Press Releases

IFC and EBRD welcome commitment to high governance and business standards by RUSAL Chairman Oleg Deripaska

In Washington:
Hannfried von Hindenburg
+1 (202) 460-7717

In Moscow:
Nezhdana Bukova
+7 (495) 411 7555

                 Banks confirm financial support for Komi Aluminium project after change in ownership

Washington/Moscow, January 17, 2006  —  The International Finance Corporation and the European Bank for Reconstruction and Development have confirmed that they plan to disburse loans totalling $150 million for the Komi Aluminium project after determining that the recent entry of Russian Aluminium (RUSAL) as an equal partner is acceptable.

The decision is an important step towards final agreement to disburse. It is based on full disclosure of ownership by RUSAL’s and Basic Element’s owner Oleg Deripaska, and additionally provides for detailed commitments to greater transparency, good corporate governance and high business standards, covering RUSAL and Basic Element. Compliance with these commitments is covenanted in legal documentation with IFC and the EBRD.

In particular, IFC and the EBRD welcome the adoption by RUSAL of an action plan over an 18-month timetable covering significant corporate ownership disclosure, the publication of financial information and specific steps aimed at improving corporate governance – notably the election of three independent directors. These independent directors, to be appointed in agreement with IFC and the EBRD, will chair and constitute the majority of the sub-committees that will oversee audit and corporate governance as well as other corporate matters.

For Basic Element, the agreement encompasses the disclosure of information on the holding’s investments as well as the adoption of a code of ethics.

Eighteen months ago, IFC and the EBRD agreed to provide financing to SUAL, Russia’s second-largest aluminium company, to expand the Middle-Timan mine in the Komi Republic, 250 km south of the Arctic Circle. In mid-2005, SUAL formed a 50-50 joint partnership for the Komi project with RUSAL, Russia’s largest aluminium producer.

IFC and the EBRD then conducted an extensive review of RUSAL’s record and ownership structure in order to determine if they could maintain their support to the Komi project because the partnership’s new ownership constituted a material change to the original loan agreement.

The EBRD and IFC, the private sector arm of the World Bank Group, had agreed to initial 9-year loans of $75 million each, to be used to increase the domestic production of bauxite, the raw material of the aluminium industry. One of Russia’s strategic priorities is to develop its own bauxite deposits in order to reduce its dependence on imports and make its domestic aluminium industry more competitive.

A key part of both the IFC’s and the EBRD’s strategy is to help Russia use its natural resources as a catalyst to diversify and develop the economy, decreasing reliance on oil and gas while setting high standards for Russian corporates in terms of disclosure, transparency, governance and business conduct, as well as environmental protection.

The International Finance Corporation is the private sector arm of the World Bank Group and is headquartered in Washington, D.C.  IFC coordinates its activities with the other institutions of the World Bank Group but is legally and financially independent.  Its 178 member countries provide its share capital and collectively determine its policies.

The mission of IFC is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications. For more information, visit