Rusal, the Russian aluminium giant owned by billionaire Oleg Deripaska, has decided to ditch plans for a £5bn flotation that had seemed destined for the London market.
Given the soaring price of aluminium and the availability of bank finance, Rusal is now not looking to tap the capital markets for cash, despite its ambitious investment plans, according to chief financial officer Vladislav Soloviev.
Rusal, currently the world number three, aims to be the biggest aluminium producer by 2012. It has a pipeline of projects that require investment of up to $10bn (£5.4bn).
Mr Soloviev, who is on the main board of Rusal, said yesterday: "The question of an IPO was always related to our funding requirement. We can fund investment in other ways."
He said that the company would finance investment through its own resources - as a result of the amount of cash coming in through the high price of aluminium. He also said that Rusal would engage in project financing of individual schemes through banks. As an example, he pointed to a $1.5bn syndicated loan the company has just negotiated.
Vera Kurochkina, Rusal's head of media relations, said: "We had always said that an IPO was just one instrument. At this stage, other instruments are more efficient."
Only a year ago, the company was lining up a flotation, according to widespread reports. Rusal's chief executive, Alexander Bulygin, said in June 2005: "We are very close to announcing that our company is fully compliant with the principles required by the stock exchanges with regard to issues such as corporate governance, transparency and accounting. Rusal needs capital to fund its expansion and a float is the most likely tool we will use."
The price of aluminium, like other metals, recently set a new record. Last month it peaked at $3,235 a tonne. The average price in 2003 was some $1,400 a tonne.
Paul Robinson, of metals consultancy CRU, said: "We will continue to see strong growth in aluminum demand, driven by China, for the rest of this decade."
Rusal's expansion plans are hugely ambitious. It currently produces 2.7 million tonnes of aluminum a year. By 2012, it aims to increase output to 5.2 million tonnes, which would, it says, take it past current market leaders Alcoa, of the US, and Canada's Alcan.
The Russian company accounts for 75 per cent of the Russian aluminum industry. It emerged as the big winner from Russia's bloody "aluminum wars" in the early 1990s. Rusal consists of the aluminum assets built up by Mr Deripaska, who then acquired the aluminum business owned by Roman Abramovich, now owner of Chelsea football club.
Mr Deripaska, 38, has bought a £25m house in London, taken English lessons, and spends part of the year in this country.