The merger between Rusal and Sual to create the world’s largest aluminium company is the latest example of Russia’s determined drive to establish itself as a global player in strategic industries.
Over the past six years, president Vladimir Putin has made a priority of rebuilding Russia’s economic and geopolitical influence, and making the west once again treat Russia with respect.
He was visibly irritated when Arcelor, the Luxembourg-based steel company, ultimately rejected a planned merger with Severstal, the Russian steel group. The failure of that merger was seen as a snub to Russia by the west, unwilling to let Russian companies into its markets.
The creation of an aluminium giant that will overtake Aluminium Company of America by production volume fits well with the Kremlin’s plans to create national champions with international clout. The takeover was driven by Rusal, Russia’s number one aluminium company owned by Oleg Deripaska. But a Kremlin official said Mr Putin had actively supported the deal when he met Mr Deripaska early this month.
Increasingly in Mr Putin’s second term, the Kremlin has pursued a policy of consolidating control over what it deems to be strategic sectors by creating a national champion and then selling a minority stake to foreign investors who bring expertise and technology.
The move has been most visible in energy. The Kremlin raised its stake in Gazprom, Russia’s giant gas monopoly, from 38 per cent to 51 per cent as a prelude to lifting restrictions on foreign ownership of the remaining shares. The move – plus Gazprom’s acquisition of Roman Abramovich’s Sibneft oil company — has seen Gazprom’s market capitalisation soar to around $250bn, making it one of the world’s largest companies.
It also created a national oil champion as state-owned Rosneft took control of the main production asset of Mikhail Khodorkovsky’s Yukos, once Russia’s biggest oil company but driven into bankruptcy by billions of dollars of back tax claims.
But the drive has stretched well beyond energy. Rosoboronexport, a state arms export agency run by a former KGB colleague of Mr Putin, last year took control of Avtovaz with ambitious plans to revitalise the Lada carmaker.
The Kremlin is now driving consolidation of the aerospace industry while Russia’s nuclear energy assets are also being grouped into a new state holding.
Unlike these deals, the creation of the aluminium giant so far does not involve a state interest. But Christopher Weafer, chief strategist at Alfa Bank, believes the merger may be the first step towards establishing state control over the metals industry as well.
Mr Abramovich, one of the most politically loyal Russian oligarchs, recently agreed to buy a 41 per cent stake in Evraz, Russia’s leading steel company.
Mr Khodorkovsky, who – somewhat ironically – made one of the first attempts to create a new kind of Russian national champion by merging Yukos with Sibneft and selling a stake in the enlarged company to ExxonMobil, instead tried to become an independent political force. He now languishes in a Siberian prison camp on fraud and tax evasion charges.