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. Last Updated: 07/27/2016

Battle Heats Up for Control Of Nikolayev Alumina Plant




A battle between two of Russia's warring aluminum clans vying for control over a key Ukrainian raw-materials supplier turned ugly at a recent plant shareholders' meeting when one side was prevented from participating, officials said Thursday.


The enterprise at the center of the controversy, the Nikolayev Alumina Plant, or NGZ, supplies Russian smelting plants with alumina, a raw material used to make aluminum.


With the Russian and Ukrainian election seasons in full swing and alumina supplies tight, Trans-World Group and Sibirsky Aluminum are scrambling to gain control over the Nikolayev plant, which boasts a yearly output of 1 million tons of alumina, or 20 percent of Russian smelters' total yearly demand.


The NGZ shareholders' meeting, held Nov. 5, turned into a battleground when Sibirsky Aluminum representatives were prevented from taking part in the meeting, even though they claim a 36.4 percent stake in the enterprise through shares bought from the Nikolayev plant's workers' collective, Sibirsky Aluminum officials said Thursday.


They were excluded on the grounds that a Ukrainian court last month ruled the shares had been purchased illegally and ordered them returned to the individual shareholders.


According to Russian press reports, the Nikolayev factory management had intended to propose a change in the company charter that would allow it to issue new shares without consulting shareholders first.


A Ukrainian court will hold a hearing over the dispute this month, Vremya MN newspaper reported.


As things stand, the Ukrainian government holds 55 percent of NGZ shares, giving it de facto ownership of the Nikolayev plant.


However, it is unclear who actually controls the plant. Some observers say Trans-World Group, a London-based metals-trading company with extensive holdings in the Russian aluminum industry, controls the plant by virtue of its connections with the Ukrainian government.


Russian smelters controlled by Trans-World Group have been the principle recipients of Nikolayev's alumina, receiving shipments despite huge arrears in payments, said Raju Daswani, principal analyst for the Metal Bulletin in New York.