Petropavlovsk chief steps aside to be senator

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The chief executive of Petropavlovsk has been made a Russian senator, triggering a management reshuffle at the London-listed Russian gold miner.

Pavel Maslovsky, co-founder of the former Peter Hambro Mining and the largest individual shareholder, has been nominated a senator from Amur, the remote region of the Russian Far East where he has overseen the development of four gold mines.

Sergey Ermolenko, general director of the company’s Russian operating subsidiary, will now become chief executive. Mr Ermolenko has been an executive at the company since its 1994 founding. In a statement Mr Maslovsky described Mr Ermolenko as “my right hand through all these years”.

Mr Maslovsky is considered the driving force behind the business, which is Russian in all respects save its Belgravia head office, where chairman and co-founder Peter Hambro liaises with Petropavlovsk’s London investor base. Mr Maslovsky’s 7.9 per cent stake is worth nearly $200m and exceeds Mr Hambro’s 4.6 per cent stake.

“In our opinion Mr Ermolenko’s appointment should not only boost the board’s independence but provide it with decades of hands-on technical and practical experience,” said analysts at Oriel Securities, adding that the appointment should be “helpful in bringing on line a number of expansions and new mines”.

Mr Ermolenko speaks little English and will be assisted in London visits by Martin Smith, the new deputy chief executive. Mr Smith, another executive who has served since 1994, is the company’s technical director.

The shuffle of the long-serving management team comes as Petropavlovsk moves further away from its roots as an Aim-quoted start-up operating one gold mine on the border of Russia and China. The company expects to produce 600,000 ounces of gold this year, putting it in the same league as Randgold, the FTSE 100 gold miner that expects to produce up to 700,000 ounces.

As a member of the Federation Council of Russia, or upper house of parliament, Mr Maslovsky will not be a politician. Rather he will be equivalent to a member of the UK’s house of lords. On December 4 he won election to the regional parliament of Amur, where he has been a face of big business for 15 years. The region then nominated him as their senator.

“He doesn’t have political ambitions, but this is a period in his life when he will be involved in political administration,” said Mr Hambro. “We are a big part of the economy in Amur, and over the years people have kept saying that he should be involved.”

Mr Maslovsky, a former professor of metallurgy at the Moscow Institute of Aircraft Technology, joins other prominent senator-businessmen including Suleiman Kerimov, the billionaire controlling shareholder of fertiliser producer UralKali.

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