Good day, ladies and gentlemen. This is Gleb Diachkov-Gertcev, Head of Investor Relations, and on behalf of UC RUSAL, I would like to welcome you to our full year 2018 results conference call. Let me introduce the RUSAL team presenting today. Oleg Mukhamedshin, Deputy CEO. Alexandra Bouriko, CFO. Anton Egorov, General Counsel. Roman Andryushin, Director of Sales and Marketing, and Denis Nushtaev, Head of Research Department. With this, I would like to pass over to Oleg to kick off our today's presentation with the highlights.
Thank you very much. Good morning. Good afternoon. It's been a long time. We postponed this analyst call due to very known reasons. Thanks to the removal of sanctions, we're coming back to our normal IR activity. Thank you for joining the call. Few words to start the call. As you know, in April last year, OFAC added our company to the SDN list until the end of January 2019 when OFAC announced the removal of sanctions.
This meant that the company was operating under OFAC sanctions for the majority of last year. These circumstances, coupled with other factors, led to certain changes to ordinary levels of operational performance. In the coming few slides, we'll give you a brief summary of sanctions-related changes. Before that, I would like to start with some key numbers highlighting the company's performance during last year.
Sales volumes of both commodity and value-added products were significantly challenged by short extensions of general licenses during second quarter, third, and fourth quarter. As a result, last year total aluminum sales decreased by nearly 7% and dropped to 3,670,000 tons. VAP sales decreased by 11% to just 1,660,000 tons. During last year, we managed to keep the VAP's share in total sales at nearly 45%. In spite of negative trends in operating results, we demonstrated stable financial performance, namely elevated level of aluminum prices during 2018.
That was caused, among other factors, by sanctions again imposed against RUSAL and largely offset a decline in sales volumes. RUSAL's revenue increased by 3.1% to nearly $10 billion. EBITDA increased by 2% to $2.1 billion, and EBITDA margin remained almost flat at 21%. Our net debt declined by 3% to $7.4 billion due to scheduled repayments during the period of last year. Now we move to page number five, environmental achievements. As always, we would like to draw your attention to our strong commitment to reduce greenhouse gas emissions.
One of RUSAL's strategic goals is to reduce direct specific greenhouse gas emissions at existing smelters by 15% by 2025 compared to levels of 2014. As you can see from the chart of the slide, we have decreased emissions by 7.5% already from the levels of 2014. This is just halfway to our target. Next slide is number six, health and safety. You can see our performance in the health and safety, which is clearly one of the strategic priorities for RUSAL. Overall lost time accident frequency rate remains one of the lowest in the industry, as you can see from this chart.
We continue to implement all of the initiatives announced earlier. On top of that, we develop new projects, which you can see from this slide. All these projects would allow us to further improve our standings in those metrics. Now I would like to pass the word to Anton Egorov who will give us a brief update on the changes of RUSAL's corporate governance.
Thank you, Oleg. Hello, everyone. To put you into the context, let me start with an overview of measures that led to the delisting of RUSAL and other companies of the group from SDN list. As you can see on slide eight, you can see the current voting and shareholding structure. But before it, I would like to remind you, and probably you are already aware that on January 27th, 2019, OFAC lifted sanctions from En+, UC RUSAL, and EuroSibEnergo. This was a result of successful implementation of core elements of the plan developed by Lord Barker of Battle, En+'s independent Chairman.
On this slide, you can see a detailed new En+ voting and shareholder structure that result from the measures have been taken according to the Barker Plan. As you can see, the major shareholder of En+ reduced his holding to 42.91% and voting to 35%. In addition, he can only nominate 12 out of Directors to En+ Board. One of the mergers related to RUSAL shareholder structure actually involved En+ issuing new shares to complete Glencore's vote. Under the security exchange agreement between Glencore and En+, Glencore shall transfer the 8.75% of the RUSAL shares to En+.
This will be done in two stages, with approximately two already transferred and the remaining shares to be automatically transferred no later than in February 2020. Next slide, please. Next slide. Okay. We are waiting a new slide, but if you don't mind, I'll continue. Let's move to the RUSAL corporate governance and corporate structure. Okay. Now we have. On this slide on the up left corner, you can see current ownership structure of RUSAL.
