Moscow -- On Monday, October 2, 2006, the largest aluminum corporation in the world was officially created. The Russian companies RusAl and SUAL and the Swiss trader Glencore announced the merger of their holdings and the creation of the united company Russian Aluminum. This newborn "baby" is the world's largest aluminum producer, easily surpassing giants like Alcan and Alcoa.
Russian Aluminum consists of the three: RusAl owns 66% of the shares, SUAL -- 22% and Glencore -- 12%. The new CEO of the company is former head of RusAl, Alexandr Bulygin, and the chairman of the board of directors is the former head of SUAL, Brian Gilbertson. The merger is being administered by JP Morgan and Morgan Stanley. The new Russian company will employ 110,000 people in 17 different countries. Annual production volume will reach four million tons of aluminum and eleven million tons of alumina, three and a half tons of the latter will be produced for export. In the next 18 months shares of the company will become public on the London Stock Exchange. The new Russian IPO will sell 20-25% of the company's stock.
This year the gains of the Russian Aluminum will be $10 billion. Full registration of the company will be completed by April 1, 2007; however the company will have to receive approval from the federal Anti-Monopoly Service of the Russian Federation and similar agencies in seven other countries. Some might say that the antitrust evaluation of the new-born giant will be rigged, however the chances of the company succeeding with its registration are very high. According to international antitrust standards, the company's size and market share will be compared to that of Alcan and Alcoa, and Russian Aluminum will only produce 400,000 more tons a year of aluminum than these firms.
The net worth of the company after the merge is complete will be $25 billion. After the IPO is issued and the company goes public, chances of a fast and large increase in value are very high. The corporation is serious about developing the metals industry in Russia; in the next five years it is planning to spend $3 - $3.5 billion on new infrastructure.
This merger is beneficial for all the parties involved, because in recent years RusAl has been running short on raw materials, and had to buy bauxite from numerous international providers. SUAL had enough bauxite for its personal needs, but could not provide enough for the merging corporation. Glencore, on the other hand, has plenty of raw materials and now has a guaranteed purchaser.
RusAl, headed by Oleg Deripaska, is one of the leading aluminum corporations in the world, which produces 75% of Russian and 10% of the world's aluminum. RusAl's production volumes have grown by 1.6% in 2005, and totaled 2.713 million tons. Total company revenues according to US GAAP in 2005 were up 22.3% and totaled $6.65 billion.
SUAL group, the majority of which is owned by Leonard Blavatnik and Viktor Vekselberg, already was one of the top ten aluminum companies in the world. The corporation does everything -- mining bauxites, manufacturing alumina, silicon, aluminum semi-prepared raw materials and finished materials. In 2005, SUAL increased its manufacturing of raw aluminum by 13.4%, to total of 1.047 million tons; and bauxites by 7.8% for a total of 5.408 million tons; alumina -- by 10.6% for a total of 2.285 million tons. According to IAS, the company gains totaled to $2.7 billion, which is 17.4% more than the gains of 2004 ($2.3 billion). The EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) has grown by 40%, to total of $600 million.
Glencore International AG is one of the largest private diversified companies mining minerals internationally. It also produces metals, alloys, trades and administers operations in oil, coal and agriculture. The company's turnover is $90 billion a year. The company owns several big name factories such as Aughinish in Ireland (producing 1.85 million tons of aluminum a year), Kubal in Sweden (102,000 tons) and alumina factory Widalco in Jamaica (1.26 million tons). Glencore is headquartered in Baar, Switzerland; the company has offices in London, Stemford and Singapore.
Here's the list of plants, factories and businesses which will be merged into the new giant "Russian Aluminum":
RusAl will provide -- Russian aluminum plants Bratsky, Krasnoyarsky, Novokuznezky, Sayanogorsky, Achinsky, Nikolayevsky in Russia; bauxite-alumina factories in Fria, Kindia, in Guinea; bauxite factory of Guyana; aluminous factory QAL from Australia; Armenal, Sayanal and Katodny factories in China.
SUAL will provide -- Russian aluminum plants Irkutsky, Uralsky, Kandalkashsky, Bogoslovsky, Nadvoizky, Volgogradsky, Volhovsky, Zaporozhsky, Pikalevsky alumina factory, SUBR, Uralskaya Folga (foil), Kremni, SUAL-Kremni-Ural and SUAL-PM.
Glencore International AG will provide -- alumina factories Aughinish in Ireland, Windalco and Alpart in Jamaica, Eurallumina in Italy and aluminum plant Kubikenborg in Sweden.