RUSAL, the world’s third largest aluminium producer, SUAL Group, one of the world’s top ten aluminium producers, and Glencore International, the Swiss natural resources group have signed an agreement to create the ‘United Company RUSAL’, by merging their respective aluminium and alumina assets.
The new company will be the world’s largest aluminium and alumina producer, employing more than 110,000 people in 17 countries on five continents. Its annual production volume will be about 4 Mt of aluminium and 11 Mt of alumina. It will account for approximately 12.5% of global aluminium and 16% of global alumina production, respectively, and will own bauxite mining, alumina refinery, aluminium smelting and foil production facilities.
Under the terms of the share-for-share deal, EN+ as RUSAL’s shareholder will own 66% of the new company, with SUAL’s shareholders owning 22% and Glencore 12%, respectively. The parties expect to complete the deal by April 1, 2007, subject to approval by antitrust regulators in Russia and a number of other countries and the consent of other stakeholders through the exercise of their beneficial rights. To manage the process, the companies will create a coordination committee, which will be headed by a SUAL representative.
RUSAL, SUAL Group and Glencore International say that by merging their assets, they are “striving to create a true global leader in the aluminium industry. The company will have all the required resources to drive further expansion and diversification of its metals and mining businesses in key international markets. In addition, the merger will deliver significant synergies in areas including management, research and development and manufacturing.”
The agreement also calls for the transformation of the new company into a public entity through an initial public offering (IPO) on the London Stock Exchange within three years from the date of the deal’s closing. “The shareholders do not view an IPO as a goal in itself, but rather as an instrument to further expand and strengthen RUSAL’s market-leading position in the global aluminium industry.”
The Board of Directors of the new company will consist of 12 members. Brian Gilbertson, currently SUAL’s President, will act as Non-Executive Chairman. Before the IPO, the Board, in addition to Gilbertson, will be comprised of six members from RUSAL, two from SUAL, one from Glencore and two independent directors. Alexander Bulygin, currently RUSAL’s CEO will serve as CEO of the joint company and will head the Executive Board, the highest governing body of the new company.
The United Company RUSAL will take on all of the obligations that the merged companies and assets have to all stakeholders, as well as social obligations, cooperation with local communities, the support and development of the regions where they work. In addition, the new company will preserve the whole portfolio of investment projects that were developed by the companies independently before the merger. This includes the programmes to modernize and develop existing production facilities.
Commenting on the agreement, RUSAL Chairman Oleg Deripaska said: “This transaction is a logical step in our strategy of establishing the world’s leading aluminium company. The combination of RUSAL, SUAL and Glencore’s alumina assets transforms the new group into a truly global company. The combined company will have greater financial, technical, research and development, network and marketing resources. The transactions have a compelling industrial logic and deliver significant synergies for further growth. The new joint company will be highly ambitious and today’s announcement is a staging post towards our future objectives.”
“This deal gives us a unique opportunity to realize the powerful potential, extensive experience and significant knowledge accumulated by Russian metallurgy. The new company is a continuation of our joint projects intended to create one of the leaders of the global mining and metallurgical sectors,’ said SUAL Holding Chairman Victor Vekselberg.
Ivan Glazenberg, the CEO of Glencore, noted: ’We are pleased to join forces with RUSAL and SUAL in this exciting new venture. We believe that this agreement provides us with a unique opportunity to become a part of an integrated and well-balanced aluminium corporation — the new leader in the international market. The transaction will deliver significant synergy benefits that will provide additional value for Glencore’s shareholders.’
The unified company will include the RUSAL assets of: Bratsk, Krasnoyarsk, Novokuznetsk, Sayanogorsk aluminium smelters, Achinsk alumina Plant, Nikolaev and Boksitogorsk alumina refineries, Friguia alumina plant (Guinea), Cie des Bauxites de Kindia (Guinea), Bauxite Co of Guyana, a stake in the Queensland Alumina Refinery (Australia), as well as ARMENAL, SAYANAL and a cathode plant in China. SUAL Group will contribute Irkutsk, Urals, Kandalaksha, Bogoslovsk, Nadvoitsy, Volgograd and Volkhov aluminium smelters, Zaporozhye aluminium combine, Pikalevo alumina refinery, SUBR, Urals Foil, as well as Silicon, SUAL-Silicon-Ural and SUAL-PM.
Glencore International AG will contribute the following alumina refineries: Aughinish in Ireland, Windalco and Alpart in Jamaica and Eurallumina in Italy, along with the Kubikenborg aluminium smelter in Sweden.
Headquartered in Moscow, with operations in 9 regions of Russia and 13 countries globally, RUSAL (www.rusal.now accounts for 75% of aluminium production in Russia and 10% internationally. RUSAL has 47,000 employees and was established in March 2000 through a merger of several largest aluminium smelters and alumina refineries in the CIS.
SUAL Group (www.sual.com) is a vertically integrated company, one of the world’s 10 largest aluminium producers. It combines enterprises that extract bauxite, refine alumina and produce primary aluminium, silicon, aluminium semi-finished and finished products.’s enterprises form a full production cycle, from bauxite extraction (over 5.4 Mt/y), alumina refining (about 2.3 Mt/y) and primary aluminium production (more than 1 Mt/y) to the manufacture of aluminium semi-finished and finished products.
Glencore (www.glencore.com) is a leading privately held, diversified natural resources company with worldwide activities in the smelting, refining, mining, processing, purchasing, selling and marketing of metals and minerals, energy products and agricultural products. Glencore operates on a global scale, marketing physical commodities produced in its industrial assets or purchased from third parties to industrial consumers, such as those in the automotive, steel, power generation, oil and food processing industries. Glencore also provides financing, logistics and other services to producers and consumers of commodities.
EN+ is a holding company established as part of Basic Element’s (www.basel.ru) restructuring. Core assets in the En+ portfolio include: RUSAL, Eurosibenergo and United Oil Group.
RENOVA Group is the leading Russian asset management company ( www.renova.ru). RENOVA is a stakeholder and strategic investor of leading Russian standalone and holding companies in metallurgical, oil, machine engineering, mining, chemical, construction, housing & utilities and financial sectors, high-technology sector. RENOVA is a shareholder of large mining and industrial entities that carry weight in the Russian and global business communities, such as TNK-BP, OJSC SUAL-Holding and CJSC Integrated Energy Systems, Unaxis Holding (Oerlikon).
