Russian Backer Halts Funds in New Blow to U.S. Aluminum Project
(Bloomberg) -- The Russian company backing an aluminum project in Kentucky said it’s suspending investments as it waits for U.S. partners to raise funds, dealing a new setback to the billion-dollar-plus mill that was supposed to be completed last year.
United Co. Rusal International PJSC announced the move on Unity Aluminum, formerly known as Braidy Industries, in a call on Wednesday. Rusal has so far poured $65 million into the venture, which local officials have been counting on to bring hundreds of high-paying jobs to the region.
The funding freeze is the latest in a series of twists, including a battle for control of the mill that led to the ousting last year of Braidy’s chief executive officer, and questions over the timing when the U.S. lifted sanctions on Rusal. The plan announced in 2017 was for a $1.3 billion rolling mill to meet growing demand for the metal from the automotive, packaging and aerospace markets.
“Unfortunately, our partner failed to contribute necessary equity from their side, so then it was a substantial change of the management and shareholder structure of Braidy Industries,” Oleg Mukhamedshin, Rusal’s deputy CEO, said on a call. “We put on hold any further investments of the project as per our agreement, and we still expect our partners to raise necessary financing after the Covid pandemic gets better.”
Mukhamedshin said Rusal’s “Plan B” is to convert the investment into a debt instrument with certain securities if Unity Aluminum isn’t successful in securing the necessary funding.
In 2019, Rusal announced its commitment to invest $200 million in the plant, which stirred up criticism as the decision came shortly after the U.S. Treasury Department lifted sanctions on Rusal and its parent company. A spokesman for Senator Mitch McConnell of Kentucky, then majority leader, told the Washington Post that the lawmaker didn’t know at the time that Braidy had hopes of a deal with Rusal when he backed the effort to lift sanctions on the Russian company.
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