You can see, the major shareholder of RUSAL now is En+ who has more than 50% of the company shares. We have the same number of the sole partners shareholding, sufficient free float and remarkable, but a bit smaller now share of Glencore represented by Makanda Holdings. Another new feature it's our obligations. In accordance with obligations undertaken by UC RUSAL, the company is committed to ongoing reporting to OFAC, including inter alia, submitting copies of Board minutes and regular compliant quarterly report. In addition, all candidates to become Directors of the Board will be reviewed by En+ nomination committee.
Company should immediately notify OFAC of any anticipated changes in the composition of the Board. The Board of Directors have been changed on February 14th this year, and currently we have 14 members, three non-Executive Directors, three executives, and eight independent non-Executive Directors. Next slide, please. As I mentioned above, the current Board consists of 14 members. Talking about new eight Independent Directors.
Newly elected independent non-executive directors include Christopher Burnham, Nick Jordan, Kevin Parker, Maxim Poletaev, and Reynolds Randolph . The new Directors come from different backgrounds, but they all bring sufficient qualification and experience to deliver robust corporate governance. Generally, that's it. Now we are moving on to the review of the operational and financial result, and I would like to hand over to Roman Andryushin, who is going to open this session. Thank you.
Roman?
Hello there. Thank you, Anton, and welcome everyone. Let me just start RUSAL results to review with aluminum sales and price performance. We're on slide 12. We already explained by Oleg, global sanctions imposed on RUSAL led to certain changes in operational performance of the company. So for RUSAL, this is also one of the key factors that affected aluminum price throughout last year. Total aluminum sales in 12 months last year amounted to 3,671,000 tons. Were included value-added product sales level is 1,000,664 metric tons. Last year, average realized price increased to $2,259 per ton.
That's +7.3% year-on-year basis. The LME component reached $2,107, so +8.5% year- to- year, which traditionally lags behind LME prices. Commodity grades premiums was $75 per ton, an average upcharge per ton of alloy sales was about $169 per ton last year. Regional sales mix in 2018 was adjusted due to the fact sanctions, which are exposure to European markets, which mean the largest share in the sales mix of RUSAL, increased from 43%- 49% on a yearly basis. Russia CIS region also grew up from 20% up to 24% last year. With RUSAL, pass this to Alexandra Bouriko, who will comment on how the elevated aluminum price and decline in sales volume affected the company financials. Thank you.
Thank you, Roman, and good day everyone. Later on, we shall look at how LME factor affected our EBITDA. Now we are on slide 13, and I would like to briefly touch on our revenue mix and dynamics. Total revenue for the year 2018 was $10.3 billion, which represents a 3.1% increase year- on- year. Revenue from aluminum sales during the 12 months of 2018 was similar to the previous year at $8.3 billion. At the same time, remaining revenue increased and totaled $2 billion. Revenue from alumina sales to third parties increased by 26.8% to $975 million, driven by unusually high alumina prices that we've seen during the year.
Revenue from sales of foil and other aluminum products was $346 million, which is +7.1% year- on- year. Revenue from other sales, including sales of other products, bauxite and energy services, increased by 20.4% to $665 million. This was due to increased sales of other materials such as anode blocks, aluminum powder, and silicon. Let's move to the next slide, please. On slide number 14, we present the key segment cash cost overview.
During the 12 months of 2018, the production cash cost of aluminum increased by 9.2% year-on-year to $1,646 per ton on average. The cash cost was primarily affected by an increase in alumina and other raw material costs. Since alumina cost was one of the key driving factors influencing the change of aluminum cash costs during the year 2018, we have provided detailed illustration of its calculation on this slide. Okay? Let's move on to the next page, which provides details on energy cost dynamics.
We are now on slide number 15. The growth of an average energy tariff, during the second quarter of 2017 to first quarter of 2018, was mitigated by the subsequent decrease, in the following two quarters, mainly due to the exchange rate factor. In the fourth quarter of 2018, energy tariff has increased up to $0.0308/kWh , driven mostly by the seasonal factors. This put our average tariff for 2018 to $0.0314/kWh , which is 3% lower than in the previous 12 months, when the average tariff amounted to $0.0323/kWh .
Let's move to the next slide. We are now on slide number 16, EBITDA. On this slide, we traditionally summarize the factors that contributed to our EBITDA dynamics. As you may see from the top chart, the LME component growth in aluminum price year-on-year on the back of the U.S. sanctions largely offset the decline in aluminum sales volumes and higher cash costs and other components. All in all, you can see that during the year, EBITDA increased marginally, to $2,163,000,000 , about 2% growth year-on-year.
