RUSAL GETS ARMENIA’S FOIL MILL ROLLING
By Robin Paxton

The Moscow Times, Russia
Reuters
July 23 2007

YEREVAN, Armenia — The aluminum foil plant on the upper slopes of
Armenia’s capital accounts for around 40 percent of the country’s
annual trade.

Only seven years ago, it was on the brink of ruin.

"The factory was practically dead," admits Georgy Avetikyan, general
director of the Armenal plant since its rebirth in 2000.

"But look around at the equipment we have now," he says, surveying
a factory floor filled with German-built mills squeezing thin layers
of foil from metal shipped in from Russia.

Armenal is owned by United Company RusAl, the aluminum giant controlled
by billionaire Oleg Deripaska. After a $70 million revamp completed
last year, it can produce 25,000 tons of aluminum foil — 12 percent
of the total in the former Soviet Union.

About half of the foil, used mainly to package food, drinks and
cigarettes, is exported to the European Union, 35 percent to North
America and 15 percent to the Middle East.

"Not a single ton leaves the factory without an order from a client,"
said Alexander Burdin, director of RusAl’s packaging division, which
supplies aluminum foil to companies such as Kraft Foods and Nestle.

Aluminum smelting in Yerevan dates back to the 1950s, when the Kanaker
smelter was among the Soviet Union’s leading plants. But when the
growing city encroached on a plant that was built on its outskirts,
pollution became a problem.

The smelter was eventually closed, leaving the foil mill on the same
site bereft of raw materials. Financial meltdown followed the breakup
of the Soviet Union, and the plant effectively stopped.

"To produce foil, you need aluminum sheet — and we didn’t have
any," said Avetikyan. "SibAl came in with their business plan and
got approval. There were several companies competing."

SibAl, or Siberian Aluminum, was Deripaska’s aluminum company at the
time. Deripaska later extended his reach to form a joint venture with
the Armenian government in 2000.

Over time, RusAl increased its ownership of the plant and by 2003
controlled it outright. It is one of three foil plants owned by the
company, which is preparing a share float in London that bankers say
could raise about $8 billion.

The revival of Armenal mirrors consistent economic growth in the
country. Armenian gross domestic product is set to rise by about 10
percent in 2007, the fifth successive year of double-digit growth,
and the country claims the lowest inflation of any former Soviet
state over the past seven years.

Armenal employs over 800 people who earn an average monthly wage
of about $300, 50 percent more than the national average, says the
company’s press secretary, Alexander Melkumyan.

A further expansion could follow.

Burdin says the plant, part of a packaging division that earned
RusAl $240 million in revenues last year, has enough orders to add
60 percent to existing capacity.