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Exclusive: Rusal to change board in bid to persuade U.S. to lift sanctions-sources

MOSCOW/LONDON (Reuters) – Russia’s Rusal will overhaul its board and management in the hope the United States will remove the aluminum firm from a sanctions list so it can restart shipments to its customers around the world, two sources told Reuters.

FILE PHOTO: Aluminium ingots are seen stored at the foundry shop of the Rusal Krasnoyarsk aluminium smelter in the Siberian city of Krasnoyarsk, Russia November 9, 2017. REUTERS/Ilya Naymushin/File Photo

The sources, familiar with the developments but who asked not to be identified because they are not allowed to speak publicly, said Rusal would soon appoint a fully independent board that in turn would install a new management team.

“Rusal is in touch with U.S. authorities and hopes the measure will be enough for them to be removed from the sanctions list,” one of the sources said. Rusal declined to comment.

The United States this month imposed sanctions against billionaire Oleg Deripaska and the eight companies in which he is a large shareholder, including Rusal, in response to what the United States called “malign activities” by Russia.

By adding Deripaska’s businesses to its Specially Designated Nationals blacklist – the first time Washington had done so with a publicly listed Russian firm – the United States effectively choked off their access to the international financial system.

Rusal, the largest part of Deripaska’s empire and the world’s second-biggest aluminum producer, has seen customers stop buying its aluminum and creditors scramble to offload debt.

Hong Kong-listed Rusal lost almost 60 percent of its share value after the introduction of sanctions, while aluminum and alumina prices soared, hitting businesses around the world, including in the United States.

Earlier this week, the United States moved to ease some of the measures against Rusal, saying it did not want to hit companies around the globe and that it could remove Rusal from the list if Deripaska ceded control.

The two sources added that Rusal hoped Deripaska could keep his stake in the firm at the current 48 percent under any arrangement with U.S. authorities.

“Forty-eight percent is not a controlling stake of 50 percent, which under the U.S. rules triggers the sanctions,” one of the sources said.

The source added that Rusal was still not shipping to customers around the world as it awaited guidance from U.S. authorities.

“Rusal needs clarity from OFAC before it can resume those shipments,” the source said, referring to the Office of Foreign Assets Control of the U.S. Treasury, which enforces economic and trade sanctions based on U.S. foreign policy and national security goals.

Aluminium prices in London fell nearly 2 percent on the news to a low of $2,237 per tonne.

Reporting by Polina Devitt and Dmitry Zhdannikov; Editing by Dale Hudson and Jason Neely

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Bitcoin frenzy settles down as big players muscle into market

LONDON/NEW YORK/SINGAPORE (Reuters) – After bouncing up, falling down and keeping investors on the edges of their seats, bitcoin may be maturing into a period of relatively boring stability, experts say.

Tokens of the virtual currency Bitcoin are seen placed on a monitor that displays binary digits in this illustration picture, December 8, 2017. Picture taken December 8. REUTERS/Dado Ruvic/Illustration

A worldwide wave of regulation has led to a collapse in trading volumes. Cryptocurrency advertisements are disappearing from top internet pages, and bitcoin no longer dominates Google searches.

As investors try to figure out what bitcoin wants to be when it grows up, the best-known cryptocurrency is going through somewhat of an existential crisis.

“It needs a new narrative,” said Nicholas Colas, New York-based founder of investment research firm DataTrek. “There is every chance that if there is some sort of institutional involvement, there could be a move higher.”

Bitcoin rallied 25 percent in April after crashing 70 percent from a high near $20,000 late last year.

The cryptocurrency landscape has indeed changed. Mom-and-pop investors who drove bitcoin’s skyrocket rise in 2017 have been pushed aside by government bans on trading, and replaced by cryptocurrency funds, wealthy individuals and established financial firms.

The bigger players can make bigger moves, but their trades are often obscured by screens on over-the-counter (OTC) brokerages and matching platforms.

They are also less likely to chase sudden swings in bitcoin’s value, being more interested in the potential of unproven but promising blockchain technology.

Average daily traded volumes across cryptocurrency exchanges fell to $9.1 billion in March and to $7.4 billion in the first half of April, compared with almost $17 billion in December, according to data compiled by crypto analysis website CryptoCompare.

Several exchanges saw their daily trading volumes drop by more than half between December and March, including Bitfinex, Poloniex, Coinbase and Bitstamp, the data shows.

Cryptocurrencies’ biggest-ever trading day was Dec. 22, when volumes topped $30 billion, according to CryptoCompare.

On April 8, volume sagged to $4.6 billion, the weakest day since last October, according to the data.


