Rusal’s share price drops on news of Vekselberg lawsuit

The share price of one of Russia’s biggest companies, aluminum producer Rusal, dropped slightly on Friday following media reports that billionaire Viktor Vekselberg’s investment firm had launched a lawsuit against it.

A source close to Vekselberg confirmed to the Prime Tass news agency on Friday that Vekselberg’s Sual Partners, which owns a minority stake in Rusal, was suing the aluminum giant in London over a long-term contract the company signed with mining company Glencore in December.

Sual, which is co-owned by Vekselberg and his partner Lev Blavatnkik, are claiming that a $47 billion supply deal signed between Rusal and Glencore was agreed in violation of Sual’s right to veto.

“The contract with Glencore stipulates the supply of 1.4 million tons of aluminum in 2012 – 30 percent of the company’s overall supplies. In the next six years, this figure could rise to 50 percent,” a source told Prime Tass. The source added that the aluminum was being sold to Glencore at a premium on the market price.

The lawsuit is also directed against Glencore, as well as billionaire Oleg Deripaska, who holds a controlling stake in Rusal, and his holding company, En+.

The court case comes amid a brewing dispute between the billionaire shareholders of Rusal, which led Vekselberg to step down as board chairman last month over a disagreement about the running of the firm.

Vekselberg and Deripaska have long been divided about a 25 percent stake the firm holds in Russian metals giant Norilsk Nickel. The stake’s value fell sharply shortly after it was acquired due to the global financial crisis.

Both Vekselberg and the second largest shareholder in Rusal, billionaire Mikhail Prokhorov, want to sell the stake to ease Rusal’s mammoth debt burden, but Deripaska has refused.

Shortly after he stepped down as Rusal CEO, Vekselberg threatened to sue Deripaska over an allegation that Vekselberg had not properly fulfilled his duties as board chairman.

Although the alleged court case is not directly related to last month’s dispute, observers say it nevertheless links back to Vekselberg’s frustration at the running of Rusal.

“The main reason Vekselberg left Rusal was that he doesn’t agree with Rusal’s corporate governance, and the fact that Deripaska makes all the decisions without consulting other shareholders,” Valentina Bogomolova, a metals and mining analyst at Uralsib investment bank, told The Moscow News. “The Glencore contract is for him just one more example of such a policy.”

Other disputes have also marred relations between Vekselberg and Deripaska, including a spat over Rusal’s Bogoslovsk Aluminum Plant, which receives its electricity supply from Vekselberg’s KES power generation holding. Vekselberg is trying to merge KES with Gazprom’s power generation assets.

Sual, RUSAL, EN+ and Glencore have all declined to give an official comment on the lawsuit, although Deripaska did confirm to media sources that the deal with Glencore was approved in December.

Under the rules of the London Arbitration Court, where the lawsuit was allegedly signed, requests have to be responded to within 30 days, Reuters reported.