Russia's Rusal, state bank tie up to produce aluminum auto parts

Russian aluminum giant Rusal has signed a memorandum of intent with the State Corporation Bank for Development and Foreign Economic Affairs, or Vnesheconombank, to jointly set up facilities to produce aluminum and aluminum alloy-based automotive components, rolled and cable products, the company said Monday.

The finished goods would be supplied to the Russian market.

Russian and foreign automakers, who have specific commitments to increase their share of Russian-made parts used by their facilities, will be among the potential consumers of such auto components, Rusal said in a statement.

Under the agreement, Rusal will attract investors, provide them with the existing industrial infrastructure and ensure that aluminum is supplied to production sites.

Vnesheconombank, in turn, will consider its participation in investment projects that have been proposed by Rusal, which are also in line with the bank's investment and financial policies.

The new facilities will be located at the Bogoslovsk, Urals, Nadvoitsy, Kandalaksha, Volkhov and Volgograd aluminum smelters or at other plants in the respective federal subjects of Russia.

"In todays negative market environment, attracting new partners to build new facilities to produce high tech value-added aluminum goods will promote Russia's industrial development, create more jobs and contribute to wider aluminum consumption growth," said Alexey Arnautov, Director of Rusal's Aluminium Division West. "This will in turn help to restore a supply and demand balance in the industry."

Rusal has previously also signed a memorandum of understanding with Israel's Omen High Pressure Die Casting, to establish a joint venture to produce automotive components at the Volkhov aluminum smelter.