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Ukrainian Property Fund continues litigation with Rusal
Edited by : AL CIRCLE
2 min read
Ukraine's State Property Fund and Prosecutor General are continuing litigation to renationalize a 68.01% stake in Zaporizhiya Aluminum Smelter (ZAlK), but believe it would make sense to sign a new contract with the stake's owner, Russian aluminum giant UC Rusal.
ZAlK is the only major asset over which a court battle is being waged to return it to state ownership, SPF head Alexander Ryabchenko told Interfax on the sidelines of the Ukrainian Investment Summit being held in London from April 18 to 20.
"Clearly, the investment obligations have not been met. The investor does not intend to fulfil them. Discussions are being held with the government, and court proceedings are underway simultaneously. We don't want to resolve [the problem] through the courts, but the current position [of Rusal] - to not fulfil the obligations and only litigate - is hopeless," Ryabchenko said.
He said "we need to reach a new, realistic agreement, that the investor takes on the obligations and how they will put ZAlK into operation."
Rusal, in turn, said that "all the obligations stipulated by the law are being met in full by the company."
The company said earlier that it is prepared to modernize ZAlK if the smelter will be able to secure a long-term contract for electricity supplies at economically reasonable prices for at least ten years.
"As for further investment, at the current electricity rate not a single producer can even simply operator, let alone develop the smelter. The smelter is carrying steady losses due to the actions of the authorities, which lead to the restriction of activity of any investors," a Rusal spokesman told Interfax.
According to Rusal, after a rate hike in March 2012, the cost of 1 kWh of electricity for consumers in the second voltage class, which includes ZAlK, has risen to nearly 12 cents, which is several times more than the rate in other aluminum producing countries.
At this rate, even with the use of the most advanced technology the cost of electricity per tonne of primary aluminum at ZAlK would be $1,800, Rusal said in a statement.
The average cash price for aluminum on the LME was $2,182 per tonne in March.
ZAlK is the only major asset over which a court battle is being waged to return it to state ownership, SPF head Alexander Ryabchenko told Interfax on the sidelines of the Ukrainian Investment Summit being held in London from April 18 to 20.
"Clearly, the investment obligations have not been met. The investor does not intend to fulfil them. Discussions are being held with the government, and court proceedings are underway simultaneously. We don't want to resolve [the problem] through the courts, but the current position [of Rusal] - to not fulfil the obligations and only litigate - is hopeless," Ryabchenko said.
He said "we need to reach a new, realistic agreement, that the investor takes on the obligations and how they will put ZAlK into operation."
Rusal, in turn, said that "all the obligations stipulated by the law are being met in full by the company."
The company said earlier that it is prepared to modernize ZAlK if the smelter will be able to secure a long-term contract for electricity supplies at economically reasonable prices for at least ten years.
"As for further investment, at the current electricity rate not a single producer can even simply operator, let alone develop the smelter. The smelter is carrying steady losses due to the actions of the authorities, which lead to the restriction of activity of any investors," a Rusal spokesman told Interfax.
According to Rusal, after a rate hike in March 2012, the cost of 1 kWh of electricity for consumers in the second voltage class, which includes ZAlK, has risen to nearly 12 cents, which is several times more than the rate in other aluminum producing countries.
At this rate, even with the use of the most advanced technology the cost of electricity per tonne of primary aluminum at ZAlK would be $1,800, Rusal said in a statement.
The average cash price for aluminum on the LME was $2,182 per tonne in March.
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