Our EBITDA margin stood firmly at the level of 21%. In terms of segment impact, aluminum segment remained the largest contributor to the group's EBITDA. We would note robust results of alumina segment given spike in alumina prices that affect EBITDA profitability of this segment. Let's move to slide number 17, please. This slide describes our capital expenditures. On this slide, we provided an overview of our key existing capital projects. During the year, our total CapEx was around $830 million.
Out of which 46% went to maintenance CapEx. The company continued to invest in its key development projects to support our competitive advantages of vertical integration into raw materials and product mix enhancements. Our focus in terms of the projects remains relatively unchanged, and all projects are progressing very well. As an example, we can outline that in June 2018, we have launched two of our key projects aimed at increasing the company's self-sufficiency in raw materials.
Namely Dian-Dian bauxite deposit in Guinea and Friguia alumina refinery complex in the same geography. We also continue our work on aluminum capacities expansion, and on slides that follow, we would like to remind you of the two key projects in this field. We are now on slide number 18, describing the BEMO project. BEMO project is an industrial complex in Siberia combining Boguchanskaya Hydropower station and Boguchansky Smelter.
RUSAL has entered into a joint venture with RusHydro to carry out this project. Once fully completed, the total projected capacity of the smelter will be around 600,000 tons per annum, with the product portfolio including up to 360,000 tons of value-added product. The first half, 150,000 tons of the first stage of the smelter was launched in the third quarter of 2015. Now, the other half of the first stage, another 150,000 tons, is being finalized. The financing is provided by VEB on the project finance basis.
Let's move to slide number 19 and to take a look at our next project, Taishet Aluminum Smelter. It is currently under construction in Irkutsk region. The expected capacity of the first line of Taishet smelter is around 428,000 tons per annum. The project was initiated in 2006, but it was suspended in 2009 due to unfavorable market conditions.
We have restarted construction in the first quarter of 2017. During the course of 2018, the company continued financing of construction using its own funds. Going forward, the financing of the first stage is likely to be provided using project finance. Our corporate finance team is currently working on it. With this, I would like to hand over back to Oleg Mukhamedshin. Oleg?
Thank you, Alexandra. Just a few words about our existing debt profile. As you can see from this chart, on page 21, our total debt is around $8.3 billion, and the net debt, as I mentioned, was dropped during the course of last year to $7.4 billion. Adjusted net debt EBITDA gearing ratio is just 1.4x . The company fulfilled all its obligations under loan agreements and other debt instruments. We made all scheduled repayments. We paid all coupons and interest. You can see the existing debt maturity profile.
We will repay $900 million this year, $600 million next year, and the remaining profile is currently under consideration. We look at the number of opportunities for debt repayment, but it is a bit premature to give you any details. Once we make any commitments or any decisions, we will let you know. You remember prior sanctions in April of 2018. It was another successful Eurobond placement. The total amount of Eurobond outstanding is about $1.6 billion. Not much to say on top of that. We can move to page 22.
Just a few words about Norilsk Nickel. Excellent year for Norilsk. You've all seen very good performance of the company due to the quite a nice price environment for both nickel and palladium. We very much happy to have our exposure to Norilsk Nickel. We will tell you later about our view on electrical vehicles industry and future perspectives. It's very complementary for our own aluminum business. We're very much happy to keep this investment. I would pass the word back to Roman to talk about aluminum market.
Thank you, Oleg. We are on slide number 24, and that is about global aluminum market and aluminum balance. Company estimates that global balance reached the deficit at about 1.6 million tons last year, and we believe it will remain pretty strong deficit over the next five years, at least at the level of 1 million tons. Global aluminum demand at the same time will grow with the current level of more than 4% over the observed time. On the supply side, there will be few significant projects outside China, which is us and Middle East.
Half of the production tons outside China staying underwater since we have price at the levels we have right now. Past year, two years, we can observe reported stock have declined drastically to the level of pre-crisis 2008, 2007, and stocks constantly drawing down since 2015, covering the gap between supply and demand ex-China. Next slide. Here we would like to give more color on the global aluminum balance. Middle East will remain a major aluminum supplier, as already mentioned, and followed by the North American restart, which on the plan right now, but not significant yet.
We forecast Russian domestic consumption to expand at least 7%-8% between 2018 and 2023. Chinese market, nevertheless, expected to face deficit, in our opinion, and strict environment regulations also will ease domestic demand. We also expect that North America, European, and Asian market deficit will grow. The export, I expect it to decline due to the robust domestic demand. It is also worth to mention that we believe that majority of the new build capacity, ex-China, will be consumed presumably domestically, and mostly in form of value-added products.
