Rusal to complete demerger of higher carbon assets in early 2022

Aluminum smelter. (Reference image by UC Rusal Photo Gallery, Wikimedia Commons).

Russian aluminum producer Rusal is expected to complete the demerger of its higher-carbon assets into a separate company in the first quarter of 2022, its head of strategy Oleg Mukhamedshin told Reuters.

Hong-Kong listed Rusal – the world’s largest aluminum producer outside China – plans to change its name to AL+ as part of the process, which it hopes will help it to achieve carbon neutrality by 2050 – subject to shareholder approvals.

“At this stage, management is preparing a proposal for the way forward,” Mukhamedshin said. “To what extent these proposals will be supported by all shareholders is too early to discuss. But we hope that they will be supported.”

En+, which owns 56.9% of Rusal, supports a spin-off of assets with a pro-rata distribution of shares among all shareholders. Rusal’s second-largest shareholder Sual Partners has said that it would like to see more options on the table.

Rusal’s shareholders are likely to be asked to vote on the plan this year, Mukhamedshin said.

The new AL+ is expected to keep 60% of its current aluminium and 70% of alumina production assets. The spun-off assets – five older aluminium smelters, four alumina refineries and two bauxite mines in Russia – will form another company, yet to be named, which will focus on upgrading its technology.

Rusal will keep its Hong Kong listing when it becomes AL+ and the separated company will also be publicly listed, according to the current plan, Mukhamedshin said.

Their debt will be shared based on their net debt to EBITDA ratios and long-term financial models, which are expected to provide both with enough cashflow to service their portion of debt.

(By Anastasia Lyrchikova and Polina Devitt; Editing by David Holmes)


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