A major aluminum project in Kentucky was dealt another blow last month when the Russian company backing the project announced it was suspending its investments as it waits for U.S. partners to raise funds, Bloomberg reported.
The move marked yet another “setback to the billion-dollar-plus mill that was supposed to be completed last year,” the news outlet reported.
United Co. Rusal International PJSC announced the move on Unity Aluminum, formerly known as Braidy Industries, in a call on Wednesday. Rusal has so far poured $65 million into the venture, which local officials have been counting on to bring hundreds of high-paying jobs to the region.
The funding freeze is the latest in a series of twists, including a battle for control of the mill that led to the ousting last year of Braidy’s chief executive officer, and questions over the timing when the U.S. lifted sanctions on Rusal. The plan announced in 2017 was for a $1.3 billion rolling mill to meet growing demand for the metal from the automotive, packaging and aerospace markets.
The Washington Post reported in 2019 that then-Senate Majority Leader Mitch McConnell (R-KY) was instrumental in Rusal’s ability to partner with Braidy on the project.
When the Trump administration decided to lift sanctions on the Russian company, founded by oligarch Oleg Deripaska, a bipartisan effort in the Senate arose to keep the sanctions in place.
McConnell successfully blocked the effort, The Post reported, “despite the defection of 11 Republicans.”
The newspaper noted at the time:
Within weeks, the U.S. government had formally lifted sanctions on Rusal, citing a deal with the company that reduced the ownership interest of its Kremlin-linked founder, Oleg Deripaska. And three months later, Rusal announced plans for an extraordinary partnership with [former Braidy CEO Craig] Bouchard’s company, providing $200 million in capital to buy a 40 percent stake in the new aluminum plant in Ashland, Ky. — a project Gov. Matt Bevin (R) boasted was “as significant as any economic deal ever made in the history of Kentucky.”
A spokesman for McConnell said the majority leader did not know that Bouchard had hopes of a deal with Rusal at the time McConnell led the Senate effort to end the sanctions, citing the recommendation of Treasury Secretary Steven Mnuchin.
Michael McFaul, who served as the U.S. ambassador to Russia under former President Obama, decried the deal, telling The Post: “It is shocking how blatantly transactional this arrangement looks.”
The Moscow Project noted in July 2019:
McConnell, it seems, had his eye on this project for a while. In August 2018, just months after Rusal was first sanctioned, McConnell spoke on the Senate floor about Braidy Industries, highlighting the jobs that the new aluminum mill would be bringing to Kentucky.
As for the project’s future, Bloomberg reported that Oleg Mukhamedshin, Rusal’s deputy CEO, said in the call: “Unfortunately, our partner failed to contribute necessary equity from their side, so then it was a substantial change of the management and shareholder structure of Braidy Industries. We put on hold any further investments of the project as per our agreement, and we still expect our partners to raise necessary financing after the Covid pandemic gets better.”
Mukhamedshin said Rusal’s “Plan B” is to convert the investment into a debt instrument with certain securities if Unity Aluminum isn’t successful in securing the necessary funding.
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