two aluminium companies, creating the world’s largest producer of
the metal by uniting the suppliers to the former Soviet
OAO Russian Aluminium requested government permission to buy fellow
Russian producer OAO Sual Group and the alumina assets of Glencore
International AG, said a Kremlin spokesman who declined to be
identified in a phone interview in Moscow today. He declined to
The Financial Times newspaper reported today that Russian
Aluminium, known as Rusal, Sual and Glencore signed a non-binding
agreement Aug. 25 for an all-share deal worth $30-billion, adding
it had seen a copy of the accord.
Rusal and Sual between them produce 3.7 million tons a year of
primary aluminium, surpassing U.S.-based Alcoa Inc., which is now
the world’s biggest maker of the metal used in beverage cans and
automobiles. Rusal, controlled by billionaire Oleg Deripaska, has
been seeking to acquire companies that produce alumina, the raw
material used to make aluminium.
“Rusal needs the security of alumina supply,” said
Peter Richardson, chief metals economist at Deutsche Bank AG, in
Melbourne. Any merger “will go far in entrenching Rusal’s
growth in alumina,” he said.
Vadim Bely, a spokesman for Rusal’s owner Basic Element, declined
to confirm or deny the report in Moscow this morning.
Lotti Grenacher, a spokeswoman of Baar, Switzerland-based Glencore,
said by phone today the company wouldn’t confirm or deny the
Deripaska is Russia’s sixth-richest man with a $7.8 billion
fortune, according to Forbes magazine.
Rusal, controlled by Deripaska through Basic Element, will buy
Glencore’s alumina assets by issuing new shares and will own 64.5
percent of the new company with Sual and Glencore owning 21.5 and
14 percent respectively, the FT said.
Closely held Rusal will be able to buy out Glencore’s stake within
three years and a listing on London’s stock exchange is expected
within the same time period, the FT said, citing an unidentified
person close to the transaction. The acquisition would have no cash
element and would be paid for entirely with Rusal shares, the FT
Glencore, the world’s largest commodities trader, buys and sells
base metals including aluminium, nickel, copper, zinc and lead. The
privately held company had sales of $91 billion in fiscal 2005, up
from $71 billion a year earlier, and has stakes in mines, smelters
and metals refineries.
President Putin had already stated he would welcome a Rusal
takeover of Sual, Kremlin spokesman Dmitry Peskov said Aug.
“Consolidation in the industry is always positive,” said Tim
Barker, BT Financial Group in Sydney, which advises and manages
$54-billion of assets. Should the proposal go ahead, “it will
be a serious contender for the top dog,” he said.
Rusal announced yesterday it plans to complete a buyout of minority
shareholders in its Russian plants by the end of this year. The
plan includes the Krasnoyarsk, Bratsk, Novokuznetsk and Sayanogorsk
aluminium smelters, the Achinsk and Boksitogorsk alumina
refineries, and the All-Russia Aluminium and Magnesium Institute,
the company said. Vladimir Zhukov, an analyst at Alfa-Bank in
Moscow, said the move could be connected to trying to “clean
things up” before a merger.
Rusal is short of bauxite, the raw material refined into alumina,
while Sual, which produces two-thirds of Russia’s bauxite, doesn’t
have enough capacity to process it.