Rusal
United Company Rusal is the world's second largest aluminium company by primary production output. It was the largest until overtaken by China Hongqiao Group in 2015. Rusal accounts for almost 9% of the world's primary aluminium output and 9% of the world's alumina production. Rusal was founded by major Russian industrialist Oleg Deripaska.
The United Company was formed by the merger of Rusal, SUAL, and the alumina assets of Glencore, completed in March 2007. According to its own statistics, Rusal accounts for 6.2% of the world's primary aluminium output and 6.5% of the world's alumina production, while operating assets in 13 countries over five continents, employing over 61,000 people across its international operations and offices.
The company is incorporated in Jersey, where it has its financial centre, but its headquarters are in Moscow, Russian Federation. UC Rusal is a public limited company and its shares are traded on the Moscow Stock Exchange, Hong Kong Stock Exchange, and European Stock Exchange. Since 25 September 2020, the company changed its place of registration from Jersey to Kaliningrad, Russia. In 2021 Rusal announced a proposal to demerge its high carbon assets and change its name to AL+.
Company history
Predecessor companies 1991–2000
UC Rusal's roots lie in the business activities of Russian businessman Oleg Deripaska, who entered the metals industry as a commodities agent and broker at the Moscow Trade Stock Exchange and then at the Russian Commodities and Raw Materials Exchange. As a broker, Deripaska dealt in a wide range of commodities, including aluminium. His work also included trading with major Russian aluminium smelters.Between 1991 and 1994, companies set up by Deripaska with the backing of industrialist and entrepreneur Michael Cherney started investing in the shares of Sayanogorsk Aluminum Smelter, one of the newest and most modern aluminium plants built in Soviet times. In 1994, Deripaska was elected the General Director of SAZ.
In 1997, the companies controlled by Deripaska underwent a general restructuring, resulting in the creation of Sibirsky Aluminium to manage the aluminium and alumina assets acquired by Deripaska's companies. By 2000, Sibirsky Aluminium managed, among other aluminium-related assets, majority interests in the Sayanogorsk aluminium smelter, the Sayanal foil mill, a fabricating plant in Samara, Russia, and a minority interest in the Nikolaev alumina refinery in Ukraine.
Founding of Rusal and company expansion 2000–2007
Gradual strategic acquisitions and growth projects eventually led to the creation of one of the world's largest aluminium and alumina producers. Rusal has historically opted to integrate its assets under centralized operational and management control fully. The company has achieved increased production and efficiency in most of its acquired facilities through production "creep", as well as by undertaking key modernization and expansion projects.Rusal was founded in 2000 after Sibirsky Aluminium and Millhouse Capital, owned by Roman Abramovich, agreed to merge their aluminium and alumina assets.
By 2002, Sibirsky Aluminium and Millhouse Capital were managing controlling stakes in the Armenal foil mill in Armenia and the Belaya Kalitva metallurgical plant and in Russia, and also took under management the Friguia bauxite and alumina complex and Bauxite of Kindia Company in Guinea to secure bauxite and alumina supply for its Russian smelters. In 2002, Rusal also established the Engineering and Technology Center in Krasnoyarsk, which has since become the foundation of the company's internal R&D projects.
In 2003, Millhouse Capital sold its 50% stake in Rusal to Basic Element, which held the remaining half of the shares and belongs to Deripaska. In Ukraine, RUSAL increased its share in the Nikolaev alumina refinery to 98%.
In 2004, Rusal made the strategic decision to focus on its upstream business and began disposing of its downstream assets, including the sale of its fabricating division to Alcoa in January 2005. The divestiture process was largely completed in 2006 with the distribution of certain aluminium construction plants and other non-core assets to companies controlled by RUSAL's beneficial owner. In 2004, Rusal obtained a licence to develop bauxite mines in Guyana, and the Bauxite Company of Guyana was subsequently founded.
From 2004 to 2006, RUSAL acquired several strategically important assets worldwide. In 2004, RUSAL acquired a 90% interest in the Boxitogorsk alumina refinery in Russia and increased its holding in the Nikolaev alumina refinery to 100%.
In 2005, RUSAL bought a 50% stake in the Komi alumina project from SUAL and became its partner in the project, which involved the construction of an integrated bauxite and alumina complex in Russia's Komi Republic.
Also in 2005, RUSAL completed the acquisition of a 20% equity interest in one of the world's largest alumina refineries in terms of production capacity, Queensland Alumina Limited, located in Queensland, Australia.
Furthermore, Rusal purchased assets of a cathode plant in Lingshi County of Shanxi Province, China. In April 2008, the company acquired assets of another cathode plant in Taigu County of Shanxi Province, China, which have been integrated into the existing cathode plant in Lingshi.
In 2006, Rusal acquired assets of the state-owned Aroaima Mining Company in Guyana, acquired the remaining equity interest in the Friguia bauxite and alumina complex in Guinea, completed an extensive retrofit of the Armenal foil mill and commissioned the Khakas aluminium smelter in Russia, one of the most advanced aluminium production facilities in the world. Rusal also acquired a 56.16% equity interest in the Sardinian alumina refinery, Eurallumina.
