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. Last Updated: 07/27/2016

Alfa Group Eyes Bratsk Aluminum

The general director at Russia's largest aluminum producer is negotiating the sale of a 30 percent stake with major holding company Alfa Group, a leading business daily reported Wednesday.

If the stake in Bratsk Aluminum Factory - which is larger than the 25 percent plus one share holding needed for a blocking vote - were to be bought by Alfa, it would be a major blow to a bid by companies linked to tycoon and State Duma Deputy Roman Abramovich to take control of a large swathe of Russia's aluminum industry, Kommersant newspaper reported.

However, neither Alfa nor Sibneft - which on occasion has spoken for the "Sibneft shareholders" that bought major stakes in the Bratsk and Krasnoyarsk aluminum factories last - would comment on the Kommersant report.

Meanwhile, the director of Bratsk Aluminum, Yury Shlyaifshtein, would neither confirm or deny Kommersant's report.

"I cannot comment on this for business reasons," Shlyaifshtein said Wednesday in a telephone interview from London.

"If there was a decision [to sell the stake] it would have been made public," he added.

Shlyaifshtein did say that it had not so far been possible to communicate with Bratsk's new majority shareholders on a peaceful and cooperative basis.

He said Alfa Group could be a fair and independent player in Bratsk should it buy into the plant.

The shakeup in Russia' aluminum industry started earlier this month when shareholders in Russia's No. 5 oil major Sibneft moved to take over about 60 percent of the sector's producers by acquiring stakes previously held by major international metals trader TransWorld Group and its associates, Lev and Mikhail Chyorny. As well as buying majority stakes in Bratsk and Krasnoyarsk, the Sibneft shareholders acquired significant stakes in Krasnoyarsk Hydroelectric Station and Achinsk Alumina Plant, a major supplier of the alumina used to make aluminum. Meanwhile, Berezovsky-linked firm LogoVAZ acquired a majority stake in Russia's fifth-largest aluminum producer, Novokuznetsk Aluminum Factory

Abramovich and fellow tycoon Boris Berezovsky have been widely reported as the men behind the takeovers.

The move both surprised and galvanized Sibirsky Aluminum, a major aluminum holding that had been gradually moving to swallow as much of Russia's aluminum industry as it could handle, utilizing an alliance with power monopoly Unified Energy Systems, an important player for an industry as heavily dependent on cheap, plentiful energy supplies as the aluminum sector.

Sibirsky has fought back since the Sibneft shareholders acquisitions.

A pro-Sibirsky Aluminum external manager was recently appointed at Novokuznetsk, a definite setback to LogoVAZ's attempt to take over the firm, which produces 273,000 metric tons of aluminum a year.

The battle for aluminum, Russia's third largest export, also looks set to spill over to Ukraine in the near future.

Both Sibirsky Aluminum and a company representing the interests of Sibneft are among the four companies set to bid in a looming privatization auction for a 30 percent stake in Ukraine's Nikolayevsky Alumina Smelter, the largest such factory in the former Soviet Union, said Alexander Agibalov, a metals analyst with Aton brokerage.

According to Agibalov, Sibirsky Aluminum already holds 36 percent in Nikolayevsky, which could mean that the company is likely to win the tender for the 30 percent stake, giving it control of the plant.

The relatively independent Alfa Group could in fact be linked to either of the competing sides at Bratsk, Agibalov said.

With little benefit accruing from possession of 30 percent in Bratsk, Alfa Group could be eyeing a buyout deal from the Sibneft shareholders, Agibalov added.