File Photo: Xinhua

Russian aluminum giant United Company RUSAL announced on Tuesday a deal to buy a 30 percent stake in China's Hebei Wenfeng New Materials Co for 1.911 billion yuan ($261.4 million), in a bid to secure supplies. Experts said the scale of the acquisition shows Russian companies are shifting east from European markets.

Hebei Wenfeng New Material Co is located in Caofeidian district, Tangshang, Hebei Province. It has an annual output capacity of 4.8 million tons of aluminum oxide. RUSAL is listed on the Hong Kong Stock Exchange (HKEX), and according to its announcement to the exchange, the acquisition will help the company obtain aluminum oxide supply at a competitive cost.

RUSAL will get 1.4 million tons of aluminum oxide each year after the acquisition is completed, Bloomberg reported.

The acquisition is an example of large-scale investment from Russia to China, and it will ensure Russia's supply of aluminum, Zhang Hong, an associate research fellow at the Institute of Russian, Eastern European and Central Asian Studies under the Chinese Academy of Social Sciences, told the Global Times on Tuesday.

"Aside from business in the raw material sector, RUSAL also wants to explore the Chinese market, underscoring how RUSAL's strategy is shifting from Europe to the east as a result of sanctions," Zhang said.

Russia is the world's second-largest aluminum producer after China, and RUSAL is the only aluminum producing company in Russia. In March 2022, RUSAL closed its plant near the Black Sea due to regional logistical challenges. On March 20 this year, Australia suspended exports of aluminum oxide and bauxite ore to Russia, and about 20 percent of its supply of aluminum oxide was affected, according to media reports.

In 2021, Russian FDI into China hit $7.54 million, and the investment from RUSAL will be a China-Russia business cooperation case ranking in the front tier.

Global Times