In May 2006, Rusal and RusHydro signed a cooperation agreement for the construction of the Boguchanskaya hydropower station and the Boguchansky aluminium smelter. Rusal increased ownership in the Bratsk, Krasnoyarsk, Sayanogorsk, and Novokuznetsk aluminium smelters, the Achinsk and Boksitogorsk alumina refineries, and the Russian National Aluminium and Magnesium Institute to 100% in November 2006, and in Sayanogorsk in June 2007.
To stay competitive, the VAMI and SibVAMI aluminium and magnesium research institutes became the backbone for engineering and technology centres involved in the development of new, unique production technologies, including the RA-300 and RA-400 reduction cells for Rusal. The new technologies allowed for large-scale greenfield and brownfield projects. In 2005, Rusal created its own engineering and construction subsidiary, Rusal-Engineering Development Limited, responsible for modernization and construction projects.
In December 2006, Rusal acquired through a privatisation process a 77.5% equity interest in the Aluminium Smelter Company of Nigeria. The Group acquired a further 7.5% equity interest in ALSCON from MAN Ferrostaal AG in January 2008.
UC Rusal
In late March 2007, the merger between Rusal, its domestic competitor SUAL, as well as the bauxite and alumina assets of Swiss commodities trading group Glencore, created UC Rusal. The merger created the world's largest aluminium company at the time, with assets in 17 countries across five continents, including 16 aluminium smelters, 12 alumina refineries, eight bauxite mines, three powder metallurgy plants, three silicon smelters, three secondary aluminium plants, three aluminium foil mills, two cryolite plants, and one cathode plant. The merger was completed in March 2007, at which time the newly formed company was estimated to have pro forma sales of $12 billion and production capacity of approximately four million tonnes of aluminum and 11 million tonnes of alumina.Company consolidation and expansion projects
In November 2007, Rusal signed a cooperation agreement with Samruk-Energo, a subsidiary of Samruk-Kazyna, on the creation of a 50/50 joint venture to operate the Bogatyr Komir LLP, the largest coal mining company in Kazakhstan.Because of a string of mergers and acquisitions, particularly that of Norilsk Nickel, UC Rusal had a high level of debt, which was exacerbated by the 2008 financial crisis. To be able to retain its stake in Norilsk Nickel, and to avoid having to float the stake to foreign lenders, UC Rusal received a $4.5 billion loan from Russian state bank Vnesheconombank to repay debts to foreign creditors. As part of its debt consolidation efforts in 2009, UC Rusal reduced the costs of its operations by 25%. In December 2009, a final agreement between the company and 72 Russian and international lenders to refinance $17 billion of debt was reached.
In January 2009, Oleg Deripaska was appointed CEO of Rusal, replacing Alexander Bulygin, who had held the position for three years.
In January 2010, UC RUSAL was listed on the Hong Kong Stock Exchange with its IPO price of HK$10.8 per share and capital raising of US$2.2 billion. The IPO attracted investors such as Nathaniel Rothschild, Robert Kuok, Paulson & Co, John Paulson and Vnesheconombank. Rusal also trades global depository receipts on the NYSE Euronext in Paris.
August 2011 saw Rusal reach an agreement with Sberbank to extend the maturity of debts until 2016, thereby cancelling VEB's loan used to repay debts to lenders.
In October 2011, UC Rusal announced that it had completed the refinancing of all outstanding debt payments worth $11.4 billion. As a result, the company was freed from all investment and dividend payment restrictions, and announced new investments into the modernisation of old smelters and construction of new smelters in Siberia.
With Chinese aluminium demand growing due to rapid urbanization and industrialization, UC Rusal signed a joint venture agreement with China North Industries Corporation in April 2012. Rusal also signed a memorandum of understanding with one of its main competitors, Shandong Xinfa Group, on the study of future potential cooperation areas, such as joint ventures.
In March 2014, UC Rusal entered into a 50/50 joint venture with Israeli automotive component manufacturer Omen High Pressure Die Casting to produce automotive components.
Resulting from massive overcapacity in the aluminium market due to China increasing its output of primary aluminium, global aluminium prices fell in the years 2007 to 2013, leading Rusal to report a loss of US$3.2bn in 2014. The company asked creditors to agree to delay payments on part of its US$10bn net debt pile. In August that year, national and international lenders agreed to allow the restructuring of its debt.
In November 2014, Vladislav Solovyov was appointed as Rusal's CEO, while Deripaska assumed the role of company president.
In 2016, UC Rusal signed another joint venture agreement with Hebei Joy Sense Cable Co., a Chinese firm, to produce aluminum cable for electrical applications.
In 2017, Rusal issued two Eurobonds to finance its debts. The first one, worth US$600 million, was issued in February, followed by a second one in April, worth US$500 million. Also in February, plans were announced to sell 10 billion yuan worth of seven-year onshore bonds to finance purchases in China, making Rusal the first foreign company to offer panda bonds on the Shanghai Stock Exchange. The company also agreed on a pre-export finance mechanism with international lenders worth US$1.7 billion for debt refinancing.
In April 2017, Rusal signed a joint venture with Indian firm Runaya Metsource for producing aluminum paste and powder, with commercial activities set to commence in 2018. In 2021, the company's revenue amounted to 596 billion rubles.
In April 2022, Rusal America Corporation was sold to former executives Brian Hesse and Andrey Donets and subsequently renamed PerenniAL.
In October 2023, Rusal acquired a 30% stake in China's Hebei Wenfeng New Materials for 1.91 billion yuan.