MOSCOW --The federal anti-trust regulator in Moscow, which never acts without cue from the Kremlin, warned this week that its review of the proposed merger between Russian Aluminium (Rusal) and SUAL, Russia's aluminium producers, is likely to be delayed well past the announced April deadline.
Igor Artemyev, head of the Federal Antimonopoly Service (FAS) told Mineweb through a spokesman that "the review of this deal can be delayed. The main reason is that the deal is very complicated. According to current legislation we can delay the review by two months and we may use [this time]."
In October, Rusal, SUAL, and Glencore of Switzerland announced that they had signed an agreement between themselves to form a merged company, to be called United Company Rusal purportedly to become the world's largest aluminium producer. The shareholding arrangements contemplated in the announcement would give Oleg Deripaska, the owner of Rusal, control over the management of the new company, which is to be domiciled legally in the Channel Island of Jersey. Sources close to the deal have told Mineweb that the value and shareholding split between Deripaska and SUAL owner Victor Vekselberg could change if legal problems arise from either side in implementing the merger. Regulators in Russia, the European Union, and the United Kingdom are all reviewing the proposed deal.
In the deal announcement, Rusal claimed "the parties expect to complete the deal by 1 April 2007." The FAS announcement suggests this isn't likely before June 2007, if then.
All that the Kremlin has released to date on the issue is that President Vladimir Putin approves the formation of a united aluminium company. There is no evidence that he approves Deripaska for control of the management, or the cashflow; or that he has agreed to accept South African executive, Brian Gilbertson as the proposed chairman of the board of the new company.
In a meeting Deripaska had with Putin on August 2, the Kremlin transcript that has been released shows calculated questions from the President, but no endorsement of Deripaska's answers. The latter omitted any reference to the merger.
"What are your impressions regarding work with the administrative structures, with officials," Putin asked coyly, knowing, as Deripaska understood, that he was referring to one of the biggest corporate lobbying operations in the country, headed by lawyers who advertise their closeness to Putin himself. Deripaska complained "there are problems getting the necessary approvals. Getting all the approvals is a very complicated procedure...Some of the regulations are outdated. You end up in a situation where you're preparing all the project documentation just for the sake of the approval." He went on to apply for Putin's endorsement of a scheme of tax write offs for infrastructure investment.
This was an ironic way for Deripaska to describe his idea of compliance with Russia's anti-trust, transfer pricing, and other tax laws and regulations that have governed Rusal's business to date. The Kremlin transcript does not record any response from Putin.
According to a source who claims to have asked for Putin's view of the deal, and of the legal challenges to Deripaska's control of the assets, the president's response was pithy and personal -- so far, he is not committing himself to the aluminium oligarchs.
Until Putin makes up his mind, delaying the FAS review of the deal is one of his options.
The last time the FAS reviewed an application by Rusal was in May 2004, when the Russian company -- abandoning its strategy as a vertically integrated miner to metal producer -- proposed selling two domestic aluminium rolling-plants to Alcoa of the US. Rusal claimed at the time that it expected the deal review would be completed, and approval issued, within eight weeks; by the end of June that year. But opposition within the Russian government forced FAS to delay for another six months; the government appr
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