Glencore Plc is set to renew an agreement to purchase aluminum from Russian producer United Co. Rusal Plc in 2019, although the volumes are likely to be significantly smaller, Reuters reported Feb. 27.
Citing anonymous sources, Reuters said Rusal will cut deal volume by 25% to 50% compared to a previous deal for 14.5 million tonnes from 2012 through 2018.
The deal in 2012 was valued at US$47 billion.
Sources attributed the drop in deal volume to Rusal's push to produce more value-added products and said Glencore's leading position on the global aluminum market may suffer as a result of the reduction.
"Rusal simply doesn't have the same amount of primary aluminum it used to have in 2012 due to its focus on value-added products," a source told Reuters.
Rusal is the world's second-largest producer of aluminum and reported output of 3.71 million tonnes in 2017.
"We don't comment on any individual customer business, however, we are committed to pursuing our strategy to expand the share of value-added product sales to 60 percent by 2021," a company representative told Reuters.
At the time of the 2012 deal, value-added products totaled less than 40% of Rusal's production. It plans to grow this to between 50% and 52% of aluminum sales in 2018 and to 60% by 2021.
