$5.4 bn Rusal in talks with Vedanta for Orissa deal

Debjoy Sengupta / Kolkata May 17, 2005

Russian Aluminium (Rusal), a $5.4 billion conglomerate and globally the third largest aluminium and aluminium alloys producer has entered into talks with Vedanta Alumina for entering into an investment participation arrangement, possibly an equity stake, in the alumina mining plant being set up in Orissa.

Sources close to the development said that Rusal was considering investments of a few hundred million dollars in Vedanta's Alumina project in Orissa and the project was estimated to cost $ 800 million which was due to commission in March 2007.

Officials from Rusal said, "The company is considering the possibility of taking part in Vedanta's project to construct an alumina plant in India's Orissa."

"Rusal is of the view that alumina mining in India would be a prospective venue," he said.

When asked about the details of the arrangement being worked out, Vera Kurochkina, head of media relations department, Rusal, said "Rusal is considering the possibility of entering into a jointventure with Vedanta and we are at a very early stage of this process, which means that the details are being worked out."

Sources also said that Rusal would soon send a delegation to India to discuss the details of arrangement that could be drawn between the two companies.

Vedanta Alumina, Vedanta Resources Plc's new project was being set up with a capacity of 1.4 million tonne per annum, but initially would produce 1 mtpa.

Around half of the alumina would be sent to the expanding aluminium facilities at Korba, part of Balco. The remaining alumina would be sold to third parties.

The mining area for the project would be spread over 680 hectare of Niyomgiri forests in Kalahandi district. Vedanta Alumina has entered into an agreement with Orissa Mining Corporation to form a joint venture to explore the Niyamgiri mines allotted to it.

The Russian Company had earlier made efforts to enter into the Indian Alumina market when Nalco was being divested, however it had backed out later on face of stiff competition from different quarters.

Rusal, is a vertically integrated company with a complete production cycle from bauxite mining and production of raw materials, to production of primary metal, semi-products and aluminium-based end products.

Founded in 2000, Rusal currently accounts for some 75 per cent of Russia's primary aluminium production and 10 per cent of global output.

The company employs more than 60,000 people spread across seven Russian regions and 10 countries.

As much as 80 percent of its revenues come from exports to 39 countries