Uc Rusal Emerges As Aluminium Giant
The Age
Wednesday March 28, 2007
NEWLY created Russian alumina/aluminium giant UC Rusal has identified a $US1.1 billion-plus ($A1.36 billion) alumina expansion opportunity at its partly owned Gladstone alumina refinery in Queensland as one of its immediate growth opportunities.
UC Rusal came into being last night at a signing ceremony in Moscow. It brings together the alumina/aluminium assets of Russian groups Rusal and Sual with those of Zug-based commodities trader Glencore, the major shareholder in the fast-growing diversified resources group Xstrata. The new group is the world's biggest in the sector and throws down the challenge to diversified heavyweights BHP Billiton and Rio Tinto to either expand their alumina/aluminium operations or give way to the big three of UC Rusal, Alcoa and Alcan. Speculation also persists that Alcoa and Alcan could yet become the subject of takeover bids from BHP, Rio or a private equity consortium. UC Rusal brings together four bauxite mines, 10 alumina refineries, 14 aluminium smelters and three foil mills in 17 countries. Rusal, controlled by Russia's youngest multibillionaire, Oleg Deripaska, contributed the biggest share of the assets and accounts for about 66 per cent of the new giant. The non-executive chairman of the new group is Victor Vekselberg, previously chairman of Sual. Its chief executive is Alexander Bulygin, previously CEO of Rusal. Brian Gilbertson, former BHP chief executive and more recently Sual chief executive, does not get a guernsey. Mr Bulygin said the new group's 20 per cent stake in the QAL's Gladstone alumina refinery had the "potential to be expanded by 1 million tonnes a year". "We are keen to participate with our partners in any expansion," Mr Bulygin said. "This would be dependent on market conditions and construction costs meeting the joint venture's criteria for return on investment." While he did not price an expansion, analysts said cost pressures for all resource project developments meant the starting price would be more than $US1.1 billion. Mr Bulygin also said UC Rusal would continue to work with the Queensland Government, through the joint working group established last year for a possible aluminium smelter development. Aluminium smelting in Papua New Guinea is also a possibility. UC Rusal signed a memorandum of understanding with the PNG Government in January to explore energy options. Mr Vekselberg said that while the group would expand its business, it would also "promote a world-class corporate governance structure".
© 2007 The Age
