Russian court approves seizure of owner's stake in gold producer Uzhuralzoloto, UGC lawyer says

A court in the Russian city of Chelyabinsk ruled on Friday that businessman Konstantin Strukov's majority stake in gold producer Uzhuralzoloto (UGC) UGLD should be transferred to the state, UGC’s lawyer told Reuters, adding the company would now decide whether to appeal the decision.

Last week, a Russian court said that Russia's general prosecutor's office had filed a lawsuit seeking to transfer ownership of shares held by Strukov in Uzhuralzoloto to the state, as part of an escalation in the seizure of domestic assets by Russian courts this year.

Dmitry Malbin, the lawyer who represented UGC in court, said that the claim was granted. UGC, Russia's fourth-largest gold producer, will decide whether to appeal after receiving the full text of the decision, he said.

"UGC carries out its activities in full compliance with the law," Malbin said. Strukov owns a 67.8% stake in UGC.

Prosecutors accused Strukov and several others of obtaining property "through corruption." Strukov has not yet responded to a request for comment submitted through UGC.

The businessman remains free and there was no information about any legal action against him personally.

A company connected to Gazprombank bought a 22% stake in UGC late last year. Another 10% of shares were floated on the Moscow Exchange in 2023 and 2024 in two public offerings.

TRADING SUSPENDED

Strukov, whose fortune is estimated by Forbes at $1.9 billion, was placed under sanctions by some Western countries, including Britain, which has said his work as a director of a company in the Russian extractives sector supported the Russian government.

Strukov was elected as a representative of the Chelyabinsk region's legislative assembly in 2000 and is now deputy speaker of the regional parliament. Malbin said that UGC had never benefited from Strukov's position in the assembly.

UGC, which mines gold in the Urals mountains and Siberia, produced 10.6 tons in 2024, 17% less than in the previous year and 3.2% of Russia's total gold output. Russia is the world's second largest gold producer after China.

Trading in UGC shares was suspended on July 4 at the central bank's request after they had slumped by almost 30%. The central bank said the recommendation was issued to calm markets. The Moscow Stock Exchange said on Friday after the court decision that trading in UGC shares will resume from Monday.

At valuations before prosecutors filed their lawsuit, Strukov's stake was worth about $1 billion.

Research released on July 9 showed that Russian authorities have confiscated assets worth some $50 billion over the past three years, underscoring the scale of the transformation into a "fortress Russia" economic model during the conflict in Ukraine.