05 November 2003 01:51
Out to project a better image: RUSSIA: Rusal tries a makeover, writes Kevin Morrison
Rusal, the Russian aluminium producer, is undergoing a makeover. Not only is
it cleaning up its ownership structure, the world's largest aluminium
exporter is changing its brand name.
Rusal, short for its previous name, Russian Aluminium, is modernising its
smelters, the first time these plants have received new investment in
decades.
With a new name and more efficient plants, Rusal sees it is time to project a
new image to its customers by changing its brand names on the aluminium
ingots, slabs and sheets it produces.
"We felt it is important to rebrand with the Rusal name, because the old
brands still have connotations of cheap metal," says Steve Hodgson,
director sales and marketing at Rusal.
Russia received a tarnished reputation for aluminium in the early 1990s when
its producers, many of which are now consolidated under the Rusal group,
flooded western markets with cheap metal in a desperate scramble for foreign
currency earnings to bolster state coffers following the collapse of the
Soviet Union.
The influx of Russian metal sent aluminium prices to long term lows, and
forced many western producers to curtail output in order to stem the rising
stockpiles.
"Delivery of Russian metal was often unreliable. Customers had to put
pay money up front before they received the metal, and then take delivery of
it at the side of some railway in Siberia. It just didn't have a good
name about it," says Mr Hodgson, one of the few western executives at
Rusal.
The change of brand names will mean owners of the metal bearing the old Rusal
brands with forgettable names such as KPA3, ID, HKA3 and CAA3-P will not be
able to trade these metals via the London Metal Exchange from mid-November.
Adam Rowley, metals analyst at Macquarie Bank, says much of Rusal's old
branded products remained outside of LME accredited warehouses.
"Those holders of the metal will probably have to sell at a discount to
customers," says Mr Rowley.
Michael Hutchison, chief executive officer of Sempra Metals, told a recent
conference in Durban, South Africa, that there was up to 1.5m tonnes of
aluminium in circulation that was not housed in accredited warehouses. Some
analysts say most of this "off-market" metal is of Russian origin.
Mr Hodgson says the old brands reflect the names of Russian smelters that
were operated by separate companies before the sector was consolidated in the
late 1990s.
"The rebranding is important because it reflects where we are now. We
have made improvements to the quality of metal, the delivery, and we even
provide credit these days," says Mr Hodgson.
He says it is part of a wider strategy change by Rusal pushed by Oleg
Deripaska, its chief executive officer, who recently raised his stake in the
company to 75 per cent after buying a 25 per cent stake from Roman
Abramovich, the owner of London's Chelsea football club.
"Until three years ago, 85 per cent of our production was sold through
third parties. Now 40 per cent is sold through these traders," says Mr
Hodgson.
"While we thank those traders for marketing our metal and building up
our customer base from the early 1990s to 2000, we feel we are capable now of
handling much more of our own sales," he says.
[FTI [The Financial Times]] |
RUSSIA IN FACTS