The theory that bigger institutions will make bitcoin markets less volatile and more liquid has grown as new OTC exchanges spring up, carrying names such as Circle, Octagon Strategy, Cumberland and Kraken.

Digital exchange Gemini’s new block trading product allows high-volume trades that will be invisible to other traders until the orders are filled.

Cumberland, one of the biggest block traders, has counterparties in more than 35 countries and quotes two-way prices in about 35 crypto assets.

Gatecoin, a Hong Kong-based crypto exchange, saw retail volumes plunge from peaks of $100 million a day last September, said Aurelien Menant, its founder and chief executive.

But, he said, as institutional players enter the market, OTC trades hidden from view have pushed up overall volumes in a way that doesn’t show up in data. Gatecoin also operates an OTC platform.

Few institutions have gone public about their plans to trade cryptocurrencies, and many asset managers say they still aren’t sure the digital currency is more than a fad.

But a Thomson Reuters survey this week found one in five financial institutions is considering trading cryptocurrencies in the next 12 months. Of those, 70 percent said they planned to start trading in the next three to six months.

In the meantime, the price of bitcoin may be stabilizing, at least on paper. The futures market BTCc1 shows bitcoin staying nearly flat – between $8,900 and $9,050 – until September.

Gatecoin’s Menant, however, is considerably more bullish. He reckons the currency might end the year above $100,000, but acknowledges that’s a gamble.


Joe Duncan, founder of Singapore-based Fintech firm Duncan Capital, expects to see retail investors return to trading as governments slowly relax their cryptocurrency rules.

“But bitcoin could still lose some market dominance,” Duncan said.

Thomas Lee, managing partner and co-founder of Fundstrat Global Advisors in New York, said the bitcoin market is languishing in a “purgatory” phase somewhere between a bear and a bull market. He predicted that could continue until at least September.

One issue is that although many of the big institutions are curious about how bitcoin’s underlying blockchain technology could revolutionize the financial sector, bitcoin isn’t widely accepted as currency and has no intrinsic value.

That, and the currency’s intense volatility, make it challenging for investors to forecast a price.

Some analysts think bitcoin will retain a premium as a security, like gold, in the digital world, while other cryptocurrencies are used for commerce.

Others see it as just another asset.

“One of the reasons to own cryptocurrencies is because they are an effective hedge,” said Sam Doctor, a data analyst at New York-based Fundstrat, a research firm whose founder is a well-known bitcoin bull predicting large rises this year. “Until something happens to disprove that thesis, you aren’t looking to sell them so long as other asset classes are falling.”

Additional reporting by Gertrude Chavez in NEW YORK and Ritvik Carvalho in LONDON; Editing by Gerry Doyle

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Solid March quarter for First Quantum

First Quantum produced 145,358 tonnes of copper from Sentinel during the three-month period, up 39% year-on-year, at an all-in sustaining cost of US$1.72 per pound ($3,791.95 per tonne).

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Tech gains and Korean vibes give world stock markets a boost

LONDON (Reuters) – World stocks rose on Friday, lifted by strong share price gains for tech giants such as Amazon and Facebook and growing hopes of a lasting peace on the Korean peninsula after a ground-breaking meeting of North and South Korean leaders.

FILE PICTURE – The logo of the web service Amazon is pictured in this June 8, 2017 illustration photo. REUTERS/Carlos Jasso/Illustration/File Photo

European shares were set to end the week with a flourish too with a pan-European index set to post its fifth week of gains in a row, rivaling last September’s winning streak, with the tech sector strongly outperforming.

The latest gains are being partly spurred by forecast-beating first quarter earnings from two of the so-called FANG tech stocks — some of the world’s largest and most influential companies by market capitalization — which has boosted sentiment on the technology sector worldwide. Inc shares jumped more than 6 percent in after-market trading while Facebook surged 9.1 percent on Thursday, calming worries about the fallout from its use of consumer data.

“Macro-economic data has been soft in a number of key economies, so it is reassuring that amidst those concerns we are still seeing strong earnings numbers coming through from big ticket corporates such as Amazon and Facebook,” said Investec economist Victoria Clarke.

“This is a good gauge of the broad drivers of sentiment particularly when there are those concerns about demand holding up in the face of weak economic data,” Clarke added.

European tech shares rose 0.75 percent to the highest in more than five weeks, buoyed also by gains in local IT and chipmaking firms such as Capgemini, ASML and Infineon.

In Britain, there was bad news on the growth front, with data showing the economy slowed much more sharply than expected in the first three months of 2018.

