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Rusal signs major deal with Chinese arms maker

By on Tuesday, November 3rd, 2009

Moscow: Russia's UC Rusal, the world's biggest aluminum producer, will supply Chinese defense industry firm Norinco with 1.68 million tonnes of aluminium from 2010 to 2016, the two companies said on Monday.

The value of the contract with the China North Industries Corporation (Norinco) was not made public in their statement. Rusal said sales to China were set to account for five percent of its sales in 2009 and it hoped 10 percent of its revenue by 2015.

The metals giant's revenues reached 15.68 billion dollars in 2008, according to the daily newspaper Vedomosti.

"The metal will be shipped to Norinco from UC Rusal's Siberian smelters, which are favourably located in proximity to UC Rusal's Chinese clients," the joint statement said.

The deal is consistent with Rusal's goal of increasing its presence in China's rapidly growing economy, chief executive Artem Volonyets said in the statement.

"We consider China a long-term driver for aluminum demand due to its rapid pace of urbanisation and industrialization," he said.

Rusal, a privately held company run by billionaire Oleg Deripaska, hopes to restructure several billion dollars worth of debt this month and conduct an initial public offering (IPO) by December, according to media reports.

The global economic crisis and a steep drop in the price of metals since last year has left Rusal with an estimated debt of 14 billion dollars (9.5 billion euros) to foreign creditor banks.

Norinco, one of China's largest diversified corporations, mainly deals in defense products.

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