Rusal to become no. 1 aluminum maker

The announcement Monday by Rusal, which is controlled by Russian billionaire Oleg Deripaska, underscores the rise of Russia's commodities-based industries against a backdrop of rising prices.

Under the terms of the agreement, privately held Rusal will issue new shares to acquire rival aluminum producer Sual as well as the Jamaican, Irish and Italian alumina assets of Swiss-based commodities trader Glencore.

Sual and Glencore will hold 22 percent and 12 percent stakes, respectively, in the new company, Sual chairman Viktor Vekselberg said. The deal requires regulatory approval in Russia and the European Union.

But Vekselberg said he expects the new company to carry out an initial public offering of stock in less than 18 months, most likely in London.

The expanded Rusal will control 12 percent of the world's primary aluminum, producing nearly 4 million tons per year and eclipsing the 3.55 million tons that that Alcoa reported in 2005.

Rusal director Alexander Bulygin estimated the value of the combined company would be $ 25 billion to $ 30 billion and said it expected annual revenue of $ 10 billion.

Under the terms of the agreement, Bulygin will become the new company's chief executive. The company will have an 11-member board including six representatives of Rusal, two from Sual, one from Glencore and two independent directors. It will have 110,000 employees and will operate in 17 countries around the world.

The company said it hoped to secure regulatory approval from Russian authorities and the European Union by April.

"There are number of challenges that lie ahead. The deal has to be approved by the various regulatory bodies and that always takes a bit of time, there are hurdles that you have to get across," said Sual president Brian Gilbertson, a one-time CEO at mining giant BHP Billington who will be board chairman at the new Rusal.