That has slashed market expectations of an interest rate increase by the Bank of England next month and sent sterling plunging to the lowest since March 9 against the dollar

The data indicated “that the (UK) slowdown is more structural”, Mizuho’s head of hedge fund sales, Neil Jones, said.

South Korean President Moon Jae-in and North Korean leader Kim Jong Un walk together at the truce village of Panmunjom inside the demilitarized zone separating the two Koreas, South Korea, April 27, 2018. Korea Summit Press Pool/Pool via Reuters

However, sterling’s slide helped UK shares on the FTSE index to rise nearly half a percent with gains led by multi-national earners which earn a big chunk of their revenues overseas but report profits in pounds.

The weak data adds to concerns that economic growth across the developed world is running out of steam, especially after lackluster euro zone figures earlier in the week and data on Friday showing French economic growth slowed more than expected in the first quarter.

“The euro zone’s economy doesn’t seem to have the type of momentum it had last year,” said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.

Earlier, though, Asian markets reveled in the glow of the summit between North Korea’s Kim Jong Un and South Korean president Moon Jae-in. Political leaders and investors hope this would ease tensions over Pyongyang’s nuclear weapons program and pave the way for the North and South to end their decades-long conflict.

That helped Seoul shares briefly rise more than 1 percent to a one-month high and the won firmed. MSCI’s index of Asian shares outside Japan rallied 0.8 percent and Japan’s Nikkei share average rose 0.7 percent to two-month peaks.

The dollar meanwhile hit its highest since Jan. 12 against a basket of currencies, having benefited from the recent run in U.S. Treasury yields — 10-year yields hit 3 percent this week for the first time since January 2014.

With a weekly gain of more than 1.5 percent, the greenback is set for its best weekly performance since late-November 2016.

“U.S. rates didn’t matter for the dollar, now they do and our positioning metrics suggest there is further scope for short dollar positions to be unwound,” said Michael Sneyd, global head of FX strategy at BNP Paribas in London.

For Reuters Live Markets blog on European and UK stock markets open a news window on Reuters Eikon by pressing F9 and type in ‘Live Markets’ in the search bar

Reporting by Abhinav Ramnarayan, Additional reporting by Saikat Chatterjee and Helen Reid in LONDON and Masayuki Kitano in SINGAPORE; Editing by Toby Chopra

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ERAMET bids for partner as min sands M&A picks up

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Black Butte production path is firming

Sandfire Resources’ 78%-owned Black Butte copper project in Montana should turn its first sod next year, managing director Karl Simich said this morning, confirming the company still believes capital costs estimates of US$220-230 million are on the money.

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Birimian doubles lithium resource

Lithium hunter Birimian (ASX: BGS) has doubled the resource at its Goulamina project in southern Mali, adding 32.1 million tonnes at 1.37% lithium oxide for 65Mt at 1.43% (931,000t).

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China’s Hollywood romance sours amid trade war, debt fears

QINGDAO, China (Reuters) – When Dalian Wanda, the Chinese conglomerate, announced in 2013 that it would build an $8 billion film studio in China to lure U.S. film producers, it did so with Hollywood flash.

FILE PHOTO: Wang Jianlin, chairman of Chinese property developer Dalian Wanda Group, sits in a meeting room as he arrives for the launch ceremony of the Qingdao Oriental Movie Metropolis on the outskirts of Qingdao, Shandong province, September 22, 2013. REUTERS/Jason Lee/File Photo

Stars like Nicole Kidman and John Travolta were on hand as the company’s chairman, Wang Jianlin, boldly announced that the new studio in the east coast city of Qingdao would help make China a “global cultural powerhouse”.

Five years later, the Oriental Movie Metropolis is set to open its doors but the mutual courtship between China and Hollywood is looking less rosy.

Walking the red carpet at the Qingdao studio launch Saturday will be Chinese comic actor Huang Bo – a big name locally – while Hollywood A-listers are expected to stay away.

Wang’s own ambitions are also looking more modest. Wanda last year sold its interest in the studio to a Chinese rival, maintaining just a management role in the venture, whose fortunes look increasingly unclear as the American film industry sours on China.

A handful of U.S.-China film ventures have fallen apart over cultural clashes, financing deals have collapsed, and Hollywood’s share of the local market has lost ground to a surge of popular, and often patriotic-minded, local film productions.

A trade war between Beijing and Washington is also looming. Negotiations over improved market access for U.S. producers via China’s strict quota system and a larger slice of profits have stalled, according to industry insiders. Reports earlier this year had suggested China was ready to open up the market.

