Russian President Vladimir Putin to pay Historic State Visit to South Africa

Pretoria - South African President Thabo Mbeki will host his Russian counterpart President Vladimir Putin on the first ever State Visit by a Russian Head of State to South Africa scheduled from Tuesday - Wednesday, 5-6 September 2006 in Cape Town.

President Thabo Mbeki will host President Putin within the context of South Africa's commitment to consolidate the African agenda through, among others, the promotion of North-South co-operation. In this regard, the Russian Federation is one of five permanent members of the United Nations Security Council and current Chair of the G-8.

President Putin, in his State of the Nation Address in May 2006, indicated that the Russian Federation had prioritised the consolidation of relations with Africa.

Issues on the agenda of discussions between Presidents Mbeki and Putin on Tuesday 5 September 2006 are expected to include, among others:

• The status of bilateral political and economic relations between both countries including endevours to promote economic relations through the Intergovernmental Trade and Economic Committee (ITEC);
• Promotion of the African agenda including a follow up of the G-8 Summit, regional developments in SADC, conflict resolution and peacekeeping in Sudan and Côte d'Ivoire and post-election Democratic Republic of Congo;
• The non-proliferation and peaceful use of nuclear energy with respect to the situation in Iran;
• The Middle East since Russia is a member of the Quartet and co-sponsor of the Roadmap; and
• The reform of the United Nations ahead of the General Assembly scheduled for later in September.

It is anticipated that the following agreements will be signed during the visit:

• Treaty of Friendship and Partnership between the Government of the Republic of South Africa and the Government of the Russian Federation;
• Agreement on Co-operation in the Exploration and Use of Outer Space for Peaceful Purposes;
• Agreement on the Continued Airworthiness between the Civil Aviation Authorities of the Republic of South Africa and the Russian Federation;
• Agreement on Co-operation in the Field of Health Care and Medical Sciences;
• Agreement between South Africa and the Russian Federation on Co-operation in the Sphere of Water Resources and Forestry;
• Agreement on the Reciprocal Protection of Intellectual Property Rights related to Defence-Industrial Co-operation; and
• Protocol on Co-operation in the Fields of Arts and Culture between the Governments of the Republic of South Africa and the Russian Federation.

While in South Africa President Putin is also expected to address Parliament, receive a courtesy call from Deputy President Phumzile Mlambo-Ngcuka, participate in a round table business meeting and visit Robben Island.

President Putin is expected to depart from South Africa on Wednesday 6 September 2006.

Economic Bilateral Relations

Trade Relations between both countries

The bulk of SA exports are made up of vehicle engines (18.8% of exports); machines & mechanical appliances (14%); Fresh grapes (13.8%); flat-rolled products or iron (10%); pears (6.8%) peaches (3.4%) - amounting to almost 70% of SA exports to Russia. The major import from Russia, accounting for over 65% of SA imports is made up of the nickel group of minerals.

The Russian Federation adopted a Decree in March 2003, following South Africa's recognition of Russia as a market economy in support of their WTO membership, to include South Africa in a list of developing countries that would enjoy preferential trade tariffs and duties with regard to exports to Russia. Bilateral relations also expanded significantly under the umbrella of the Intergovernmental Trade and Economic Committee (ITEC) between South Africa and the Russian Federation. Strategic direction and a structured and disciplined policy framework have resulted in substantive action taken by the respective governments in the strategic minerals and energy sectors through inter alia the establishment of a joint Task Force on Minerals in support of BEE objectives. Solid progress in the field of Science and Technology relations, especially in terms of the Presidential policy objective of establishing South Africa as a key player in international astronomy and deep space research, also characterise the relationship.

Russian tourists at the high end of the market visiting South Africa totalled 8,549 in 2002, and decreased slightly for the years 2003 to 7,698 and 2004 to 7,473 respectively. The number of Russian tourists is comparable to those from Greece and Argentina. The number of South Africans visiting Russia is growing steadily.

