Rusal has open mind on funding options ALUMINIUM PRODUCTION:
Rusal, the private Russian aluminium group co-founded by Roman Abramovich,
said it was still planning to launch an initial public offering in 2007, but
that this could be pushed back if cheaper funding was found.
After unveiling strong 2003 production figures yesterday, Rusal chief
executive Alexander Boulygine said: "We would see an IPO as a source for
long-term affordable financing, and we are always comparing the cost of this
with alternatives. We would not be doing an IPO just to show we could."
The group, which is currently the world's second-largest aluminium
producer after Alcoa, aims to double its production capacity within a decade.
Rusal has said in the past that it planned to float a 25 per cent stake by
2007. Mr Boulygine said the date "could be 2006, it could be 2008".
He added that Rusal planned to issue bonds in the international market 12
months before any IPO, a move that would require the secretive group to open
its books to investor scrutiny.
Rusal is now 75 per cent owned by co-founder Oleg Deripaska through his Basic
Element vehicle, following Mr Abramovich's reduction of his stake to 25
per cent last October.
The group said it produced 2.6m tonnes of primary aluminium in 2003, up 4.3
per cent from the previous year. Turnover increased by more than 12 per cent
to Dollars 4.5bn, while sales outside Russia rose to Dollars 3.7bn from
Dollars 3.4bn in 2002, reflecting the strengthening global demand for
aluminium.
Mr Boulygine said productivity, which had been lagging behind western rivals,
rose 15 per cent in 2003 thanks to staff cuts and greater use of outsourcing.
Profits, which were not disclosed, had been helped by the rising aluminium
price, Rusal's access to low-cost electricity, and attractive alumina
supply contracts.
The group's previous shortage of raw materials had now been resolved
through the signing of 10-year supply contracts, Mr Boulygine said.
Rusal's capital expenditure rose to Dollars 230m in 2003 from Dollars
160m in 2002, and is likely to rise further in 2004 because of the upgrading
of the group's smelter at Sayanogorsk.
The group also said it would buy out minority shareholders, who own stakes of
between 0.8 per cent and 6 per cent in four of Rusal's Soviet-era
smelters, before the end of the year.
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