VLADIVOSTOK, Russia, Sept 10 (Reuters) - Plans by Russia’s power company Rushydro to join a new aluminium smelter project that Rusal wants to build in Siberia, have been complicated by international sanctions, Rushydro’s head Nikolai Shulginov said on Monday.
Rusal, ranked the world’s No.2 aluminium producer after China’s Hongqiao, started work on the Taishet project in 2006.
The project was mothballed in 2009 due to weak aluminium prices, but dusted off last year last year as prices recovered. In April, Rushydro’s board approved the move to join the project with total investments seen at around $1 billion.
The United States imposed sanctions on seven Russian oligarchs, including Rusal’s former president Oleg Deripaska, and the 12 companies they own or control in April, in response to what it termed “malign activities” by Russia.
“The thing is that the situation has been changed,” Shulginov told reporters at a newly launched power station.
“Several months ago, before the sanctions had been toughened, we were at the stage of taking the decision on joining the project under certain conditions.”
The sanctions caused havoc in the global aluminium market, prompting several countries and companies to successfully lobby Treasury for a softening of the terms on Rusal, which last year accounted for more than 6 percent of global aluminium supplies estimated at around 63 million tonnes.
“Now, taking the sanctions into account, everything has changed. We have to get back, maybe to recalculate our model: what will happen to the aluminium prices, to the electricity prices... There are lots of ‘buts’,” Shulginov said.
Russia’s state development bank VEB has put financing for the construction of Taishet aluminium smelter on stand-by but has not suspended the deal.
Taishet was expected to raise a total of $1 billion in financing, 30 percent of which would be granted by VEB, the organiser of a syndicate of lenders. It is designed to produce 428,500 tonnes of aluminium per year. (Reporting by Vladimir Soldatkin; editing by Richard Pullin)