The American company will not be included in the Komi-Aluminium project

non-ferrous metallurgy
The American company Alcoa has finally abandoned participation in the Komi-Aluminium project to build an alumina plant for processing bauxite from the Sredne-Timan deposit. This was stated on Friday by the Chairman of the Board of Directors of OJSC SUAL-Holding, Viktor Vekselberg. Thus, Alcoa was actually left without Russian projects: its other major deal, the purchase of the Belokalitvensky Metallurgical Production Association (BKMPO) and the Samara Metallurgical Plant (SMZ), was frozen by the Federal Antimonopoly Service.
Kommersant wrote that Alcoa would not take part in the Komi-Aluminium project on September 14, after OAO Gazprom refused to sign a quadripartite agreement with RAO UES of Russia, OAO SUAL, and Alcoa on fixing electricity prices for Komi-Aluminium enterprises. On Friday, Viktor Vekselberg, head of the board of the SUAL management company, announced a “divorce” from Alcoa at a press conference in Yekaterinburg.
According to Mr. Vekselberg, in addition to problems with electricity tariffs, “Alcoa is now more interested in participating in the project for primary aluminum than for alumina.” SUAL previously announced its intention to complete the development of a feasibility study for the Komi-Aluminium project in November 2004.
The construction of the complex for the production of primary aluminum, which Mr. Vekselberg is talking about, as part of the Komi-Aluminium project, will begin only after the bauxite mine and alumina refinery are put into operation. However, earlier Alcoa official representative Kevin Lowry told Kommersant that the company would enter the Komi-Aluminium project only if it received fixed electricity tariffs for 20-25 years. And Gazprom has already stated (see Kommersant on September 14) that it will not fix gas prices for the Pechora State District Power Plant, which should provide energy not only for the alumina plant, but also for the aluminum plant.
Officially, Alcoa has so far refused to participate only in the alumina refinery project. However, judging by Mr. Lowry's comments, the company will announce a complete withdrawal from Komi-Aluminium as soon as SUAL receives an official response from Gazprom. A source in the gas concern previously told Kommersant that a response to the aluminum makers would be sent in the near future.
Viktor Vekselberg explained on Friday: “We will implement the alumina project either independently or with some other partner.” He also noted that the issue of increasing financial participation in Komi-Aluminium is being considered with the largest potential creditor of the project - the structures of the European Bank for Reconstruction and Development and IFC.
The exit from the Komi-Aluminium project is the second time in six months that Alcoa has had to dramatically change its plans in the Russian market. Another project of the American company in Russia is the purchase of two enterprises owned by Russian Aluminum - the Belokalitvensky Metallurgical Production Association (BKMPO) and the Samara Metallurgical Plant (SMZ). Back in May, Alcoa submitted an application to the Federal Antimonopoly Service (FAS) to purchase the legal entities that formally own SMZ and BKMPO - Prime-Alum and the Russky Prokat trading house - and expected to receive approval of the transaction by June 30. However, the FAS has not yet issued permission for the transaction, without explaining the reasons.
According to unofficial data, the department put Alcoa in a dead end, demanding that it provide complete information about its owners according to Russian standards as soon as possible. Sources close to the deal give various reasons for delays in Alcoa's request. According to one version, the FAS is embarrassed by the presence of defense government procurement capacities at BKMPO and SMZ; according to another, government agencies do not like the participation of intermediaries affiliated with Rusal in the deal. Yesterday, Rusal told Kommersant that, “as before, they are awaiting the decision of the FAS.”
The Alcoa press service refuses to comment on either the exit from Komi-Aluminium or the reason for the delays in the deal with Rusal. The FAS press service told Kommersant yesterday that the decision on Alcoa “has not yet been made.” If Alcoa refuses, it will have to formulate its strategy towards Russia from scratch. Kommersant will monitor developments.
MARIA Kommersant-CHERKASOVA, Ekaterinburg; MARIA Kommersant-MOLINA, DMITRY Kommersant-BUTRIN, NATALIA Kommersant-SKORLYGINA

Newspaper "Kommersant" No. 179/P dated September 27, 2004, page 13

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Alcoa has nothing to do in Russia