Russia’s Dead Billionaire Coal King Leaves Potential Financial And Environmental Disaster Behind
It’s been ruled a suicide. But then again, this is Russia. We don’t know what happened.
To the Fatherland in which he was born, Dmitry Bosov, 52, dead of a gunshot wound in his Moscow mansion on May 6, was the coal king. He made his fortune, like so many other billionaires there, in the heady days of privatization under the Boris Yeltsin government in 1992. Some got aluminum mines, some got oil and gas fields. Bosov got the hard coal that is turned into coke that is used by the Europeans, mostly, to make steel. In his passing, a potential financial and environmental disaster awaits his company Sibanthracite. “Sib” means Siberia. Anthracite is the “hard coal” that’s made Bosov a billionaire.
The debt load of Sibanthracite exceeds his net worth, which is estimated by Forbes to be a hair over $1 billion.
There’s now a fierce struggle is being waged between its former and current shareholders for ultimate control of the company and its assets. It’s being waged Russian style and Russia watchers and investors know what that means. It’s hard to get into the details because the details are murky.
One executive in the company who could not talk on the record told me Sibanthracite projects are being closed one after another. The construction of the Severomuisky Train Tunnel-2 is frozen. The deal to sell the company’s subsidiary, Arctic Mining Company, to businessman Roman Trotsenko has fallen apart. After due diligence, it became clear that there was too much financial and environmental risk baked into the buy.
Below is a Sibanthracite corporate video from YouTube to see what they do.
This is not a small entity. They produce over 20 million tons of coal. They have a revenue stream of more than 125 billion rubles, or around $2 billion.
Since May, Dmitry’s wife, Katerina Bosov is the most senior executive. She is more interested in the fashion business, and in Los Angeles, than being a coal miner’s chairwoman. She’s been thrust into the role.
Investment banks holding Sibanthracite’s debt are hoping Katerina appoints someone new to lead. The company did not return requests for comment.
Société General, Credit Suisse CS and Citibank, along with a consortium of four Russian banks, issued about $1 billion in loans to the group between 2014 and 2020. The company’s environmental problems are becoming a turn off for European lenders.
That’s okay, because Russian banks will chip in. The problem is, those banks are state owned, and they don’t want Russian oligarch dramas, of which there are many with the Bosov’s following Dmitry’s death in May.
The federal government of Russia has the most senior claim over Sibanthracite assets, so foreign banks will have to get in line, and since the line will likely be very long, it is not clear if they will get anything at all if Katerina doesn’t prove to be one of the best coal industry executives around.
At the moment, though, instead of paying hazard disposal fines and cleaning up some environmental degradation in Siberia, Katerina is electing to use reshala’s – a “special brand” of Russian lobbyists who use strong-arm tactics to minimize fines and make promises disappear at the municipal level.
This tactic makes it tougher to turn to the federal government for support.
If the U.S. has the saying “I’m with the federal government and I’m here to help you”, the Russian version of that in this situation would be more like, “I’m from the federal government and I’m here to take everything from you and if you don’t agree to clean up your mess I might even put you in jail.”
A Siberian Soap Opera
Just before his death, Bosov was set to testify against an ex-partner named Anatoliy Bykov who had just been arrested for ordering contract hits on his enemies. The very gun Bosov allegedly used in his suicide was a gift from yet another partner, ex-minister Mikhail Abyzov who is awaiting a RICO trial for allegedly running an organized crime group while being a Russian cabinet minister. Estonian media, Postimees, reported last November that Bosov and Abyzov were being watched for laundering money there.
And then there are his wives, of which there were three.
Wife number one, Eleonora Bosov, has two adult children who petitioned police for a criminal investigation of the alleged suicide as homicide.
Wife number two, Anastasia Bosov, also has two adult children.
Katerina is wife number three. She has a lot on her plate.
Over the last several months, the company started cutting costs at its core Siberian operations, cutting expenses like dump truck covers for coal transportation. Those coal miners are not happy. People living near the company’s operations in Siberia started a protest, taking images of black water, black soot in rivers and streams, and black dust in people’s homes near the mines. It made the rounds on social media.
Residents tried to sue Sibanthracite for dumping hard coal byproducts into the nearby river, and for extracting, transporting and loading anthracite in a lax way, literally next door to their homes where environmentally hazardous coal dust blew around like plant pollen, local media reported.
As Katerina began this cost cutting program, she paid $30 million in cash for a 15,000 square foot, eight bedroom, 12 bathroom mansion in Beverly Hills and – being a sellers market here in the U.S. – she paid $11 million above the listed price.
Variety called the house a tribute to the royal manor of Versailles, France. The rationale for buying it: to be close to their investment in a legalized Californian cannabis business.
All of this would have been great tabloid fodder in Russia if Bosov’s mansion in the Moscow suburbs wasn’t located one block away from Vladimir Putin himself. Bosov is the main sponsor of the amateur Russian hockey league that brings powerful business leaders on the ice with Putin. In fact, Bosov died inside his own private skating rink that he built to entertain his guests. From what I know, Putin was never one of them.
“In today’s world, environmentally unfriendly business are extremely high-risk investments,” says the same Sibanthracite executive quoted above. “Couple one of the most environmentally hazardous businesses – hard coal mining – with irresponsible, frivolous, incompetent management – and you can expect steep losses for the owners, as well as lenders and investors. People will pay for their mistakes with their jobs, with pension funds depleted. Worse case is their health and their backyards also end up being destroyed.”