Russian aluminum producer UC RUSAL has registered its prospectus for renminbi-denominated Panda Bonds issuance on the Shanghai Stock Exchange, according to a company top manager.
"The registration on the Shanghai Stock Exchange, other than the interbank market, made RUSAL the first overseas company with global operations outside of China that is seeking to offer bonds to investors within the Chinese debt market through this placement" said Oleg Mukhamedshin, deputy CEO at RUSAL.
According to the registration, the offering totaled up to 10 billion yuan ($1.46 billion), with a tenor of up to seven years. RUSAL can take the bond placement decision in the next 12 months following the registration of the prospectus.
In June 2016, RUSAL was assigned a AA+ corporate credit rating with Stable outlook by CCXR, China Chengxin Securities Rating Co Ltd, the largest credit rating agency in China.
The first trench is expected to be 1 billion yuan, said Mukhamedshin, which will be mostly used for procurement of raw materials in China.
In 2016 RUSAL purchased a total 399,400 tons of materials from the Chinese market. Purchases ranged from prebaked anodes, pitch, calcined petroleum coke and aluminium fluoride to alloying materials, electrodes and cryolite.
RUSAL made its 2013 debut in the Chinese market through a strategic partnership agreement with Chalco, the largest aluminum company in China.
Last year, RUSAL and Hebei Joy Sense Cable Co, a leading manufacturer of cables produced from aluminum alloys in China, signed an agreement to set up a joint venture, RUSAL-Hebei Joy Sense Cable Special Aluminium Products Co Ltd.
"We think we can bring some new technology in alumium production to China," Mukhamedshin said. "The feasibility study of the joint venture will be completed in the middle of this year. Then we will start construction."
More investment is expected for the company's expansion in the Chinese market. "We are considering cooperation with other companies as well. We will announce more projects in China this year," Mukhamedshin added.
“The Asian market and China in particular, has always been an important strategic location for RUSAL. This is why we chose to conduct the company’s listing on the Hong Kong Stock Exchange in 2010. Today, we are actively developing our business in the region, both directly and in partnership with the largest Chinese companies, " said Vladislav Soloviev, RUSAL’s CEO, in the press release.
"The volume of China's economy is getting bigger and bigger, even as its economic growth rate slows down," Mukhamedshin said. "China still saw significant growth."
"Our market is also growing. The consumption is growing because aluminum is used more and more in different industries, such as transportation, automobile, construction, airspace and high-speed trains," Mukhamedshin added.
And aluminum is widely used as a substitution material. For example, more and more cable is made from aluminum instead of copper, because it's two times lighter and three times cheaper.
Stimulated by the Belt and Road Initiative, a lot of successful projects in different areas were witnessed between China and Russia, as the two countries strengthened cooperation in recent years.
As a leading global aluminum producer, RUSAL is planning to build an "Aluminum Valley" in Russia. "Chinese partners will come and join in the projects, which will be part of the initiative. And we are considering potential financing of this project from the Asian Infrastructure Investment Bank," Mukhamedshin said.
Commenting on Chinese President Xi Jingping''s proposal of globalization during the World Economic Forum in Davos, Switzerland, Mukhamedshin said, "China is a global driver, the second largest economy in the world, getting bigger and bigger, becoming more and more important for global growth and development".
"Globalization is quite important. Countries should cooperate and create more opportunities for growth and improvement in the world," he added.