RUSAL PROFILE: Aluminium producer looks to cut debt and costs, focus on products

United Company Rusal remains focused on cutting debt and costs and meeting its customers’ requirements, rather than looking at new projects or acquisitions, first deputy ceo Vladislav Soloviev told Metal Bulletin.

United Company Rusal remains focused on cutting debt and costs and meeting its customers’ requirements, rather than looking at new projects or acquisitions, first deputy ceo Vladislav Soloviev told Metal Bulletin.

The company believes Russia and especially eastern Siberia have vast potential, and that it therefore remains focused on two major investment projects in the region – BEMO, a hydropower plant and aluminium smelter in Siberia, and the Taishet aluminium smelter.

“Rusal does not intend to launch any new projects for now, nor does it plan to pursue any merger and acquisition opportunities in the coming months. Instead, Rusal is intent on streamlining its business, deleveraging its balance sheet and cutting costs,” Soloviev said.

“We have to develop our competitive advantages and create new technologies in order to provide our clients with the products of high quality at competitive prices,” he added.

Rusal is building the Boguchansk and Taishet aluminium smelters in Siberia, with the aim of creating more than 10,000 new jobs.

“Apart from the new specialists, we aim to employ at these new facilities people that already have a solid experience at other Siberian smelters in Krasnoyarsk, Sayanogorsk or Bratsk,” Soloviev said.

Asia has proven to be a key market for the company as the continent consumes more than half the world’s aluminium, and Rusal has set up camp 500km from the Chinese border with major aluminium smelting capacity in eastern Siberia.

Soloviev told Metal Bulletin that the company’s plans to develop its business in China will be driven by growth in demand for transport, electrical transmission, packaging and construction.

Financing

In terms of financing, Rusal’s ordinary shares have been listed on the Hong Stock Exchange (HKEx) since 2010, while its global depositary shares listed on Euronext Paris, and Russian depositary receipts on the country’s MICEX and RTS stock exchanges.

“While the Hong Kong stock market is accessible for large international institutional investors, it also benefits from the activity of companies that do not work in other markets such as Asian funds and tycoons, two of whom participated in our [initial public offering],” Soloviev said.

“More than one-third of the Hong Kong adult population are stock investors. Nowhere in the world would you find such a big proportion of retail investors. This market has a solid financial infrastructure and an extensive investor base,” he said.

The company has also frequently used loans to fund various activities and, in October 2011, the company announced the full refinancing of its debt portfolio.

“During the recent refinancing process, the company has taken out its outstanding debt under the International Override Agreement, to the amount of $4.34 billion, and Onexim Group liabilities to the amount of $552 million,” Soloviev said.

“The repayment was made on October 5 using mainly the $4.75 billion syndicated facility arranged by international and Russian lenders,” he added.

Rusal has also carried out a refinancing of loans from Sberbank of Russia, worth up to $460 million with a five-year maturity.

The company signed an amending to its $4.58 billion loan agreement with Sberbank on September 23, extending the loan maturity to September 2016, and cancelling the Vnesheconombank (VEB) guarantee.

It refinanced its $1.1 billion debt, with the issuance of two series of rouble bonds in March 2011 and April 2011, maturing in March 2014 and April 2015 respectively.

“The company has now signed an agreement with Gazprombank on a new loan facility up to $655 million with a five-year maturity,” Soloviev said.

Since the beginning of 2011, the company has made total repayments to lenders of more than $700 million, with a 4% decrease of the net debt during the third quarter of 2011 alone, to $10.9 billion, compared with the preceding quarter.

Key facts

“Rusal is a vertically integrated aluminium company with assets right through the production process – from bauxite and nepheline ore mines to aluminium smelters and foil mills,” Soloviev said.

“It employs about 72,000 people in 19 countries, across five continents. Rusal markets and sells its products primarily in the European, Russian and CIS, Japanese, Korean, Chinese, South East Asian and North American markets,” he added.

In 2010 Rusal accounted for around 10% each of global aluminium and alumina production, he noted.

Claire Hack
chack@metalbulletin.com
http://twitter.com/#!/ClaireHack_MB

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