Russian Lebedinsky GOK Stops Supplies to Poltava GOK (PGOK: BUY)

The Russian iron ore producer suspended deliveries of iron ore concentrate to PGOK, in response to the company’s decision to supply pellets to Magnitogorsk Iron and Steel (MMK). Concorde Capital: The conflict between Russian businessman Alisher Usmanov, the main shareholder of Russia?s largest iron ore companies Lebedinsky GOK and Mikhaylovsky GOK, and Magnitogorsk Iron and Steel, will negatively affect PGOK?s operations. The iron ore company will now have to choose between whether it will supply to a big consumer, MMK, which will receive a planned at 1.2 mln mt in 2005, or a big supplier, Lebedinsky GOK, which supplies 15% of concentrate feedstock. We expect that the iron ore market will remain tight over the next several years, and PGOK is probably more interested in output expansion, than in searching of new distribution markets.