Next slide, please. On slide 26, on this slide, we would like to discuss major trends on the key international markets, including Europe, Asia, ex-China, and North America. In general, aluminum demand continues to grow from 2018, and all key markets behave on the growth curve. In Europe, it went up by 2%. Asia, ex-China, benefits from the public infrastructure investments and addition to the high aluminum density in light-weighted vehicles, and demand grew by 1.3%. In North America, consumption increased by 1.6%.
Can understand that in the last quarter, we see mixed indicators across the board, signaling an economical slowdown. Nevertheless, auto sector endured significant disruptions in Europe in the later part of 2018, as automakers scrambled to address a changeover to the diesel test cycle. This constrained production and led to vehicle output drop by over 10% in 2018. In North America, vehicle production remains nearly flat, while in Asia, ex-China, it increased by 1.2%, thanks to strong Asian countries.
In Europe and North America, increased aluminum content per car offset decline in production, resulted in increased demand from auto sector, which were the main driver of consumption. Slide number 27, and that is Russian CIS picture. We just reconfirmed robust demand last year, where our sales grew up by almost 10%, and the demand in CIS countries, which reach out the level more than 1.1 million tons, including about 900,000 tons of Russian market demand.
Although Russian economic growth slowed down towards the end of the year, GDP was estimated to grow by 1.8%. Specifically, industrial production growth amounted to 2.9%, while investment in fixed assets in Russia also increased, presumably about 3%. PMI index in September returned to the level of 50 and stayed positive till the end of the year. At the same time, vehicle production in Russia continues to grow, as well as sales of light vehicle. Last year, sales increased by 13%, whereas output was even up by 18%.
The volume of construction works represent a recovery, basically remaining below them before the crisis. Next slide. Here we are with automotive industry prospects, and as Oleg mentioned, we do believe that long-term drivers on demand is very important for all aluminum industry. That will influence aluminum and nickel markets for sure, and in long run, that supports and enhance more sales within this sector. The EV sales and trends of EV sales backed by multiple environment initiatives and also all over the world will drive the most demand in the automotive sector. For example, U.K. announced their ban combustion engines from 2040 already.
All in all, we estimate that gross EV sales in 2018 surged by 63%, up to 2 million cars, and shall reach 12, 13 million already in 2025. Globally, with stock expected to reach up to 200 million in 2030 by our estimate. A share of EV growth, the entire power generation and distribution infrastructure will need to add global infrastructure base of EV charging stations is forecasted to grow to more than 12 million by 2020, and that growth is quite significant from 2.5 million tons just in last year.
Power supply to houses and charging stations will need to be rewired to accommodate higher voltage and current as well. Bear in mind that nickel cobalt batteries are becoming a product of choice for rapidly growing electrical vehicle industry, and aluminum cables is a lighter and less expensive substitute for copper cable. We expect current trends in automotive industry to increase demand for aluminum and nickel in the future. I would like to give the floor to Denis Nushtaev to discuss development in China and our view on supply and demand in this particular region.
Yeah, thank you, Roman. Hello, everyone. Let's discuss Chinese market situation. China is very important global supply factor as it accounts for around 57% of global aluminum production and consumption. In our view, the Chinese market is now facing significant challenges for supply side reform and for other measures which were implemented by the Chinese government a year ago, especially in case of tight environmental control, supply side reform, and other measures. What happened in the past, actually, China was in some position of very high surplus, especially in 2017.
This was due to ramp up of significant part of capacity, especially in certain provinces. Some part of this capacity was really illegally built. Some of capacity was actually ramped up without permissions. But after that situation with the supply side reform, tight environmental control, some part of this capacity start to be shut, and we see very successful steps toward implementation of supply side reform. As a result of surplus in 2017, we saw a significant growth of domestic stocks, and this finally turned into higher exports.
As a part of this, lower demand in China due to tightening trading wars with the U.S. and other factors affected negatively for domestic demand. But on the next slide, as I mentioned, the Chinese government is successfully start implementing supply side reform, and the result of this supply side reform, we already have an evidence of no changes in capacity, in operating capacity starting from 2017. We do not see any evidence of growth. Instead, we see a flat growth of capacity, which is very important, and we see very good signs of implementation of supply side reform. As a result, also, we see a flat growth of production.
