Russian aluminum giant United Co. Rusal International PJSC agreed to buy a 30% stake in a Chinese alumina plant, in a bid to plug a gap in supplies of the vital ingredient amid disruptions triggered by Russia’s invasion of Ukraine.
Rusal will take the stake in privately owned Hebei Wenfeng New Materials Co. for 1.91 billion yuan ($262 million), the Russian firm said in an exchange filing. The final price coud be adjusted depending on Wenfeng’s working capital and debt, but it’s not expected to exceed 2.5 billion yuan, Rusal said.
The agreement will allow Rusal to “gain access to alumina at a competitive cost and secure its key raw material supply,” it said. The deal marks a relatively rare direct investment by a Russian firm in China’s metals sector.
Rusal has grappled with a shortage of alumina for its smelters amid the fall-out from Russia’s invasion of Ukraine. It lost control of a Ukrainian alumina refinery, while Australia banned exports of the semi-processed material to Russia.
Wenfeng owns and operates an alumina refinery with annual capacity of 4.8 million tons of metallurgical-grade alumina in the northern Chinese province of Hebei. Rusal and the Chinese firm will share output in accordance with their shareholding, according to the statement.
That means Rusal will potentially get about 1.4 million tons a year from the acquisition. The Russian company has already been importing growing volumes of alumina from China this year.
--With assistance from Alfred Liu.
