RUSAL, SUAL, Glencore Say Russian Aluminium Merger Is Finalized

On Tuesday, March 27, Russia's aluminium billionaires finalized creation of the world's largest producer of this metal and said they would float the firm within three years. The deal marks significant enhancement of Russia's presence on global resource markets.

United Company RUSAL will produce one eighth of the world's aluminium, surpassing Alcoa Inc. and Alcan Inc., by combining RUSAL, smaller Russian rival SUAL and assets of Swiss-based commodities trader Glencore. Annual sales will be around $12 billion.

"The deal is a proactive response to several significant industry trends: dynamic growth, competition to secure access to energy and raw material resources and active consolidation," Alexander Bulygin, Chief Executive of the new company, was quoted by Reuters as saying.

The new group's production capacity will be about four million tons of aluminium and 11 million tons of alumina, the firms said in a statement.

The former world's aluminium leader Alcoa produced 3.55 million tons of the metal last year. Alcan produced 3.4 million tons.

The companies did not say where they intended to list United Company RUSAL. The firm's executives have said the listing could take place in London within 18 months of the merger.

RUSAL will own 66 percent of the new company, SUAL 22 percent and Glencore 12 percent.

SUAL's main owner Viktor Vekselberg has been appointed non-executive chairman of the new company. Board members will include RUSAL owner Oleg Deripaska, SUAL shareholder Len Blavatnik and Glencore CEO Ivan Glasenberg.

U.S. citizen Blavatnik, whose Access Industries company owns 30.13 percent of SUAL, said in a separate statement the merger would ensure "the ability to compete successfully for global capital, customers and assets".

SUAL President Brian Gilbertson, once tipped to be chairman of the new company, was not named among the board members in the statement. Russian media have reported that he would leave the company after the merger.

"There is nothing out of the ordinary in Gilbertson leaving, as he was appointed to head an independent SUAL, which had planned its own IPO," Alfa-Bank's analyst Vladimir Zhukov told Reuters. "And there is also nothing extraordinary in the company's board chaired by one of the company's owners, who is a very well known figure."

The board will include two independent non-executive directors. A third independent non-executive director will be appointed by July 1.

United Company RUSAL combines four bauxite mines, 10 alumina refineries, 14 aluminium smelters and three foil mills. The company's assets and over 100,000 employees are located in 17 countries.

The company also owns bauxite reserves and has access to a significant energy base, the statement said.