The shadow of United States sanctions has soured a deal between Russian aluminium titan U.C. Rusal and compatriot power company RusHydro to build a new aluminium smelter in Siberia.
RusHydro’s chairman Nikolai Shulginov told the media on Monday that the project, which the two companies began work on twelve years ago, has gone from tentative to the proverbial drawing board.
“The thing is that the situation has been changed,” he said about the Taishet project.
“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.
“Now, taking the sanctions into account, everything has changed. We have to get back, maybe to recalculate our model: what will happen to the aluminum prices, to the electricity prices… There are lots of ‘buts’.”
The project kicked off in 2006, but a dip in aluminium prices led to its suspension 3 years later. It was resurrected last year after aluminium prices recovered, and RusHydro’s board voted to join the project just prior to the imposition of sanctions earlier this year.
Russian state-owned development bank VEB also signed on to the project prior to the sanctions on Rusal, but in the interim the bank put funding on stand-by until sanctions can be resolved.
The Taishet smelter has a planned nameplate capacity of 428,500 metric tons per annum. The project has raised US$1 billion in funding, with VEB providing 30 percent of the total.
The United States Treasury Department imposed sanctions on Rusal, En+ Group, and founder Oleg Deripaska in April as part of a group of several Russian businessmen, politicians, and companies. The United States government alleges that the group has been engaged in a litany of activities meant to destabilize countries around the globe, including allegedly influencing the 2016 presidential elections in the United States.