Rusal quest for value to dent Glencore’s aluminum clout – by Dmitry Zhdannikov and Polina Devitt (Reuters U.S. – February 27, 2018)

LONDON/MOSCOW (Reuters) – Mining giant Glencore’s deal to buy aluminum from Rusal will be renewed from 2019, but the tonnage is likely to be much lower as the Russian producer taps into growing demand for value-added products, two sources close to the matter said.

Unless it sources from additional suppliers, the reduction in volume will weaken the leading position held for years by Swiss-based Glencore in the global aluminum market.

Rusal, controlled by billionaire Oleg Deripaska and co-owned by Glencore, is expected to cut the volume in any new deal by 25-50 percent from the 14.5 million tonnes that covers the seven years from 2012 to 2018.

The deal was valued at $47 billion in 2012. The new arrangement is likely to last a number of years although the exact duration is not yet clear, sources said. Glencore owns 8.75 percent of Rusal, the world’s second-largest aluminum producer after China’s Hongqiao.

“Rusal simply doesn’t have the same amount of primary aluminum it used to have in 2012 due to its focus on value-added products,” said a senior source, who asked not to be identified as the discussions are not public.

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