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ENRC selling bulk of its alumina to RUSAL - prospectus

Moscow, June 23

Kazakh miner Eurasian Natural Resources Corporation (ENRC) sell the bulk of its alumina to United Company RUSAL (UC RUSAL), the Russian aluminum giant, Kazakhmys plc, the copper corporation that owns 14.59% of ENRC, said in a prospectus/circular.

Sales to UC RUSAL accounted for 16.1% of ENRC's consolidated revenue in 2006 and 85.4% of the revenue generated by ENRC's alumina division, the prospectus said. The remaining revenue is generated by shipments to China and Tajikistan.

UC RUSAL buys alumina from ENRC under long-term contracts for the period 2002-2016 and supplies most of the raw material to its smelters in Siberia.

Kazakhmys also said that ENRC sold a significant amount of the iron ore that it mines to Russia's Magnitogorsk Iron & Steel Works (MMK). These sales generated 12.5% of ENRC's consolidated revenue and 49.2% of its iron ore division's revenue in 2006.

"Although the Group has entered into long term contracts with UC RUSAL and MMK, there can be no assurance that the counterparties to such contracts will fulfill their contractual obligations or that, on expiration, such contracts will be renewed," Kazakhmys said in the prospectus, regarding potential risks to ENRC.

UC RUSAL was established in the spring of 2007 through a merger with Siberian-Urals Aluminum Company (SUAL) and the alumina-related assets of Switzerland's Glencore International. The merger created the world's biggest producer of both aluminum and alumina, with 4.2 million tonnes and 11.3 million tonnes, respectively. All alumina supply contracts with ENRC were signed before the united aluminum company was formed.

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