Pretax profits have fallen by 90 per cent to $5.28 million (€4.21 million) at Aughinish Alumina, the Co Limerick aluminium firm being taken over by two of Russia's wealthiest and most influential oligarchs.
Aughinish's parent, the Swiss-based metals trader Glencore, is merging its aluminium interests with the politically-connected Russian groups Rusal and Sual to create the world's biggest aluminium and alumina manufacturer. With 110,000 staff, the company will control some 12 per cent of global production.
The dominant figure in the merger is Rusal's billionaire owner Oleg Deripaska (38), who will control 66 per cent of the merged entity, United Company Rusal. Sual's owner Viktor Vekselberg (49), also a billionaire, will own 22 per cent and Glencore will own 12 per cent.
The creation of the new firm will see the Aughinish plant in the Shannon Estuary take a small part in a drive by the Kremlin to create national companies competing on the world stage.
With a flotation on the London stock exchange mooted within 18 months, Mr Vekselberg said after the merger was made public on Monday that he had discussed the deal with Russian president Vladimir Putin.
Contemporaries of hugely wealthy business figures such as the oil magnate Roman Ambromovich and imprisoned tycoon Mikhail Khodorkovsky, Mr Deripaska and Mr Vekselberg both made their fortunes in the privatisation boom that followed the collapse of the Soviet state.
A former nuclear physicist who was raised by impoverished grandparents in a small farm in southern Russia, Mr Deripaska is connected through marriage to the family of former Russian president Boris Yeltsin. He emerged with a fortune estimated at $14 billion from the murderous "aluminium wars" that marked the bloody privatisation of Siberia's aluminium industry in the 1990s.
While Mr Deripaska has attributed his success in the most dangerous of all Russian privatisations to the cheap Siberian hydropower in aluminium production, some of his associates faced criminal charges arising from their business activities. Mr Deripaska was never charged himself, but he was denied a visa by the US state department until last year.
Mr Vekselberg's fortune is estimated at $10.1 billion. He is best known as one of the main shareholders in BP's oil joint venture in Russia. He received a loan in 2004 from the European Bank for Reconstruction and Development for a project in the Arctic Circle to extract bauxite, the raw material for aluminium. He is also a candidate for the governorship of Kamchatka, a region in eastern Russia.
Aughinish blamed the collapse in its profitability last year on rising energy and raw material costs, but said Glencore's involvement in the merger did not pose a threat to the jobs of its 500 full-time and 200 contract staff.
Newly-filed accounts for Limerick Alumina Refining Ltd, the company's main operating vehicle, show its profits fell in spite of a rise in turnover to $395.17 million in 2005 from $341.74 million a year earlier. The plant made pretax profits of $54.74 million in 2004. A spokesman said business had improved strongly in the current year but that a downturn was forecast towards the end of the year.
The creation of United Company Rusal represented a positive step for Aughinish because it moved the operation into an integrated aluminium business, he said. In addition, the firm said the commissioning last March of a 150 megawatt combined heat and power electricity plant will help to manage its energy costs.