Currently, we see that 60% of Chinese production is loss-making, which is very unique and disaster situation in the Chinese aluminum industry when you have depressed prices but very upward cost curve, which is turning into very significant loss-making of smelters. As a result, in January, February, we already start seeing significant cuts in capacity. Over second half of 2018, around 3 million tons of capacity was shut due to low aluminum price.
What we see today, around 1 million tons of capacity already start to be closing over January, February, which is really significant. We are definitely seeing that the market will definitely be turning into a significant supply moderation in China, and we already see this in 2018 and definitely expecting significant supply moderation in China going forward with the successful implementation of supply side reform, which is very good example in steel industry. You can also study this slide in our appendix, showing that the steel industry supply side reform actually was very successful in balancing the market and pricing environment. With this, we are done with the market overview. I would like to pass it back to Gleb to kick off the Q&A session.
Thank you, Denis. Thank you all for your attention. Now we would like to open the line for questions.
We will now take our first question from Oleg. Please go ahead, sir.
Good day, gentlemen. Happy upcoming 8th March, [register]. Two complex questions from me. When do you think your long-term contracts with both suppliers, your suppliers and your consumers will be fully completed? When do you hope to sign them? When do you think, as a result, your working capital will normalize? I don't know, this year or whenever you think. My second question is about your future balance between dividends and CapEx. What is current completion ratio of Taishet and how many do you think to invest in 2019, 2020? What will be the effect on your dividends, and do you expect to resume them?
Let me take these questions. This is Alexandra. The first question on the working capital, you rightly noted that our working capital have increased significantly during 2018 as a result of difficulties that we've had with mostly our customers. As Roman already noted, we are in the process of reestablishing our normal relationships, and we expect that in the second half of the year, the situation should improve and become more or less at the same state as it was before the sanctions. With our suppliers, we're already establishing the credit terms that we had prior to April 6th of last year.
In terms of reaching more normalized levels of working capital, we expect that it will likely take up to the end of the second quarter when we see more normalized levels to offload the stocks and get the normal credit terms and trade financing in place to finance receivables and stocks. Moving to your second question on the Taishet project and balance between CapEx and dividends. Taishet project, as we already stated, was continuing throughout 2018, and we keep it moving forward now. The first metal there is expected towards the end of 2020, and the remaining spend that is required is around $700 million-$800 million.
As we already stated during our presentation, the corporate finance team is right now working on getting project finance to finance the project. So it should not really impact any future dividend distributions. Any decisions on future dividend distributions will be made by the Board of Directors and the shareholders, as it has to be, and will be in line with our dividend policy and subject to our covenant restrictions and general situation with the company's liquidity. Okay. Thank you.
What is management's view on dividend payments? Do you think RUSAL can pay dividends? Is able to pay dividends, I mean, in terms of financial conditions?
We would refrain from making any comments on potential dividends at this point in time. Thank you.
Okay. Thank you very much.
Thank you. If you find that your question has been answered, you may remove yourself from the queue by pressing star two. We will take our next question from Daniel Major from UBS.
Hi. Thanks very much for the questions. A couple of follow-ups perhaps on the questions that have already been asked. Could you provide any specific guidance on either how much working capital you expect to release or an absolute level of normalized working capital across the group? Also, can you provide any specific guidance on your expected CapEx spend at a group level over 2019, 2020? A third question, can you just provide us with a reminder of the amount of incremental metal production on 100% base that you expect to bring to the market from the completion of the first phase of the BEMO project and the Taishet project over the next two to three years? Thanks.
Thank you for your questions. First, the part on the working capital. As you would appreciate, the working capital figures depend on many factors, including the cost of production, the price of metal and so on. However, based on the current mark to economic situation, over the course of 2019, we expect to release somewhere between $600 million and $900 million of working capital at this point in time. In terms of the additional production at the smelters that are under construction, as I already stated during the presentation, the second quarter or the second half of the first half of BEMO is expected to bring additional 150,000 tons per annum, and that is coming on stream now in 2019.
So in 2019, the full annual life figures will be slightly less than that, but the capacity will be 150,000 tons. Overall, Boguchansky Smelter following 2019 will operate at 300,000 tons per annum capacity. Taishet Smelter, the first line has a capacity of 428,000 tons, and that is coming on stream towards the end of 2020. So the full capacity is not expected until late 2021.
