Translated material
Aluminum world
Viktor Vekselberg is looking for a partner for the international integration of SUAL
Yesterday it became known that SUAL abandoned the idea of creating, together with the British Fleming Family & Partners, an international mining and metallurgical company based on SUAL's assets and Fleming's assets in Africa. The owners of SUAL agreed to terminate the agreement signed in January 2003. And yesterday, speaking with journalists, the main owner of SUAL and its chairman of the board of directors, Viktor Vekselberg, said: parting with Fleming does not mean that SUAL refuses to cooperate with strategic investors, and will not affect SUAL’s strategic plans to create an international diversified company. He said that SUAL is currently searching for a strategic investor among international companies with relevant experience, and by the summer the company will identify the main partner. Mr. Vekselberg did not exclude from the list of potential partners the candidacy of his main rival in Russia - Oleg Deripaska's company RUSAL. “If it is profitable from a business point of view, why not,” Reuters quotes the head of SUAL.And this, undoubtedly, has its reasons. After Russian aluminum assets were divided between two groups - RUSAL, which took 3/4 of Russia's primary aluminum production, and SUAL, which received control over a quarter of the assets for the production of primary aluminum and almost 80% of Russian alumina production capacities - these companies preferred to remain neutral. They looked for partners and investors outside. But they did not show open hostility towards each other.
The situation changed after SUAL failed to find a co-investor and partner for the implementation of the ambitious Komi-Aluminium project, which was launched in 1997. SUAL's attempts to attract Western partners were unsuccessful, since they put forward conditions that were not entirely compatible with Russian realities (for example, obtaining multi-year contracts with fixed electricity tariffs), and to save the project, SUAL finally decided to turn to RUSAL.
RUSAL, which urgently needs alumina, agreed to participate in the implementation of the second stage of the project, which provides for the construction of an alumina refinery with a capacity of up to 1.8 million tons of alumina per year. In April 2005, a corresponding agreement was signed. After this, it became easier for the companies to negotiate, and they began a second joint project. Now they are creating a joint venture for the production of fluorine salts on the basis of the Polevsky and South Ural crealite plants, the products of which are used in the aluminum industry. An equal joint venture and a management company will be created to manage these assets.
Now Mr. Vekselberg did not rule out the possibility of creating an international company jointly with RUSAL. And although the press services of both holdings are very cautious in commenting on his words, the very emergence of this topic means that relations between Russian aluminum companies have reached a new level.
The head of SUAL's public relations department, Alexey Prokhorov, said that SUAL is actively considering various opportunities for business development with a number of the world's leading players in the mining and metallurgical industry. “It would be premature to talk about any details now. As for RUSAL, cooperation with this company is currently limited to participation in the Komi-Aluminium project. No other negotiations are ongoing today. But if the partnership proposal is of interest from a business point of view, then the possibility of expanding cooperation cannot be ruled out,” said Mr. Prokhorov. His colleague from RUSAL, Vera Kurochkina, said that RUSAL is interested in any opportunity to successfully expand its business, including through mergers and acquisitions. But she chose not to comment on the possibility of any combination of efforts for strategic development with SUAL, except for the already announced projects.
If we theoretically accept the idea of merging RUSAL and SUAL, which currently occupy third and sixth places, respectively, in the world ranking of aluminum producers, then it is obvious that the united Russian holding could compete for the right of leadership with international aluminum leaders - Canadian Alcan (3.5 million tons of primary aluminum) and American Alcoa (3.4 million tons). The total production of primary aluminum by the two companies (2.7 million tons for RUSAL and 1.05 million tons for SUAL) exceeds the figures of today's industry leaders.