INTERVIEW-UC RUSAL Eyes Aluminium Supply to ETF

HONG KONG, Sept. 15 -- UC RUSAL Ltd <0486.HK> <RUAL.PA>, the world's top aluminium producer, said on Wednesday that it will consider supplying the metal to a physically-backed aluminium exchange traded fund (ETF).

"Rusal is an aluminium producer not an investment bank launching financial products. So as soon as the ETF is ready, we will consider the potential supply of the metal to the ETF," Oleg Mukhamedshin, deputy chief executive of capital markets, told Reuters Insider in an interview. "Investment banks are talking with us because they are looking for a long-term stable supply of aluminium."

UC RUSAL said in a corporate presentation earlier this month that it was considering a Hong Kong listing for an aluminium backed exchange traded fund, for which it may supply metal.

Commenting on the terms it is giving the ETF compared with long-term and spot contracts, Mukhamedshin said: "It should be comparable terms, so we are not going to be providing aluminium with a discount to existing opportunities."

Mukhamedshin said the ETF was only one of its customers and there was no exclusivity on supply.
"Among the producers, RUSAL has the longest position on aluminium ... so it's going to be a market transaction," he said. "Asia might be a very interesting market for ETFs going forward but I don't think the first market place will be Hong Kong. It should be the U.S. or Europe first."

The company's Chief Executive Oleg Deripaska had said in June that it could participate in the first aluminium-backed exchange traded fund.

Shares of UC RUSAL were up 5.2 percent by the midday trading break on Wednesday, outperforming a 0.05 percent gain in the broader Hang Seng Index <.HSI>. (US$1=HK$7.77)