Putin arrives in S.Africa on historic visit

CAPE TOWN, Sep 5 (Reuters) Russian President Vladimir Putin arrived in South Africa today, starting a historic two-day visit on Tuesday which will see Russia stepping up investment in the country.

Putin was met on arrival by South African Foreign Minister Nkosazana Dlamini-Zuma and Russian officials before leaving for talks with South African President Thabo Mbeki in Cape Town.

His visit is the first by a Russian head of state to sub-Saharan Africa.

The Kremlin said in a statement that Russian investment in a ferro-alloy plant could be one of the deals on the cards.

It said investment firm Renova, owned by oil and aluminium billionaire Viktor Vekselberg, would sign an agreement on the ferro-alloy plant during Putin's visit.

Renova would sign a ''whole range of documents'' at a business conference in Cape Town tomorrow, including an agreement to guarantee electricity supplies to its jointly-owned manganese mine and to the ferro-alloy plant.

Renova has 49 per cent of United Manganese of Kalahari, which it says has deposits of several hundred million tonnes of the metal. South Africa has 80 per cent of the world's reserves of manganese, which is used in steelmaking.

Putin will also oversee the signing of a memorandum of understanding between De Beers and Alrosa, the South African and Russian firms that account for around 75 per cent of the world's diamond mining.

The dominance of the industry by the two firms forced them to accept a deal with the European Commission in February, under which top producer De Beers agreed to phase out the purchase of rough diamonds from No. 2 producer Alrosa from 2009.

Putin will be the first Kremlin leader to visit South Africa despite Moscow's active support of the country's long battle against apartheid white minority rule, which ended in 1994.

Both states have evolved along parallel lines since the end of apartheid and the fall of Communism, as democracies struggling with social problems but blessed with mineral wealth.

De Beers, 45 per cent owned by mining conglomerate Anglo American, accounted for about half the world market in 2005. De Beers chairman Nicky Oppenheimer will meet Putin during his visit.

Alrosa, owned by the Russian state, extracts nearly a quarter of the world's diamonds.

But Interfax news agency reported last month that Alrosa had filed a lawsuit to challenge the ruling by the EU, which was able to impose its competition rules because De Beers operates in Europe.

In the banking sector, Russia's Vnesheconombank will agree a memorandum of understanding with Nedbank, South Africa's fourth biggest bank by assets, the Kremlin statement said.

Putin, who this year chairs the Group of Eight industrialised nations, will also talk with Mbeki about wider trade questions, regional issues and how the international political system can be improved.

Putin, a former KGB spy, will also visit Cape Town's Robben Island, the prison where former South African leader Nelson Mandela was held for almost 20 of his 27 years in jail during the apartheid years.

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