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. Last Updated: 07/27/2016

Siberian Aluminum Acquires 2 Smelters

No. 2 aluminum giant Siberian-Urals Aluminum Co., or SUAL, has completed its takeover of two key smelters and is negotiating an $800 million joint venture with top producer Russian Aluminum, SUAL officials said Friday.

Yulik Zimmerman, the head of SUAL’s legal department, said Friday that SUAL had acquired the Kandalaksha smelter in the Murmansk region and the Urals-based Bogoslovsk smelter.

"This is the last step in gaining control over the two companies," Zimmerman said.

Last year, SUAL President Viktor Vekselberg cut a deal with Trustconsult owner Vasily Anisimov to bulk their mutually owned assets into one holding company, but later Anisimov decided to bail out of the business, citing personal reasons. After the merger collapsed, SUAL decided to simply acquire the two smelters.

The sum for which Vekselberg’s Renova company, a major shareholder in SUAL, purchased the aluminum assets from Anisimov’s Trustconsult was not disclosed by either party.

The negotiations with Trustconsult unfolded against the backdrop of last year’s mega-merger that produced the massive Russian Aluminum, which with annual output of 2.1 million tons of primary aluminum controls about 75 percent of the nation’s aluminum production.

"We hope that we will be able to develop a civilized relationship with Russian Aluminum, avoiding some of the practices typical in the local business environment," said Vekselberg.

Vekselberg said SUAL is currently negotiating a joint venture with Russian Aluminum to build an alumina plant worth $700 million to $800 million to process bauxite in the Timan-Pechora region in the Komi Republic.

All in all, there are now 16 companies under Vekselberg’s command, but only four — the Bogoslovsk and Uralsk alumina plants plus the Irkutsk and Kandalaksha smelters — will be part of SUAL.

SUAL made two additional share issuances to swap its shares for those of Kandalaksha and Bogoslovsk.

On Friday, its new shareholders elected a new board of directors and passed a new corporate charter.

Economies of scale resulting from the merger will reduce costs by 10 percent to 12 percent, but it will affect only alumina producers and smelters, while bauxite producers and companies at the end of the production chain will remain outside SUAL. "We merge only those assets that we deem necessary to make part of one company," Vekselberg said.

SUAL owns some 40 percent of SUAL-Holding, while the remaining 60 percent belongs to other metal makers in the hands of Vekselberg and his team of managers.

SUAL-Holding acts as a management company for all of its shareholder companies, including SUAL itself.

Companies that became part of the SUAL-Holding have annual revenues of about $1.4 billion.

With annual production of some 1.7 million tons of alumina and 600,000 tons of primary aluminum, it is now the world’s No. 8 primary aluminum maker.