Russia's Rusal seen unlikely to start BEMO aluminium project in 2014

Russia's Rusal, the world's largest aluminium producer, is unlikely to start production at its Siberian Boguchansk aluminium project in 2014, the Energy Ministry said on Tuesday.

Rusal, led by Russian tycoon Oleg Deripaska, has already delayed the launch of the 588,000 tonne-per-year Boguchansk smelter several times due to weak aluminium prices.

The project, also known as BEMO, includes an aluminium smelter and a hydropower plant. It is being financed by Rusal and Russian state-controlled hydroelectric power producer Rushydro.

The ministry said in a statement a recent visit by officials including deputy energy minister Vyacheslav Kravhenko showed the Boguchansk hydropower plant was almost ready but the aluminium smelter was not completely ready, "which raises doubts in its launch in the end of 2014".

Rusal declined to comment on the ministry's statement. "Previously investors were talking about starting in the second half of 2014, there is no other decision so far," the aluminium giant said in an emailed comment.

Rusal, with net debt at $10.3 billion at the end of March, is currently talking to creditors over debt restructuring as the situation in the aluminium market has improved.

"As Rusal has not confirmed it, the reason of a (possible) delay remains a question: either the company does not want to hurry while it waits for a further aluminium market recovery, or it is not technologically ready," said Sergey Donskoy, metals and mining analyst at Societe General.