Rusal looks to make small acquisitions

The world’s largest aluminum producer, United Co. Rusal, is looking for some small acquisitions as it seeks to diversify and expand its business, the company’s chief executive, Vladislav Soloviev, said Monday.

Mr. Soloviev said he’s looking at smaller deals, such as bauxite producers in Indonesia or heating-plant operators in Russia.

“We do not see serious M&A transactions, but definitely we see some targets with the transactions in terms of diversification…Some targeted, small M&A transactions,” Mr. Soloviev said in an interview during a visit to London.

Rusal and other aluminum producers have suffered as the price of the metal—which is used to make a range of products from soda cans to cars—has shed more than 10% of its value over the last six months, accompanying the broader selloff in commodities markets. Investors have shunned commodities amid fears that economic growth in China may be slowing sharply and the dollar’s strengthening.

As a result, the executive said the firm is on a drive to bring down costs. The recent depreciation of the Russian currency has helped Rusal, as most of its costs are denominated in rubles.

But more cost controls are planned. The company is considering shutting down just over 4% of its total production capacity as it seeks to focus on profits, Mr. Soloviev said.

Rusal may shut more than 200,000 metric tons out of its 4.5 million tons of capacity by closing smelters that are breaking even or loss-making following a review in October, Mr. Soloviev said.

The executive is also eager to push further into areas that are growing rapidly, particularly the automotive industry. Aluminum content is currently 150 kilograms per car, on average, but this could rise to 250 kilograms by the end of the decade, according to Mr. Soloviev.

Ford Motor Co. is already producing popular high-aluminum content cars, he said, and General Motors Co. and other manufacturers are likely to follow suit.

The CEO said he expects demand for aluminum to grow by 6% a year for the next five years.

The recent announcement that China will scrap a 15% export tax on some aluminum products will have a negligible impact on the market, he said. There would be more ramifications if China changes export taxes on the primary metal, but this is highly unlikely, he said.

“The Chinese strategy is to support their own downstream producers, so it’s silly for them to send the cheaper metal abroad rather than to support their own producers,” he said.

Meanwhile, the company said that talks with Sberbank on a pre-export financing loan are ongoing.

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