Russian hydropower giant RusHydro’s board of directors will consider participating in construction of aluminum giant UC RUSAL’s Taishet Aluminum Smelter on April 19, after a strategy committee has discussed it.
The participation plan includes creation of a special purpose vehicle with RUSAL to raise $1.1 billion project financing, of which about $200 million will be spent to compensate RUSAL’s historic costs. Sberbank, Gazprombank, and Vnesheconombank (VEB) may grant the loan at 7.75% at the investment phase of the project and at 7.25% at the operating phase.
RusHydro will have to buy 50% in the SPV for $288 million with part of the sum compensated by RUSAL’s purchase of 42.75% in the Irkutsk power grid company for $88 million. RusHydro also wants to be free from guaranteeing liabilities under VEB’s loan on the Bogushanskaya hydropower plant.
The Taishet plant’s capacity is seen at about 430,000 tons of aluminum per year with the first stage’s capacity reaching 215,000 tons. Finalization of the plant’s construction will cost $700-800 million.
RusHydro sees construction of the second stage of Boguchansky aluminum smelter more profitable than the Taishet plant.
Taishet’s net present value will be positive only if aluminum prices at the London Metal Exchange grow by at least 2% above a long-term consensus forecast, if power prices in Siberia grow by at least 6%, if capital expenditures of the project do not skyrocket, and if the project financing accounts for 65% of the project’s costs.
The baseline scenario for the plant’s development sees power prices in Siberia rising by only 3%, and then RusHydro may receive 10 billion rubles of losses from the plant, while construction of the second stage of the Boguchansky aluminum smelter will bring it 3.7 billion rubles of profit even under these conditions.
The Energy Ministry also thinks that RusHydro’s participation in construction of the Taishet aluminum smelter may have a negative impact on the company. (Prime/Ukrainian metal)