Great, thank you. Just a very quick follow-up on that working capital release. You obviously, a combination of inventories and the receivables, payables. Can you give an indication of exactly how many tons of inventory you expect to sell into the market? I know sales versus production was around 300,000 tons last year. Do you expect to sell all that into the` market this year?
It will gradually find its way into the market or will be financed depending on the market situation.
Okay, cool. Thank you very much.
Thank you. We will take our next question from Boris Sinitsyn, VTB Capital.
Hello. Thanks for the presentation. Just two questions from our side. Firstly, could you please share the CapEx guidance for 2019, if you may? The second one is on effective tax rate in the fourth quarter. It was higher than usual, like around 40% on our numbers just for the fourth quarter. The question is, what is the reason for such a high effective tax rate? Are there any implications for cash outfalls based on this in 2019? Thank you.
Thank you for your questions. In terms of the CapEx guidance, we broadly expect to continue with the same development projects that have been already started in previous years, including Taishet Smelter, Taishet Anode Factory and a number of others. So the CapEx should remain broadly on the same levels as you have seen in 2018 and 2017. Depending, of course, on the overall situation, we may increase the rate of certain projects or vice versa, postpone some of them to retain liquidity.
With respect to your question on the tax accrual in the fourth quarter. Based on the certain court practices that we have seen, we've reassessed certain tax positions that the company has previously taken and made an accrual to that end in Q4 of 2018. In fact, part of that accrual was included in accounts payable and was settled in the first quarter of 2019. Overall--
Okay.
--it does not have a significant impact on the effective tax rate of the group in comparison to what you have seen in previous years.
Okay. Pretty clear. Thank you so much.
Thank you. We will take our next question from Barry Ehrlich from Citi. Hello?
Yes, I have two questions, please. First of all, what was the ruble unit cost growth for electricity, rail, and labor in 2018? And what expectation do you have for 2019? Or at least some indication of where these costs stand now relative to 2018. Thank you.
Can you please repeat the first part of your question? The ruble unit cost or--
Yes. So ruble unit cost growth for electricity, rail, and labor in 2018, and maybe, not precisely, but some idea. What is your expectation for 2019, if you have one, and if not, where does it stand, let's say, in February or the first quarter relative to the 2018 level?
Okay. If you are talking about ruble unit cost, it increased year- on- year, just under 5% for electricity. I think if you look-- I cannot recall off the top of my head, the labor and transportation cost would be probably slightly less than that. In 2019, we anticipate quite similar increases that would be in line with the inflation in Russian Federation. So between 4% and 6%.
Okay.
Okay?
If I have an additional question. Were there any covenants triggered or debt schedules altered over the last 12 months due to sanctions or due to any other factors? If so, can you give us just a little bit of description on the amounts involved, and any implications?
Oleg, are you still there? Okay. This is Alexandra. To answer your question, no, there has not been any changes or any covenants triggered as a result of sanctions or otherwise. No accelerations, no significant changes to debt repayment schedules. You can see that on one of the slides in the presentation. So it basically stayed intact. One significant transaction that was undertaking towards the end of 2018, was the conversion of part of a U.S. dollar denominated Sberbank loan into rubles. Approximately $2.1 billion of the loan balance was converted at the end of 2018, but the repayment schedule remained intact.
Okay, thank you.
Thank you. We will take our next question from Nikolay Sosnovskiy, from Prosperity Capital Management.
Yes, hello. Yes, hello. Thanks a lot for the opportunity to ask questions. I've got two. First one is on your corporate side. We know that En+ has decided to redomicile into Russia. So the question is, if there are any kind of similar plans for RUSAL, and if yes, what are the reasons behind such potential redomiciliation? That's the first question. Second one is on Norilsk Nickel. Do you have any changes in your strategic views with respect to the stake that might took place during the last 12 months? If yes, can you please update on your views with regards to this strategic investment? Thank you.
This is Anton. I'll take your question, if you don't mind. Talking about the potential redomiciliation, or if you want, continuous out to Jersey, to Russia, both companies, En+ and RUSAL. As you may know, En+ shareholders meeting approved the domestication, but there are some internal procedures should be done before it. Talking about RUSAL, as you may know, in November 2018, the company's Board decided that domestication from Jersey to Russia is in the best interest of the company and the shareholders at all.
