Oleg Deripaska is under unexpected personal pressure, at home and abroad, just when his plan to take control of one of the largest bauxite and aluminium producers in the world is close to final government approval. And that is exactly why the trouble for Deripaska is growing now.
Russian government authorization this month of the creation of a monopoly aluminium concern, integrating domestic and foreign bauxite, alumina, and aluminium production assets, has followed a no-objection ruling from the European Commission (EC) in Brussels. The unconditional ruling was issued by the EC on February 1.
The published text indicates that EC anti-trust regulators found no evidence that the new United Company Rusal will control a significant volume of the alumina and aluminium traded in the European Economic Area. The Commission concluded, says the release, " that the operation would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it."
A fortnight later, the Russian Federal Anti-Monopoly Service confirmed its conditional ruling on February 14. Unlike the EC, the FAS concluded that "United Company RUSAL Limited can limit competition in world markets". Accordingly, following a government-wide review, FAS has made its approval conditional.
On the surface, the provisos appear relatively benign for Deripaska. The new Rusal must price its aluminium to consumers in line with the London Metals Exchange (LME) price, FAS has ordered: this, plus a markup of no more than 5% for domestic consumers; 10% for foreign consumers.
The Russian anti-trust regulator told The Russia Journal it has imposed five additional conditions: implementation of all supply and delivery contracts, especially for Russia's military plants; prohibition on shutting down production facilities; non-discrimination in supply and pricing between customers; the obligation to supply Russian plants with metal to meet their consumption capacity; and a duty to notify FAS ahead of price increases, and to disclose details of the chain the group uses for its trade.
“In actual fact, the situation described on paper is already the one in operation", a Moscow newspaper quoted Rusal spokesman Vera Kurochkina as saying. Under the surface, new and tougher conditions are being imposed as the Kremlin's price for the merger.
A website statement, attributed to Alexander Bulygin, chief executive of Russian Aluminium (Rusal), the prime mover of the merger, claimed the approvals support "the creation of Russia's first transnational corporation and the new leader of the global aluminium industry. We are now ready to round off the merger and plan to close the deal in the near future."
The merger of Rusal, owned by Oleg Deripaska; SUAL owned by Victor Vekselberg; and alumina assets of Swiss-based Glencore was announced in October 2006. They have agreed that, if there are no challenges to asset ownership in the proposed merger, Deripaska will own 66% of the new company, with Vekselberg and his associates 22%, and Glencore, 12%. Asset problems for Deripaska may produce a premium in cash or shares for Vekselberg, and vice versa, according to private undertakings between them.
The candidate chairman of the new company is SUAL chief executive, Brian Gilbertson. But he recently said he may drop out -- either because he doesn't want to wait for the initial public offering that has been planned for London; or because he will be ousted at the insistence of shareholders, or the Kremlin.
Rusal claims the combined company "becomes the world's largest aluminium and alumina producer, employing more than 110,000 people in 17 countries on five continents. The company will account for approximately 12.5% of global aluminium and 16% of global alumina production, respectively. The annual volume of production will be approximately 4 million tonnes of aluminium and 11 million tonnes of alumina."
Rusal remains a highly
豫公网安备41010502003434号