“Everybody is waiting to see, but I don’t think the quota on imported movies will be lifted,” said Zhang Haoyue, a Hollywood studio sales executive who previously worked as an import manager for China Film Group, the state-backed film giant.


A series of high-profile deals and financing agreements have also hit snags.

Wang, the Wanda chairman, last year saw his $1 billion bid for the U.S. company Dick Clark Productions Inc fall though after its owner, Eldridge Industries, said the Chinese company failed to honor contractual obligations.

Wang controls the U.S. cinema chain AMC Entertainment Holdings Inc and Legendary Entertainment, a U.S. studio.

China’s Huahua Media and the state-backed Shanghai Film Group in November scrapped a $1 billion agreement to co-finance a slate of films from Paramount Pictures. In February, NBCUniversal sold out of Oriental DreamWorks, its much-hyped joint venture between China Media Capital and Universal’s DreamWorks Animation.

Industry sources said Huahua had encountered liquidity problems amid a Chinese crackdown on “irrational” overseas deals and its domestic partners had also pulled out of the deal.

“For a while everybody was going to China,” thinking that Chinese investors just wanted to “meet celebrities, be exposed to Hollywood,” said Ben Waisbren, a U.S. film producer and president of LSC Film Corp.

Waisbren said Hollywood had looked to Chinese investors to offload some financing risk, but many realized making a return in film wasn’t so easy.

“Somebody in China said, ‘these deals don’t make any sense … and we don’t want to look stupid because we don’t want Hollywood to look at us as dumb money,’” said Waisbren.

Wanda sold off the Qingdao studio to a rival property developer, Sunac China Holdings Ltd, amid a sweeping sell-down of assets to raise funds. Wanda retains management control of the complex.


China is also tightening its grip on its film market. A recent regulatory reshuffle handed control over censorship and approvals to the Communist Party’s powerful publicity department last month.

China’s quota system allows 34 imported movies, while overseas producers get a 25 percent share of box office takings – less than in other international markets. Since 2016 a handful more have been allowed in via a “cultural exchange” channel.

U.S. film industry insiders said that Chinese regulators were increasingly protecting local films and saving the best release dates around holidays for local movies.

Foreign producers and distributors would also sometimes get approvals shortly before release dates, limiting the time for marketing.

“I don’t think the Communist Party and Chinese government are interested in having more American content in China,” said Robert Cain, president of Pacific Bridge Pictures, which provides financial and strategic services to the film industry.

“I don’t think the U.S. has very much bargaining leverage right now.”


Hollywood blockbusters once ruled in China, but are losing steam. North American movies have taken around a quarter of the box office in China so far this year, down from over 45 percent in 2016, according to data from the box office tracker EntGroup.

This shift could hit Wanda’s Qingdao studio, which had hoped to benefit from soaring demand from overseas producers looking to add China elements to their films to help boost box office takings in China.

Last year, a movie about a Chinese hero beating western mercenaries in Africa broke China’s box-office record, while Hollywood offerings like “Star Wars: The Last Jedi” failed to ignite when released in China earlier this year.

Hollywood films that focus on action figures or superheroes no longer provide a magic formula in China, said Kevin Niu, a U.S.-based producer who worked on the horror movie “Abattoir”.

“Chinese audiences seem to enjoy content that has strong family and community value, or content that depicts themselves or their dream life-style,” he said.

With the aid of Hollywood know-how and bigger budgets, local movies, once ridiculed for weak special effects and storylines, are gaining momentum as they find ways to play on these domestic themes and improve production quality.

“Made in China might not be entirely respected, but it’s getting better every month,” said Chris Bremble, chief executive of Base FX, a China-based visual effects and animation company.

Bremble said Chinese cinemagoers were willing to splash out on tickets for domestic films now because they look increasingly like big international movies.

“Chinese cinema will soon be looking more like Hollywood cinema, which is spectacle driven, very commercial focused motion pictures,” he said.

Reporting by Pei Li in QINGDAO and Adam Jourdan in SHANGHAI; Editing by Philip McClellan

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Emboldened by Trump, banks push to throw off old rule constraints

WASHINGTON (Reuters) – Emboldened by President Trump’s pledge to loosen laws introduced following the 2007-2009 global financial crisis, U.S. banks are pushing to scrap or revise more than a dozen other lesser-known rules they say are outdated, costly and hurt economic growth.

FILE PHOTO – After signing, U.S. President Donald Trump holds up an executive order rolling back regulations from the 2010 Dodd-Frank law on Wall Street reform at the White House in Washington February 3, 2017. REUTERS/Kevin Lamarque

    Many would have been revised a decade ago, but changes were shelved during the financial crisis and the fierce political battle over the 2010 Dodd Frank Act that imposed a new layer of restrictions.

