Mr Gilbertson, who is president of Sual, the aluminium miner controlled by Victor Vekselberg and Len Blavatnik, is in the process of adding coal and power generation assets to the group.

Speaking after addressing the Russian Economic Forum in London, Mr Gilbertson said that Sual was not pursuing a public listing. There had been speculation that Mr Vekselberg and Mr Blavatnik were planning an initial public offering in London or New York.

Mr Gilbertson said that Sual would have sufficient funds from cashflow and debt facilities in order to fund a growth programme that could include $4 billion (£2 billion) of additional aluminium-smelting capacity and the development of the $1 billion Komi bauxite-alumina project in Russia.

Sual had sales of $2.3 billion last year, up $600 million on 2003. Earnings before interest, tax, depreciation and amortisation increased by 20 per cent to $400 million.

Sual is in discussions with Rusal, the rival aluminium group controlled by Oleg Deripaska, Russia’s second-richest man, to develop Komi in a joint venture.

Separately, Mr Deripaska has hinted at adding an oil production arm to his Basic Element empire, which, apart from Rusal, also includes a huge timber business. Basic Element owns a substantial petrol station network and Mr Deripaska is planning to invest in Russian oilfields to protect his supply.

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