25 April 2008 (09:17)

Moscow, 25 April 2008 - UC RUSAL, the worlds largest aluminium and alumina producer, is pleased to announce that it has signed an agreement with BaselCement, part of the construction business of Basic Element, to sell the Pikalyovo Alumina Refinery.

UC RUSAL aims to be one of the most effective energy and metals corporations in the world. The companys strategy is to create and develop a business that complies with the highest possible levels of profitability and which delivers the best quality products. In 2006, the production of alumina at the Pikalyovo Alumina Refinery became unprofitable following significant prices rises in nepheline concentrate, a primary raw material used in the refining process at the plant. A technical audit conducted in 2007 concluded that opportunities for converting it into other core products should be explored. Having analyzed all possible options, UC RUSAL has decided to sell the asset to BaselCement, which will convert the facility into a cement production centre.

The parties have reached an agreement on the deal and it will be completed once all preliminary conditions are finalized, such as the clearance of the purchase by the Russian Federation Anti-monopoly Service.

BaselCement is planning to invest USD 83 million in restructuring the Pikalyovo Alumina Refinery. As a result, the plant is expected to produce about 1.8 million tonnes of cement per annum and will become one of the worlds largest producers. Much of the output will meet the high demand from the construction industry in St.Petersburg, as the city prepares to launch major infrastructure projects in 2009 including the construction of the Western high-speed link and the Orlovsky tunnel.

The modernization of the plant will enable production of cement to start by the autumn of 2008. The retooling of the first two furnaces that will switch them from alumina to cement will begin in May 2008. By the middle of 2009, an additional four furnaces will be retooled and the plant will have successfully completed its switch to cement production. It is expected that the plant will break-even in the next one and a half to two years.

By converting the plant to cement production the facility can maximize all its competitive advantages, such as its favourable geographical location, its raw materials base, its existing technology and its highly qualified personnel. All of the articles of the previously agreed collective agreement with employees, including the salaries levels and benefits, will be maintained and fully delivered.

Cement from the plant has already been ordered by local construction companies along with subsidiaries and partner companies of Basic Element, such as Glavstroy, Transstroy, Hochtief, and Strabag.


United Company RUSAL (www.rusal.com) is the global leader in the aluminium industry, accounting for approximately 12% and 15% of global production of aluminium and alumina respectively. The company was founded in March 2007 through the merger of RUSAL, SUAL, and the alumina assets of Glencore. UC RUSAL sells its products in 70 countries worldwide and employs 100,000 people in 19 countries, across 5 continents.

About BaselCement

BaselCement was established in 2006. The company is a part of the construction business of Basic Element. In 2006, the revenues of the diversified investment company, Basic Element, exceeded USD 18 billion.

In late 2006, BaselCement started production of cement and lime at the Sastobe-Cement plant (Kazakhstan). The plants production capacity is 300,000 tonnes per annum. In September 2007, the company launched the Achinsk Cement, which produces 700,000 tonnes per annum. At the moment three other cement plants are being constructed at Ryzan, Veliky Novgorod, and Tuapse. BaselCement is also working on non-metallic mineral mining projects, such as basalt, granite, and sand mining.

In October 2007, BaselCement and Austrian construction company Strabag announced the creation of the joint venture that will produce cement and other non-metallic minerals in Russia and Eastern Europe. Strabag.Ukraine, a joined project with the DCH group, is the largest joint construction project for the mining of non-metallic minerals in Ukraine. The joint venture with Strabag is also currently building a large plant in Hungary. In early 2008, BaselCement announced a joint project with ITERA for construction of cement plants in Russia and the CIS.

About the Pikalyovo Alumina Refinery
The Pikalyovo Alumina Refinery is situated in the Leningrad region of Russia. It is the only production facility in the world which uses waste from processing apatite and nepheline ores (nepheline concentrate) as a raw material. The refinery was commissioned in 1959. In 2007, the refinery produced 250,000 tonnes of alumina. It employs over 3,000 people. The refinerys raw materials base is suitable for production of cement. The plant has its own lime pit with estimated reserves of 25 million tonnes as of 1 January 2007. The total explored and proven reserves suitable for industrial use are estimated at 330 million tonnes. The reserves of dump-mud are estimated at 14 million tonnes.

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