By Armen Zakarian
Russia’s dominant aluminum manufacturer vowed on Monday to turn its subsidiary in Armenia into Europe’s most advanced facility of its kind with $50 million in capital investments to be funded by German banks.
“We want to build the best [aluminum foil] plant in Europe,” Aleksandr Livshits, vice-chairman of the Russky Allyuminii (Rusal) group, told reporters in Yerevan, referring to an ambitious plan to modernize the Yerevan-based Armenal plant. “It will be the best because no new aluminum rolling factories are being built in Europe at the moment.”
Livshits, who served as Russia’s finance minister under former President Boris Yeltsin, said Rusal will borrow $50 million from German banks to replace Armenal’s Soviet-era technological lines. The equipment will likewise be supplied and installed by a German engineering firm, he said. In addition, he added, the Russians will invest $20 million of their own resources.
Armenal was founded as a Russian-Armenian joint venture in 2000 on the ashes of the Kanaker Aluminum, an industrial giant which employed thousands of people in Soviet times. The plant, whose main production is aluminum foil, has been 100 percent owned by Rusal since December 2002.
It was brought to a halt late last year in anticipation of the promised investments and is still standing idle. Livshits, who met with President Robert Kocharian earlier on Monday, said the parent company is poised to seal a deal with a German insurance company which will pave the way for the start of the modernization. He said Armenal is due to produce 25,000 tons of aluminum rolls and foil next year.
The company’s aggregate output stood at 5,500 tons and 9,000 tons in 2002 and 2003 respectively. The production was mainly exported to the West.
Rusal controls nearly 80 percent of aluminum production in Russia and ranks second worldwide in the sector. It came under public spotlight in the summer of 2003 when Russian prosecutors launched criminal proceedings against one of its billionaire owners, Oleg Deripaska, on suspicion of financial fraud. Armenal executives expressed concern at the time that the criminal inquiry could undermine the Rusal investments.
Like many other Russian tycoons, Deripaska accumulated enormous wealth in the 1990s as a result of controversial privatization deals widely linked with the Yeltsin administration.
Rusal’s second co-owner has been, at least until now, Roman Abramovich, an even more famous Russian “oligarch.” Abramovich has also faced fraud allegations and now lives in London in what increasingly looks like self-imposed exile.