The creation of United Company Rusal was described as "historic" by Viktor Vekselberg, Saul's co-owner, on Monday.

He said: "After long negotiations, the three companies - Rusal, Sual and Glencore - have signed an agreement to merge the majority of their assets to form a very large aluminum company."

The long-expected merger creates a group that will produce four million tonnes of primary aluminium per year, substantially more than the 3.6 million tonnes currently produced by US company Alcoa, formerly the world's biggest group, Vekselberg said.

United Company Rusal will also produce 11 million tonnes of alumina, making it the world's largest alumina maker.

The company will employ 110,000 people in 17 countries on five continents, the company said on Monday.

Vekselberg said the new company would conduct an IPO "in 18 months, most likely in London".

He added that Rusal would control 66 per cent of the new group, Sual would have 22 per cent and Glencore would have 12 per cent.

Analysts have put the potential value of the group between $20bn and $30bn.

The board

The chief shareholder of the new group will be Oleg Deripaska, Rusal's owner, who is one of Russia's richest men, with a fortune estimated by the business daily Vedomosti at $14 billion.

Rusal's Alexander Bulygin will become the chief executive of the new company, while Brian Gilbertson, Sual president, will serve as non-executive chairman of the board of directors.

Rusal revenues reached $6.65 billion in 2005, when the company produced 2.714 million tonnes of primary aluminum.

Sual, which is co-owned by Vekselberg and Leonid Blavatnik, mines more than 5.4 million tonnes of bauxite, the main component in aluminum, and produces over one million tonnes of primary aluminium.

The formation of the new group is the latest step in Russian strategy of fielding natural resources giants - such as state gas monopoly Gazprom and state oil company Rosneft - to compete with leading international companies on a global scale, analysts say.

The merger won the blessing of Vladimir Putin, the Russian president, who said he supported the project in mid-September.