Russian Metals Giant Plans Split to Focus on Green Aluminum

(Bloomberg) -- Russian metals giant United Co. Rusal International PJSC plans to split off its higher-carbon assets, leaving a business focused on the fast-growing green aluminum market.

Rusal, along with other producers such as Alcoa Inc. and Rio Tinto Group, is driving the development of so-called “green aluminum,” with automakers and other consumers charged a premium for metal with a smaller carbon footprint. Under Rusal’s plan, its management has proposed changing the name of the company to AL+ as it seeks to become a key player in that potentially lucrative market.

“Rusal would focus on reinforcing its position as a leading producer of low-carbon aluminum and the new company would concentrate on the development of the domestic market and its growth potential,” the company said Wednesday in a statement.

READ: Russian Metals Giant Ups Ante in Race for Greenest Aluminum

The plan comes as Europe, Rusal’s main export market, prepares to implement a carbon border tax that’s expected to affect Russian companies. Last month, Rusal’s parent En+ Group International PJSC said the company had produced aluminum with the lowest carbon footprint as the race for cleaner sources of the metal intensifies.

AL+ will include Rusal’s newest smelters -- Khakas and Boguchansky -- as well the Taishet project, international alumina and mining facilities and some other assets. The Russian plants work on hydro-power. AL+ will produce about 2.8 million tons of aluminum a year and its management will focus on net-zero carbon projects and the promotion of low-carbon aluminum brand Allow, En+ Chairman Gregory Barker said by email.

Producers who use lower carbon-emitting power generation are starting to brand their output as green aluminum, even though it’s the same metal that’s been marketed for years. At the same time, Rusal and other companies are exploring ways of further reducing emissions or finding technologies that don’t emit any carbon dioxide. Aluminum accounts for an estimated 1% of greenhouse gas emissions by the industrial sector.

Nornickel Stake

Rusal’s almost 28% stake in MMC Norilsk Nickel PJSC will remain in AL+ as it is party to the Russian miner’s shareholder accord and Nornickel dividends are important for the company’s investment program, Rusal said.

The new company will house assets including the Bratsk and Irkutsk aluminum smelters, as well the Achinsk alumina refinery and Russian mining assets. It will produce 1.8 million tons per year and overhaul existing facilities to make them less polluting, Barker said. Both businesses will be self-sufficient and able to service their respective debt, according to En+.

En+’s board of directors suggested that in the interests of Rusal shareholders it would be better for the higher-carbon business to be listed on the Moscow Exchange. Its shares should be allocated to current Rusal owners on a pro-rata basis, it said. Still, no final decision has been taken and Rusal will study all potential options for the deal. The split would also require regulatory approval.

The U.S. Office of Foreign Assets Control has been informed of the proposed asset split and will be kept updated, En+ said. Rusal and En+ emerged from the U.S. sanctions in early 2019 following an accord with the OFAC, which curbed the influence of controlling shareholder Oleg Deripaska.

Rusal shares declined 4.4% as of 5:10 p.m. in Moscow trading.

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