RUSAL and ELSO Group to set up joint manufacture of aluminium radiators

UC RUSAL, one of the world’s largest aluminium producers, and ELSO Group, a large Russian heating appliances manufacturer, with a leading position in this field, have announced plans to set up a joint business for manufacturing aluminium radiators at the Nadvoitsy aluminium smelter, one of RUSAL’s production sites.

The joint venture called ‘Russian radiator’ will be launched in the third quarter of 2015 with its early-stage annual capacity of approximately 2 million radiator sections. It is planned that by 2019 the production site will reach its full design capacity of 4 million radiator sections a year, for which RUSAL will supply 4,000 mt of aluminium annually from its aluminium smelter located in Nadvoitsy. The radiators will be sold locally in Russia and other CIS countries.

The joint project, with a total investment of USD9.4 million, borrowed in part from banks, will be financed by both companies on a parity basis, each owning 50% of the equity. The borrowed funds will be utilised for the purchase of equipment and reconstruction of the reduction area.

‘This project is both socially and economically vital. The new business allows raising investments for a modern facility, retaining part of the jobs in the town after unprofitable aluminium production was mothballed in the region, but it will also help present new local products to the Russian market that didn’t exist before, because previously radiators have been imported from outside Russia”, said Alexey Arnautov, the head of new projects in RUSAL.

This JV with ELSO Group will create jobs for those who have just been laid off after the potrooms at the aluminium smelter in Nadvoitsy shut their doors after the closure of business. The manufacturing of radiators will re-employ over 100 people who live in the town.

Recently, RUSAL and Vnesheconombank announced the signing of a memorandum that promises new cooperation in restructuring loss-making operations of RUSAL. Both parties expressed an interest in working together and setting up new capacities for aluminium-based products, including car parts, rolled metal, and cables.

RUSAL signed its first shareholders agreement for a joint business in March this year with Omen High Pressure Die Casting (Israel) when VolkhOr, a joint venture for car components, was founded. This plant will be launched at the Volkhov aluminium smelter.

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