The South African fruit exporting company, Capespan now ranks Russia as its single largest fruit export market for South Africa, surpassing the UK for the first time last year. In 2004 Capespan exported fruit produce worth $20 million to Russia out of a total trade of $56 million and presenting a 30% share of the export market to Russia. Apple and pear exports have registered an increase in their share of the South African deliveries to Russia. Demand for grapes has been booming in Russia.

Bilateral relations also expanded significantly under the umbrella of the Intergovernmental Trade and Economic Committee (ITEC) between South Africa and the Russian Federation. Strategic direction and a structured and disciplined policy framework have resulted in substantive action taken by the respective governments in the strategic minerals and energy sectors through inter alia the establishment of a joint Task Force on Minerals in support of BEE objectives. Solid progress in the field of Science and Technology relations, especially in terms of the Presidential policy objective of establishing South Africa as a key player in international astronomy and deep space research, also characterise the relationship.

South African Investments in Russia

The SA multinationals Anglo American, Standard Bank, De Beers, JCI, Barlowworld, Capespan and Bateman have substantial interests in Russia. In addition, SAB/Miller has established a brewery in the Kaluga Region, which represented a US$100 million investment, and their product, Golden Barrel Beer, is highly successful in the local market. Standard Bank also has a growing presence in Russia as well as SAPPI, Protea Hotels and Sun International.

In March 2004, the Russian company, Norilsk Nickel bought 98.5 million common shares, or 20% of the South African gold producer Gold Fields for $1,16 billion. Norilsk Nickel is now the world's largest producer of the nickel and palladium group of metals, accounting for 18% of world nickel production, 13% of cobalt, 3% of copper, over 50% of palladium, 14% of platinum and 15% of world gold production. It should be noted that Norilsk Nickel announced in March 2006 that it plans to sell the said shares bought from Gold Fields.

During April 2004, the Director General of the Department of Minerals and Energy, led a wide ranging SA business delegation to the Russian Federation with the objective to explore prospects for joint ventures and to outsource capital, expertise and resources in the oil, gas and minerals sectors. The following Black Economic Empowerment (BEE) companies and government institutions held constructive consultations with their Russian counterparts: PetroSa, Mvelaphanda Resources, Pan African Energy Resources, Pelewan and Lazig, Sekoko Resources, Afro Resources, Mineralco, Randgold and Exploration, Phikoloso Mining and Global Eagle Strategic Empowerment Alliance Systems.

SA's BEE entities also held meetings with prominent Russian entities including Norilsk Nickel, Renova, Aton Capital, Colliers International, Rusimport, Transneft, MorPort, Sual, Lukoil, Interfinance Developments and Crystal Diamond Company. The meetings were constructive and fruitful and a number of projects of mutual interest were identified. The BEE companies also instituted reciprocal invitations for follow-up meetings in South Africa to their Russian counterparts. The Director of Renova recently visited South Africa and it can be expected that increased interaction between the respective entities would lead to more substantial trade, economic and investment links between South Africa and the Russian Federation.

The joint venture company, United Manganese of Kalahari (UMK), between Black Economic Empowerment groups and the Russian Renova Group of companies, has been established in order to co-operate on the prospecting, mining and processing of manganese ore in the Kalahari basin.

Russia's largest steel maker, Evraz, recently said that it would decide within less than a year whether to buy a bigger stake in Highveld Steel&Vanadium. Evraz currently has a 24,9% share in Highveld. It is possible that Evraz could buy Anglo America's Highveld share of 29,2 % in order to introduce black investors to Highveld.

Media Programme for State Visit to South Africa by Russian President Vladimir Puti, Tuesday, 5 - Wednesday, 6 September 2006

Issued by Ronnie Mamoepa on 082 990 4853

Department of Foreign Affairs
Private Bag X152
Pretoria
0001

29 August 2006