Metal industry development strategy reconsidered to back Deripaska: focus on domestic market
The government had approved the program to spur demand for aluminum products before Rusal was included in the US sanctions list in December 2016.
Changes have been introduced into the strategy of Russian metallurgical industry development that was scheduled to run until 2030: they are supposed to help Oleg Deripaska’s US-sanctioned company Rusal to sell aluminum in the domestic market, Vedomosti writes citing the text of a document, the authenticity of which was confirmed by three sources.
According to the publication, the updated version of the document features 42 new investment projects of various companies, which provide for an increase in the processing of aluminum in Russia by 363.100 tons this year. The amendments were made after Rusal was targeted by American sanctions in April, one of the sources of the newspaper remarked.
Earlier, Kommersant reported on the government’s plans to back Rusal by increasing the consumption of aluminum inside the country. According to the media outlet, Deputy Prime Minister Dmitry Kozak has approved the corresponding roadmap.
This program is expected to be implemented through expanding the metal application, imposing restrictions on its import, as well as granting subsidies to the industry if Rusal products are used. Overall, with the help of these measures, it is planned to fuel the domestic demand for aluminum by 2.5 times.
Notably, the government had approved the program to drive up demand for aluminum products before Rusal was included in the US sanctions list in December 2016. The action plan implied a total increase in demand to reach 505 thousand tons by 2020. One of the measures was also a priority for state and municipal procurement, Interfax reminds.
Billionaires Oleg Deripaska and Viktor Vekselberg, as well as their companies, became subject to US sanctions in April this year. Their accounts were blocked, and the stock prices of the companies plummeted. In particular, Vekselberg had to pay western banks extra two billion dollars as additional collateral.
Both businessmen appealed to the government of the Russian Federation for state support. In mid-May, it became known that Viktor Vekselberg’s Renova group has already received state support. This was reported by acting Minister of Finance Anton Siluanov. He also added that the government intended to support other Russian companies under US sanctions.
At the same time, Deripaska refused state support in the form of liquidity through Promsvyazbank because of the proposed conditions. Rusal called them "enslaving."
Rusal is the largest aluminum producer outside of China, in 2017 it produced 3.71 million tons of aluminum (outlook for 2018 - 3.9 million tons). Last year, aluminum consumption in the country amounted to about 920 thousand tons, which is 13% higher than in 2016.
Before facing sanctions, Rusal exported more than 80% of its products. The EU is the main market for sales - 45%, the United States, Asia and the domestic market accounted for 18%.