So the Tajik aluminium producer (Talco) is shouting at Rusal, claiming they’ve been done over:
Talco claims Rusal and its associate companies "actively encouraged and
participated in the fraud" through the supply of raw material to
Talco’s refining plant at inflated prices and then buying back the
processed aluminium at big discounts.
Err, in my admittedly limited experience of the Russian aluminium industry, that was the whole point. There were any number of plants to turn alumina into aluminium and none of them had any working capital. So various people would buy alumina, ship it to the plants and take away the processed material, paying for the work that was done. As this process was highly risky (at one point the Reuben brothers had lost a $1 billion or so doing this so the Economist told us some years ago) there were not all that many willing to do this (plus there were the usual problems over people being shot etc….if I remember correctly that Tajik plant changed hands several times as various armed militias fought over it). Thus the profits from supplying the rare factor of production were high.
The managers of the plants which did the processing were of course well rewarded for signing said contracts. This sounds rather more like a new set of managers looking for their piece of the action than anything else.
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