Summit News

Rusal in no rush to decide on possible London listing

MOSCOW (Reuters) - Russian aluminum producer Rusal 0486.HK is in no rush to make a decision on whether to list in London and its decision could depend on Brexit talks, Deputy Chief Executive Oleg Mukhamedshin said.

Rusal Deputy Chief Executive Officer Oleg Mukhamedshin attends an interview at the Reuters Russia Investment summit in Moscow, Russia September 19, 2017. REUTERS/Grigory Dukor

Rusal, the world's largest aluminum producer after China's Hongqiao 1378.HK, is considering cancelling its Paris listing and listing in London where it thinks its shares would be more heavily traded, sources close to the company told Reuters in June.

Rusal will remain listed in Paris for now as that would allow it to use a relatively cheap and easy process within the European Union, known as passporting, if it decides to obtain a London listing, Mukhamedshin told the Reuters Russia Investment Summit on Tuesday.

The company is monitoring Brexit talks in case the passporting system changes when Britain leaves the EU in March 2019, he added.

“That is why we have not decided yet,” he added. “So far, no big decisions are planned.”

“All risks, Brexit, need to be evaluated,” he said.

Rusal’s shares are listed in Hong Kong, Moscow and Paris but turnover in Paris has been low.

Slideshow ( 2 images )

Rusal’s free float covers 13 percent of the company’s shares and Mukhamedshin said global turnover in the shares had improved recently to average $20 million a day in August, up from $3 million-$4 million not long ago.

Russian tycoon Oleg Deripaska’s En+ Group, which owns 48 percent of Rusal, is planning an initial public offering in London this year and may sell a stake to China’s CEFC, sources familiar with the matter have told Reuters.

Last month, Rusal, also partly owned by trading group Glencore GLEN.L, announced a sharp increase in its dividend payment for 2017 as higher aluminum prices boosted its earnings.

According to Mukhamedshin, the next dividend payment is likely to be for the first quarter of 2018.

Rusal does not plan any new refinancing or restructuring deals by the end of this year. In 2018, the company should repay about $300 million of its debt and is likely to use its own cash to do that, Mukhamedshin said.

Speaking about the company’s development projects, he said Rusal was on track to agree on a $800-million project financing with a syndicate of banks, including state development bank VEB, for its Taishet aluminum smelter, which will resume construction next spring.

The first line of this Siberian smelter, with an annual capacity of 430,000 tonnes, will be built by 2020. Rusal is also on track to double the capacity of another Siberian smelter - Boguchansk - to 300,000 tonnes by the end of 2018.

Further expansion of these smelters and an upgrade of its Khakas smelter in Siberia remain subject to market conditions.

Aluminum prices have risen 23 percent this year and the market needs the new capacity from these smelters as a deficit in the global market is expected to widen to 1.9 million tonnes in 2018 from 1.1 million tonnes this year, Mukhamedshin said.

Aluminum CMAL3 is currently trading in London above $2,100 per tonne, and Rusal does not expect it to decline from the current level any time soon as demand is rising.

Follow Reuters Summits on Twitter @Reuters_Summits

Reporting by Polina Devitt, Anastasia Lyrchikova, Katya Golubkova, Andrew Osborn, Anastasia Teterevleva and Diana Asonova; Editing by Susan Fenton