For order

Alcoa and the EBRD agreed to develop rolling production in Russia

Representatives of the European Bank for Reconstruction and Development signed yesterday a loan agreement with the American company Alcoa in the amount of $75 million. The funds will be used to modernize and increase the capacity of two enterprises that Alcoa bought last year from Russian Aluminum for $257 million - - Samara Metallurgical Plant (SMZ) and Rostov Belokalitvinsky Metallurgical Production Association (BKMPO). The EBRD's credit committee approved the loan to Alcoa at the end of May, and the bank's board of directors approved this decision at the end of June. Until yesterday, negotiations were underway on the interest rate, but the parties did not disclose it. The EBRD's senior banker in Russia, Paul Burton, only clarified that the EBRD will provide only $50 million, and HSBC will provide another $25 million. The EBRD loan, Mr. Burton explained, “will be a new era” for the Samara and Rostov metallurgical plants. “We believe that Alcoa is a very big name in Russia,” the bank’s executive apparently concluded after Alcoa management told Russian President Vladimir Putin at a June investment forum in St. Petersburg that it would invest this year in BKMPO and SMZ 80 million dollars.

The five-year loan, as Alcoa Russia President William O'Rourke explained yesterday, will help speed up the modernization of Russian factories. In a conversation with a Vremya Novostey correspondent, he admitted that six months ago, when he arrived in Samara, it was the worst enterprise in terms of “maintaining order” that he had ever seen. Over the past four years, according to him, there has been virtually no investment in SMZ and BKMPO. As a result, their productivity lags far behind the rest of Alcoa's plants. Most of the borrowed funds - $40 million, as Mr. O'Rourke specified, will be used for the construction of a furnace for processing slabs at BKMPO. The rest will go to modernize the production of semi-finished products. “We hope that production growth at Russian factories will be 5-8% per year over the next five years,” Mr. O'Rourke said.

So far, Alcoa representatives are cautious about their plans for Russian assets in the medium term and do not voice specific parameters. "Our plans are very dependent on the consumers of the products," Mr. O'Rourke explained. The main goal for Alcoa is to become the largest Russian supplier and exporter of rolled cans. But for this, he says, it is necessary that Russian aluminum can producers also invest in their growth. He noted that RUSAL should begin construction of another can production (which already has a Rostar plant in Dmitrov near Moscow and Rostar-Vsevolozhsk), a plant for the production of aluminum containers is already being built by the English company Rexam, and there is a similar plant in Poland from the Can-Pack company. The head of Alcoa Russia said that negotiations are already underway with these packaging manufacturers about possible cooperation.

The company is confident that there is great potential for growth in Russia, since only 4 kg of aluminum is consumed per capita here (in other countries - 20 kg). Although when asked whether Alcoa plans new acquisitions in Russia, Mr. O'Rourke answered negatively. But he added that out of the global capital investment program for this year, which amounts to $2.5 billion, $1.6 billion is planned to be spent on projects related to the company’s growth, including in Russia.

Yana GODOVANAYA