So, the next corporate station this way might be extraordinary shareholders meeting, but the decision didn't made, so such an opportunity is still under consideration. It's a subject of internal procedures and steps. Talking about the reason why, there are a number of reasons. One of them is tax benefit. Another, it's a necessity to move the place of registration and the company office closer to Russia, the country where main production facility is located. It's a number of other reasons. If you want to discuss something else, I'll be happy to answer. But generally, the main rationale were two points mentioned by me. Thank you.
And, with respect to your second question on investment in Norilsk Nickel, the company didn't change its view of its investment in Norilsk Nickel as a strategic investment. We continue our involvement as a significant shareholder in various significant decisions through Norilsk Nickel's Board and its committees, and we expect to continue to receive significant dividend flow and high dividend yield from this investment into the future. Okay?
Mm-hmm. Just a small follow-up on Norilsk Nickel. Obviously, in last year and especially this year, the company will be ramping up its CapEx and especially with regards to environmental projects. So what is your view on these additional investments? Do you think they are beneficial for the company or it is a necessity? So what's your view on this additional CapEx?
Let me comment since I'm on the line. I think we clearly are not in a position to comment on Norilsk investments during this call.
Mm-hmm. Thank you.
Thank you. Once again, if you would like to ask a question, please press star one. We will now take our next question from Timothy Riminton from Barclays.
Hi there. Thanks. Hi there. Thanks for your time this morning. I have a few questions. Firstly, on the subject of the Sberbank loan refinancing into rubles, could you talk a little bit about your rationale for doing this? Also, why is, in the financial statements, the ruble section is only totaling around $800 million, but you say you have transferred $2.1 billion, so can you account for that?
Secondly, when do you expect or do you expect and when, to regain your credit ratings from major credit rating agencies? Then finally, can you comment at all on the deal with Glencore, which was meant to come to an end at the end of 2018? I understand that the OFAC agreement prevented you from signing new contracts. Can you comment at all on progress on that deal since the end of sanctions? Thank you very much.
Let me start from credit ratings first. Look, clearly, once RUSAL faced U.S. sanctions in April, our credit ratings, except Chinese one, were put on hold. Currently, we are in an active phase of discussions with their main credit rating agencies, and we expect the ratings to be announced in, let us say, a week's time. So I would say probably three, four weeks. In terms of Sberbank's credit facility, it is correct that $800 million , it is a number which you can see from our accounts at the end of last year, and the remaining part was converted into rubles during the first quarter of this year. In terms of Glencore, what deal exactly are you talking about?
I understand you had a long-term supply contract with Glencore that ran for roughly 10 years, or a significant amount of time.
Okay, thank you. Roman can address this question.
Yeah, thanks, Oleg, and thank you for your question. As you may understand, any commercial questions at this stage of negotiations are sensible, and I would say that we have been performing this contract all the time over the duration of this contract. As time passed by, we are in the negotiation process with all the market participants as well as Glencore. As well as we finalize our contractual process with the other parties, we will come back to the market and inform accordingly. Thank you.
Thanks very much.
Thank you. We will take our next question from Boris Sinitsyn from VTB Capital.
Hello again. Just two small questions from our side. Firstly, what is your outlook on energy cost, electricity cost, sorry, in 2019? Basically, if you have any comments why in the first quarter the head market in Siberia outperformed so much despite higher water levels will be very helpful. Second one is your guidance, if you may, guidance on alumina and bauxite output in 2019, especially taking into account recent news on strikes at Guinea and as well as expected ramp-up of the Dian-Dian project. Thank you.
Thank you for your question. In terms of electricity situation, we actually expect that electricity cost will not change in ruble terms above the level of inflation as we have already indicated. In fact, the Siberia day ahead market performed in accordance with our internal expectations during the first quarter. It was a seasonal increase due to cold weather. The water levels indeed are quite high. So that should help to bring the cost down in the spring and summer months.
With respect to your second question on alumina and bauxite output, we expect that our Dian-Dian project will be operating at its full capacity next year and will produce nearly 3 million tons of bauxite. The strike in Guinea is unfortunate, but it will not significantly impact the overall volumes that the company produce. The mine is not very significant in our bauxite portfolio. The alumina output will increase slightly following the operation of Friguia refinery at its intended capacity in 2019.
Thanks. A small follow-up on Dian-Dian. Did you mean 2020 or 2019 at full capacity?
2019. 2019 we expect that it will be mining at full capacity.
Thank you.
Okay.
Thank you. It appears there are no further questions at this time. I would like to turn the conference back to you, Gleb.
Thank you all for your attention. I think we will end the call right now. Thank you all. Bye-bye.