Sudden help from Elon Musk: This is how Viktor Vekselberg went from the first million to the first billion

And he has special knowledge: He knows from his professional life how resources are used in oil and gas production. If a pump stops working, the device is thrown away. So he founded a private recycling company called NPO Kom Wek and hired five colleagues. They collect tons of electrical scrap and copper cables from state-owned companies, separate the goods and sell them to Germany – with a fantastic return: buy cheap, sell a hundredfold.

Good deals on old computers

Vekselberg’s employees earned enough after two years of working in the private sector. You receive your salary and say goodbye to early retirement. But the boss wants more, much more. He starts a computer company that imports used IBM computers from the United States and updates them with control software for lighting production smokestacks. His trump card: He can program, knows his way around software and hardware, and has connections with combine managers.

This trade also works like clockwork; The only difference from capitalism’s first adventure: the profit margin in computers is even higher than copper. 1 million, the second, a third earn. In 1990, he changed the name of his company to Renova, and this is what he meant: He wanted to renew, or rather revolutionize, the sclerotic state economy.

He got a taste of this feeling in 1991, when he went to New York for the first time with his wife and daughter and met fellow former student Len Blavatnik. He is fascinated and dreams of settling in the USA. There, at the epicenter of capitalism, he wants to compete with the best. He gets encouragement from his old friend Blavatnik, a longtime multimillionaire.

Yeltsin’s brutal privatization is an opportunity

They made plans at a rooftop bar in Manhattan, he later told the Financial Times. One of them: a return to Russia, where Gorbachev’s successor, Boris Yeltsin, announced the privatization of 15,000 state-owned companies. Hunting fever is rising in a New York bar. Let’s go.

Yeltsin wants to turn working people into business owners. In return, they are given coupons that give them the right to buy shares of their company. But few people have the necessary change or the desire to take risks; They prefer to sell their coupons and withdraw cash quickly. The lack of trust in the private sector is an opportunity for Blavatnik and Vekselberg: They stand outside the factory gates at the beginning of a shift and offer workers cash in exchange for vouchers.

Vekselberg’s battered Volga serves as a mobile office, with a pile of ruble bills, sales contracts ready to be signed, bottles of vodka and an air gun, just in case. Blavatnik revealed these details at a gala in Moscow in 2015, where he celebrated 25 years of friendship with his friend Vekselberg. Business celebrities from all over the world are invited.

Starting in 1996, the two friends bought provincial aluminum smelters together because they were cheaper than those around Moscow, where bribes were used to fight over assets. The duo has an advantage: American Blavatnik has a lot of dollars in his pocket, Vekselberg knows where potential aluminum smelters are located. And he’s charming, speaks Russian and Ukrainian, and knows how to get private companies to take action: by setting exorbitant targets and letting staff generously share in the success.

Blavatnik and Vekselberg are undoubtedly among the biggest beneficiaries of shock therapy in the economy. They acquire a portfolio of various aluminum companies and combine them to form Sual (Siberia-Urals Aluminum Company); They mix them with the aluminum business of Zug-based Glencore and Oleg Deripaska-owned Sibirsky Aluminum. This creates Rusal, the world’s largest aluminum producer, which is listed on the Hong Kong Stock Exchange.

Vekselberg gets help from Elon Musk

Vekselberg becomes chairman, Glencore boss Ivan Glasenberg and Oleg Deripaska become board members. Things take a dramatic turn in 2018 when Vekselberg, Deripaska and Rusal are placed on the US sanctions list. But suddenly they get support from a surprising source: Tesla boss Elon Musk and powerful American auto moguls. Because with Rusal’s sanction, aluminum prices are rising rapidly and the production of Tesla, GM and Ford is becoming more expensive.

This is particularly troubling for Musk, who just signed delivery contracts with Rusal for the Tesla Model Y. He feared sales would decline due to price increases and lobbied Trump until he lifted the ban on Rusal in the spring of 2019, a year after the sanctions. Now aluminum prices are falling again – Big Automotive is celebrating.