Rusal expands business in China

UC Rusal announces that is has entered into a framework agreement to acquire a 33% stake in Shenzhen North Investments, a Chinese trading company and subsidiary of Norinco, which sells primary aluminium in China and South-East Asia, and that it has agreed on creation of a joint venture with  Norinco to produce aluminum alloys.

The framework agreement on acquisition of a 33% stake in ‘Shenzhen North Investments’ will see Rusal  take an active role in the strategic and operational management of the trading company. Two representatives of Rusal  will join the Board of Directors, one of whom will be appointed Chairman. In addition, Rusal  will be entitled to appoint a Vice-Chairman of the Board of Supervisors and a deputy CFO.

The transaction is subject to approval by Rusal ’s Board of Directors, its lenders and the relevant regulatory bodies in China. The transaction is scheduled for completion in the first quarter of 2011.

The acquisition of a stake in a Chinese trading company with more than fifteen years experience will enhance the effective promotion of Rusal’s products in the Chinese market. Rusal will continue to supply primary aluminium to  Norinco, as well as is considering the possibility of increasing sales to China when market conditions become more favorable.

In addition, Rusal and  Norinco have also signed a Memorandum of Understanding to establish a joint venture to produce and sell aluminum alloys, including semi-finished parts for production of aluminum cans, slabs and billets for production of aluminium profiles as well as wheel alloys. Rusal will provide facilities at its plants to commission production, supply liquid metal, and assist in the organization and control of the technology process.  Norinco, in turn, will supply the equipment, provide necessary resources for the production engineering and equipment assembly, as well as working capital. It is expected that Rusal ’s share in the joint venture will be not less than 51%.

Oleg Deripaska, CEO of UC Rusal , said: ‘The Asian market is one of the company’s top priorities and is strategically important in terms of the promotional support behind our products. The geographical proximity of Rusal ’s smelters to China enables us to offer the most favorable conditions to our partners in Asia. Commissioning modern, high-tech and environmentally friendly production in Siberia, which will focus on supplying Asian consumers, is a clear demonstration of our commitment to this market. We hope that these agreements will be an important stage in expanding our partnership with Norinco and will facilitate the development of mutually beneficial relations between our countries.’

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