Rusal may invest 150 mln euro in Nadvoitsy, buy smelter's electricity supplier
PETROZAVODSK. April 30 (Interfax) - UC Rusal plans to acquire a TGK-1 asset, Ondskaya Hydroelectric Station, which currently supplies electricity to one of its production facilities, Nadvoitsy Aluminum Smelter in Karelia, the head of the internal republic, Alexander Khudilainen, told journalists on Tuesday.
Rusal also plans to invest 150 million euro to retool production at the Nadvoitsy smelter.
Rusal management had previously planned to close the Nadvoitsy smelter because it was losing money. However, it will now continue operating, as a producer of aluminum foil and aluminum powder. Investment to modernize production is expected to total about 150 million euro. Rusal will raise a loan from Vnesheconombank (VEB) to carry out the project.
"We were able to reach an understanding during negotiations with Rusal chief executive and general director Oleg Deripaska, who visited the facility on April 7," Khudilainen said. "After that we were able to arrange a meeting with President Vladimir Putin and proposed options for preserving the enterprise," he said.
The president arranged for a meeting to be held between representatives of Rusal, Gazprom , Federal Grid Co , and Russian Grids that agreed an action plan.
"The essence is that the volume of aluminum production will be maintained at about 35,000 tonnes. Available space will be used for milling equipment to produce roughly 5,000 tonnes of aluminum powder. About 30,000 tonnes will be used to make foil," he said.
Organization of the aluminum processing will enable creation of 200-250 jobs.
In order to reduce production costs, a large part of which is the electricity, the meeting participants agreed that Rusal should buy the Ondskaya Hydroelectric Station, 100% of whose output is consumed by the Nadvoitsy smelter.
The Energy Ministry and Economic Development Ministry have until May 6 to draw up the terms for organizing a valuation of the Ondskaya station's sale.
Rusal is to prepare and submit to VEB an application for financing the organization of aluminum foil and powder production at Nadvoitsy.
The smelter produces 81,000 tonnes of aluminum a year. Closure of the plant would put about 800 people out of work.
Rusal had previously announced plans to reduce primary aluminum production to 275,000 tonnes a year by 2018. By the end of 2012, it expected to reduce primary aluminum production by 150,000 tonnes, at the Nadvoitsy, Bogoslovsky, Volkhov and Novokuznetsk. The remaining reductions were to be conducted in stages, including electrolysis production at Nadvoitsy and Volkhov by 2015 and the 3rd and 4th blocks at Novokuznetsk by 2018.
However, the state intervened last year, preventing the closures out of the need to retain jobs at core enterprises in the monocities.
