RUSAL offers RusHydro 50% stake in Taishet aluminum project

ST. PETERSBURG, Jun 5 (PRIME) -- Russian aluminum giant UC RUSAL has offered hydropower giant RusHydro a 50% stake in a project to complete construction of the Taishet Aluminum Smelter in the Irkutsk Region, CEO Vladislav Solovyov told PRIME in an interview released on Monday.

“We have made our proposal for RusHydro as comfortable as possible. Their participation in the project almost does not require financial expenses at the moment… Tariffs will be market-based. We want them to enter the project as a shareholder with a 50% stake, but funds for the construction will be borrowed from a bank. On the whole, we have restructured the deal in the most profitable way for RusHydro. But I can’t talk about details, this is a commercial secret,” he said during the St. Petersburg International Economic Forum.

RUSAL’s board of directors already approved investing U.S. $38.5 million in preparatory works.

Reuters reported earlier citing Deputy CEO Oleg Mukhamedshin said RUSAL plans to borrow $700–800 million from domestic state banks this year to launch the plant’s first stage with a capacity of 430,000 tonnes. CEO and major shareholder Oleg Deripaska said later RUSAL plans to finish construction of the plant within two years.

Construction of the facility with a projected annual production capacity of 750,000 tonnes of aluminum started in 2006, but was frozen in 2009 on the back of the global economic crisis. RUSAL has already invested over $760 million of its own funds, while the entire cost of the project is estimated at $1.4–1.6 billion.

RUSAL is holding talks with investors, including with a consortium of Gazprombank, Sberbank, and VEB, on partial financing of further construction of the plant.

Solovyov also said that RUSAL plans to define main parameters of the second stage of an aluminum plant in the republic of Khakasia sometime by September.

“We have discussed the project preliminarily, this is only an idea so far, which requires detailed thorough study, defining of parameters, including with ministries, with VEB,” he said.

Solovyov said in April that RUSAL is considering building a new complex of the Khakas Aluminum Smelter with a projected capacity of up to 544,000 tonnes and a preliminary cost of 130 billion rubles.

RUSAL’s management does not see a need to revise the company’s dividend policy, Solovyov also said.

“This is not being discussed yet. In my opinion, it is not right to change the dividend policy every year. I believe that 15% from covenant EBITDA (earnings before interest, taxes, depreciation, and amortization) is a universal policy. It was specially adopted at least for five years ahead,” he said.

He also said the company will not pay dividends for January–March.

RUSAL expects an aluminum price in the range of $1,900–2,000 per tonne until the end of 2017, Solovyov also said, adding that demand for aluminum remained stable.

(56.6876 rubles – U.S. $1)

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