UC RUSAL sells Pikalyovo Alumina Refinery to BaselСement

UC RUSAL announces that it has signed an agreement with ‘BaselCement’, part of the construction business of ‘Basic Element’, to sell the Pikalyovo Alumina Refinery.

UC RUSAL aims to be one of the most effective energy and metals corporations in the world. The company’s strategy is to create and develop a business that complies with the highest possible levels of profitability and which delivers the best quality products. In 2006, the production of alumina at the Pikalyovo Alumina Refinery became unprofitable following significant prices rises in nepheline concentrate, a primary raw material used in the refining process at the plant. A technical audit conducted in 2007 concluded that opportunities for converting it into other core products should be explored. Having analyzed all possible options, UC RUSAL has decided to sell the asset to BaselCement, which will convert the facility into a cement production centre.

The parties have reached an agreement on the deal and it will be completed once all preliminary conditions are finalized, such as the clearance of the purchase by the Russian Federation Anti-monopoly Service.

BaselCement is planning to invest $83 mln in restructuring the Pikalyovo Alumina Refinery. As a result, the plant is expected to produce about 1.8 million tonnes of cement per annum and will become one of the world’s largest producers. Much of the output will meet the high demand from the construction industry in St.Petersburg, as the city prepares to launch major infrastructure projects in 2009 including the construction of the Western high-speed link and the Orlovsky tunnel.

The modernization of the plant will enable production of cement to start by the autumn of 2008. The retooling of the first two furnaces that will switch them from alumina to cement will begin in May 2008. By the middle of 2009, an additional four furnaces will be retooled and the plant will have successfully completed its switch to cement production. It is expected that the plant will break-even in the next one and a half to two years.

By converting the plant to cement production the facility can maximize all its competitive advantages, such as its favourable geographical location, its raw materials base, its existing technology and its highly qualified personnel. All of the articles of the previously agreed collective agreement with employees, including the salaries levels and benefits, will be maintained and fully delivered.

Cement from the plant has already been ordered by local construction companies along with subsidiaries and partner companies of Basic Element, such as Glavstroy, Transstroy, Hochtief, and Strabag.