Three-way merger creates worlds largest aluminium and alumina producer

The deal to combine the aluminium assets of Russian companies Rusal, Sual and Swiss commodities producer and trader Glencore, has been completed.

The combined company created by the deal, United Company Rusal (UC Rusal), is now the world's largest aluminium and alumina producer.

The new company's production capacity totals about four-million t/y of aluminium and 11-million t/y of alumina, thereby surpassing rival producers Alcoa and Alcan in size.

UC Rusal's assets include four bauxite mines, 10 alumina refineries, 14 aluminium smelters and three foil mills.

It also owns extensive, high-quality bauxite reserves and has access to a significant energy base, including the power produces by some of the world's largest hydropower plants in the Commonwealth of Independent States (CIS).

The company's assets are located in seven countries across five continents, and it has more than 100 000 employees.

UC Rusal's CEO is Alexander Bulygin, who was previously the CEO of Rusal.

Commenting on the launch of UC Rusal Bulygin said that the deal was a proactive response to several significant industry trends – dynamic growth, competition to secure access to energy and raw-material resources, and active consolidation to enhance competitive positions.

“Our global presence, strong financial base, access to hydropower and proprietary technology provide UC Rusal with a strong platform to support our future development.

“Our goal is to become an international metals and energy corporation,” Bulygin averred.

In a statement, UC Rusal said that the company plans to undertake an initial public offering in the next three years.

Previous Sual chairperson, oligarch Viktor Vekselberg, who is now the non-executive chairperson of UC Rusal, said that the new company planned to boost production volumes and undertake expansion projects.

It is expected that the merger will significantly benefit Russian aluminium production, in particular, as it will make the enlarged company self-sufficient concerning raw materials.

Russia, where most of Rusal and Susal's smelting infrastructure is based, does not have sufficient supplies of bauxite and alumina, and the companies historically had to rely on purchases of these input material abroad to sustain production.

Glencore will contribute the following alumina refineries to the transaction �– Aughinish, in Ireland; Windalco and Alpart, in Jamaica; and Eurallumina in Italy.

Its Kubikenborg aluminium smelter, in Sweden, will also form part of the deal.

Rusal will bring its aluminium smelters in Bratsk, Krasnoyarsk, Novokuznetsk and Sayanogorsk, alumina plant in Achinsk and alumina refineries in Nikolaev and Boksitogorsk – which are all located in the CIS – to the table.

Rusal will also contribute its interests in the Friguia alumina plant, in Guinea; the Compagnie des Bauxites de Kindia, in Guinea; the Bauxite Company of Guyana; the Alscon aluminium refinery, in Nigeria; the Queensland alumina refinery, in Australia; Eurallumina, in Italy, Armenal, Sayanal and a cathode plant in China.

Sual will contribute its Irkutsk, Urals, Kandalaksha, Bogoslovsk, Nadvoitsy, Volgograd and Volkhov aluminium smelters, Zaporozhye aluminium combine, Pikalevo alumina refinery, SUBR, Urals Foil, SUAL-Silicon-Ural and SUAL-PM.

Under the terms of the merger agreement, Rusal's shareholders own 66% of the new company, with Sual shareholders 22% and Glencore 12%.

While UC Rusal has no mining or production assets in South Africa, the status quo could possibly change in future.

Vekselberg is the chairperson of Renova, which is already active in South Africa. Swiss company Investment Partners AG manages the company's South African projects, the most advanced of which is United Manganese, of Kalahari, in which Renova has a 49% share, the other 51% being held by historically disadvantaged South Africans.

At the recent sixth,