26 Apr 2018 10:27

Temporary nationalization of Rusal possible either for money or assets - regulator

YALTA. April 26 (Interfax) - Temporary nationalization of UC Rusal , which has been hit by U.S. sanctions along with its principal shareholder Oleg Deripaska, could theoretically be used as a way to get the Russian aluminum giant out from under the sanctions, the head of Russia's Federal Antimonopoly Service (FAS), Igor Artemyev said.

"I think that [nationalization of Rusal] will not happen for real, that is, if this happens then basically like a temporary arrangement. If it will be bought by the state, then formally these sanctions, which have been applied and are now hurting exports of aluminum and everything else, should theoretically be lifted. And if they are not lifted, then this will already be sanctions against the Russian state, not specific companies, which would also not be very surprising. But it's clear that the state would be the owner for a short period, then other people will apparently appear there," Artemyev told reporters on Wednesday, commenting on his views regarding the proposal to nationalize Rusal.

"It's important that Oleg Vladimirovich Deripaska get a fair price, after all, if this will be done. But I think that the experience, for example of [oil company] TNK-BP [which was bought by Rosneft in 2013] or other such major sales when state companies acquired something, it was in principle according to the market," Artemyev said.

Other Rusal shareholders could also be involved in the arrangement, he said. Rusal's second largest shareholder is Viktor Vekselberg's Renova Group, which has also been hit by U.S. sanctions. The only major Rusal shareholder not subject to sanctions is commodities trader Glencore.

"But there are still private shareholders there. If it comes to some kind of nationalization, it will also be provisional, it will be the stake of Oleg Vladimirovich, probably. Of course, he has control there, but the arrangement can vary, after all, with the government not taking a controlling stake but offering part to other shareholders who exist today," Artemyev said.

It would be quite possible to increase foreign shareholders' interest in Rusal, he said. "Why not? I don't see contraindications. The thing is, strictly speaking, under the 57th law [on foreign investment in strategic sectors], the aluminum industry is not classified as strategic, so others can be invited there and the ownership of existing shareholders can be expanded. Therefore, theoretically, they could altogether just buy out themselves, then nationalization is not needed and Oleg Vladimirovich can work in other areas, having received the corresponding capital. But this is his decision, what he decides, let it be so," Artemyev said.

"It's not very desirable for the government to take all this on itself, but if there's no other way out, it can take it temporarily. This has happened in various countries that have been under sanctions, I think in Venezuela, elsewhere, where they took it on themselves. But, you know, Chinese companies are all under the state, that's their model," Artemyev said.

"There will be some sort of optimal thing, it should proceed from the principle of reasonableness. Then, one does not necessarily have to pay money for these stakes, other stakes can be offered. For example, if one were to do something interesting, what would I do? I would announce the privatization of some major assets and simply swap stakes, and that's it," Artemyev said.