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Rusal Aluminium ETF Mooted

Written by Staff

April 16, 2010 4:10 PM (CET)

Russian aluminium giant Rusal is considering launching a physically backed aluminium ETF in the second half of 2010, Reuters reported earlier this week.

According to the news agency, Rusal is considering setting aside one million tonnes of the metal to back the ETF, equivalent to around US$2.4 billion at the current spot price.

There were rumours of plans for a similar ETF involving Credit Suisse and metals trader Glencore late last year, although this has yet to come to fruition.

It is unclear whether Rusal’s mooted new venture involves either of these two firms, although Glencore owns a minority stake in Rusal and Credit Suisse was lead manager of Rusal’s recent Hong Kong initial public equity offering. approached both Rusal and Credit Suisse to request further information but neither was prepared to comment.

Within the commodities markets, physically backed ETFs are so far confined to the precious metals subsector, where storage presents less of a challenge. However, assuming that storage costs can be managed and quantified, using physical commodities as the backing for an ETF removes the need to gain financial exposure through the rolling over of futures contracts, something that can cause significant tracking difference from spot price returns.

For that reason alone, the ongoing efforts to construct a physically backed aluminium ETF will be watched with interest by issuers and investors alike.



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