With Congress now poised to pass the first rewrite of Dodd Frank backed by key Democrats, and as Trump-appointed regulators strike a much more industry-friendly tone, banks see the changing atmosphere as an opportunity for a sweeping overhaul.

“The feeling is there are many rules that are so old that they’re out of sync with what you need to promote economic growth and that’s a conversation policymakers are now willing to have,” said Wayne Abernathy, executive vice president at the American Bankers Association, a bank trade group.

Reuters has identified around 15 pre-crisis rules that bankers and lobbyists want to change, based on multiple interviews, disclosure forms, and advocacy documents submitted to the administration, its appointed officials and lawmakers.

While promising considerable savings, most changes should be far less contentious than tweaking Dodd Frank, which aims to curb excessive risk-taking and predatory lending, lobbyists say. Still, some proposals face resistance from consumer groups and business advocates warning they could erode customer protection and hurt small businesses.

Laws targeted by banks include the Civil War-era False Claims Act; the 1933 Securities Act; the Federal Deposit Insurance Act of 1950; the 1956 Bank Holding Company Act; the Bank Secrecy Act of 1970; a raft of lending laws including the 1977 Community Reinvestment Act; the 1991 Telephone Consumer Protection Act; the 2001 Patriot Act and the Sarbanes-Oxley Act of 2002, among others.

Having accumulated over decades, albeit with occasional tweaks, together they are as costly and as much of an impediment to lending and economic growth as Dodd Frank, bankers say.

“It’s like death by a thousand cuts: this happened over a long period of time…and now a lot of members of Congress, and a lot of consumers and the regulators agree that it’s gone too far,” said Timothy Zimmerman, CEO of Pennsylvania-based Standard Bank and chairman of the Independent Community Bankers of America.

With Trump in the White House and more business-friendly Republican-controlled Congress, banks seized the opportunity spending a record $66.7 million on lobbying last year, according to the political contributions database OpenSecrets.

Senate lobbying records show much of this was devoted to revising Dodd Frank and other laws, including many of those cited above.

Earlier this month, community bankers descended on Congress to meet with many of the 67 Senators who voted for the Dodd Frank rewrite, seeking their backing for other changes.

Lobbyists aim to sway lawmakers to sponsor deregulatory provisions that can be pegged to other upcoming must-pass legislation and pressure the agencies to push ahead with rule-easing, lobbyists told Reuters.

They are also dedicating a lot of time persuading the new agency heads and their senior staff to take up banks’ pre-crisis wish list, according to lobbyists and disclosure filings.

Speaking at an event in Washington on Thursday, Republican Jeb Hensarling, chairman of the House Financial Services Committee, said the debate over rewriting Dodd Frank had obscured efforts on some of these other problematic rules.

“Many of our bills don’t even touch Dodd Frank,” he said.


So far, the industry has gained traction on two laws they say are woefully outdated: the anti-money laundering rules outlined under the Bank Secrecy Act and the Community Reinvestment Act which requires lenders to extend credit to low-income communities where they take deposits.

The anti-money laundering rules, which require banks to track and report cash transactions over $10,000, are particularly costly and ineffective because the low threshold triggers millions of needless reports, say regulatory experts.

Globally, banks spent an estimated $12 billion on compliance with the rules in 2016, according to data compiled by consultancy Quinlan Associates.

The House of Representatives has tabled a bill that would raise the threshold to $30,000. It would also require newly-incorporated private companies to disclose their true owners, making life easier for their banking providers.

The Senate is expected to introduce a similar bill in coming months, said Greg Baer, president of The Clearing House Association, a bank group which has advocated changes to the law.

Likewise, regulators have said they would unveil in coming weeks changes to the community lending rules, which banks say have become outdated with the rise of online lending and other technology developments.

These changes could include more flexibility in assessing bank compliance, and potentially softer penalties.

Consumer advocates warn, however, any easing of the rules could lead to discrimination of some groups of borrowers or create “banking deserts” where consumers do not have access to branches, said Randy Benjenk, a lawyer at Covington Burling.

Conservative Republicans also raise concerns that the proposed changes to anti-money laundering rules would push more of the compliance burden onto small businesses.

“It’s a new tax on small business creators,” said J.W. Verret, professor of Banking Law at Scalia Law School.

“That would wipe out much of the benefit of tax reform passed by Congress last year.”

Reporting by Michelle Price; Editing by Tomasz Janowski

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