Vladimir Denisov

Y

ear 2002 was marked by big changes for the Russian aluminum industry. Despite the unfavorable trends of market development and fall of aluminum prices early in the year, the production of primary aluminum grew by 1.7 % on the average, amounting to 3.3m tons. The dynamics of SUAL group of companies’ development largely outstrips that of the world. At the same time the corporate management believes that their strategic aim is not only a build-up of production figures but also the establishment of a transparent financial structure permitting an entry to the foreign capital markets for the development of new ambitious projects. Last year there happened several events, which let the company considerably improve the corporate position in the internal market and enter the group of the first six world leaders.

P  R  O  F  I  L  E
Chris Norval SUAL Holding President Born in South Africa. Graduated from the Rand Afrikaans University cum laude in 1981. Has wide experience of work in different sectors of economy (aluminum, coal-mining, nickel, copper, oil, power and steel industries) and business operations, among them, commercial corporate financing and management. Engaged in bringing companies to world capital markets. He worked in the UK and other European countries, the USA, South America, Africa, Indonesia, Japan, Korea, Canada and Ukraine. For the last 17 years he has been holding leading positions in prominent world industrial companies. When a general director on corporate financing in Billiton Plc., he participated in the development of the company and its entry to world capital markets. Under his guidance, the program of placing IPO at London Stock Exchange was implemented. Later on he elaborated the program for strategic development and handled all biggest transactions in Billiton Plc., including its merging with BHP in 2001, due to which the united company became one of the largest players in the world industrial business. Further on, one of his activity lines became the implementation of the investing policy of Billiton Plc. for the development of its distributor system in the US. He elaborated and introduced the program of merging with the distributor system of Alcoa (Integris Metals was formed). This merging brought Integris Metals to the leading positions in the distribution and sales of metals in the US. From 1991 to 1996 he was Financial Director of Samancor, later on known as South African Metallurgical Group. Prior to the appointment in SUAL group of companies, he was responsible for strategic planning, including merging of business operations and development of new diversifying lines in BHP Billiton.

ACQUISITION OF NADVOITSY ALUMINUM
In 2002, SUAL group of companies has completed the consolidation of 96 % of shares of Nadvoitsy Aluminum and now controls this stock; six out of seven members of the board of directors of the plant are representatives of SUAL group of companies.
Nadvoitsy Aluminum is located in the Republic of Karelia, in the North-West of Russia. It was built in 1954. In 1995 the reconstruction began and the shift of the electrolysis operations to pre-baked anodes – an aluminum production process most eco-friendly today – is under way now. In 2002 the output reached the record figure amounting to around 74,000 tons of aluminum.

MERGER WITH SEVZAPPROM
The same year, 2002, SUAL group of companies and SevZapProm, managing company for Volkhov Aluminum, Volgograd Aluminum and Pikalev Alumina, signed an agreement on the acquisition of aluminum assets. In 2003 they will exchange shares of SUAL group of companies and the aluminum smelters belonging to SevZapProm, thus completing the merger.
In so doing, late in 2002 the process of redistribution of the Russian aluminum assets was completed. SUAL group of companies joined the enterprises of SevZapProm Holding to its structure, thus making possible the integration of Pikalev Alumina, Volgograd Aluminum and Volkhov Aluminum smelters. SUAL group of companies corporate capacity increased to 2m tpy in alumina output (65 % of Russian production), and 865,000 tpy in primary aluminum (25 % of Russian production), ranking the group #6 among world aluminum producers.

SET-UP OF INTERNATIONAL FINANCIAL AND INDUSTRIAL GROUP
The next step in the development of SUAL group of companies became a set-up of an international financial and industrial corporation. On the eve of the new year SUAL group of companies, Access Industries (Eurasia) and Fleming Family & Partners (FF&P Investors), announced the establishment of a united international industrial group whose core will be SUAL aluminum enterprises. It is supposed that in the new corporation 77 % of shares will belong to the alliance of SUAL/Access Industries (Eurasia) and FF&P Investors may receive up to 23 % of shares.
The merger will also include the coal-mining enterprises of Access Industries (Eurasia) along with nickel and tantalum assets of FF&P Investors. Moreover, FF&P Investors will input substantial funds in the development of the group. Below is how Victor Vekselberg, SUAL Holding principal shareholder, comments on the objectives of the merger: "We intend to set up an international corporation whose capitalization will be in line with similar indicators of western companies. Our agreement with Fleming Family & Partners is an important stage of the program of our entry to the world market of capital. In our opinion, this set-up shows that our success has been highly assessed by world investors".

NEW PRESIDENT OF SUAL HOLDING
For higher efficiency of managing SUAL group enterprises and dividing of roles between the owner and the managers, Chris Norval was invited to take the position of SUAL Holding President. Prior to this appointment, he was responsible for strategic planning, inclusive of merging of business operations and development of new diversifying lines in one of the biggest world industrial companies – BHP Billiton.
Former SUAL Holding President, Victor Vekselberg, in turn became Chairman of SUAL Holding Board of Directors. In his words, "Chris Norval’s large experience of practical work in world corporations will be well combined with the efficiently-operating management system established in SUAL group of companies. This combination will permit an implementation of an ambitious program for the development of the international industrial company and the promotion of its securities in approaching the world capital markets".
As Chris Norval claimed, "our plans include the creation of a diversified international industrial group whose assets are in the markets with high development capabilities. I am convinced that our corporate managers can optimally reconcile the Russian experience of managing production assets with the international practice of corporate management. Jointly, we shall be able to build an industrial group of world level".
Nowadays, very few Russian companies (with international ambitions) understand the vital importance of building relations with the potential investors of the future. The appointment of an independent President was another step of the company’s management towards investor confidence that will promote further transparency and should dramatically improve the company image.