Hong Kong-listed aluminium major United Company Rusal is picking up a 30% stake in Chinese alumina refinery operator Hebei Wenfeng New Materials (HWNM) for a consideration of around 1.9 billion yuan ($266.9 million), according to an exchange filing.
With Australia and Ukraine stopping alumina and bauxite exports to Russia after the latter’s invasion of Ukraine in early 2022, Rusal has lost two of its crucial sources of raw material, prompting the firm to turn to markets like China and India to acquire aluminium feedstocks.
As the sole Russian company listed on the Hong Kong bourse, United Company Rusal said that the acquisition will enable it to gain access to alumina at a competitive cost as well as to secure its key raw materials supply, but the deal is awaiting approval from the Chinese authorities, per the filing.
The purchase price of 1.9 billion yuan ($266.9 million) may be adjusted depending on HWNM’s working capital and debt as of closing, but the closing price is expected to stay within 2.5 billion yuan ($349.2 million).
HWNM, which only commenced operations in 2022, owns and operates an alumina refinery located in the Caofeidian District of northeastern Hebei, with an annual capacity of 4.8 million tonnes of metallurgical grade calcined alumina.
The Tangshan-headquartered firm recorded around 281.3 million yuan ($39 million) in net profit after tax for the year ended December 31, 2022, while its audited net asset value stood at around 2.9 billion yuan ($407 million), per the filing.