ENRC sells bulk of its aluminum and iron ore production to Russia

mineral resources

ENRC sells bulk of its aluminum and iron ore production to Russia

By SRI ⋅ June 20, 2008 ⋅

Kazakh miner Eurasian Natural Resources Corporation (ENRC) sells the bulk of its alumina to United Company RUSAL (UC RUSAL), the Russian aluminum giant, Kazakhmys plc, the copper corporation that owns 14.59% of ENRC, said in a prospectus.

Sales to UC RUSAL accounted for 16.1% of ENRC’s consolidated revenue in 2006 and 85.4% of the revenue generated by ENRC’s alumina division, the prospectus said. The remaining revenue came from exports to China and Tajikistan.

UC RUSAL buys alumina from ENRC under long-term contracts concluded for the period of 2002-2016 and supplies most of the raw material to its smelters in Siberia, according to Interfax.

Kazakhmys also announced that ENRC sold a significant amount of the iron ore that it mines to Russia’s Magnitogorsk Iron & Steel Works (MMK). These sales generated 12.5% of ENRC’s consolidated revenue and 49.2% of its iron ore division’s revenue in 2006.

“Although the Group has entered into long term contracts with UC RUSAL and MMK, there can be no assurance that the counterparties to such contracts will fulfill their contractual obligations or that, on expiration, such contracts will be renewed,” Kazakhmys commented potential risks to ENRC in the prospectus.