Russian aluminum giant UC RUSAL wants to buy one of Gazprom Energoholding’s hydropower plants in the Murmansk region in an attempt to reduce the cost of power supplied to its low margin aluminum plant in the town of Kandalaksha.
RUSAL CEO Yevgeny Nikitin sent a letter to the region’s governor Andrei Chibis with a proposal to support Kandalaksha Aluminum Smelter. The company wants to acquire a 155-megawatt (MW) Niva GES-3 hydropower plant from Gazprom Energoholding’s subsidiary Territorial Generating Company-1 (TGC-1). He also asked for reduced tariffs at the local power market, the business daily said.
The Niva GES-3 is one of the six plants of a hydropower plant cascade on the Kola Peninsula. RUSAL suggested creation of a power-metallurgy complex based on the Niva GES-3 plant that would operate own or rental power production equipment so that RUSAL’s smelter got power without any surcharges collected from industrial power consumers.
A source familiar with the matter said that the parties were yet to discuss the legal side of the deal, but it should allow the smelter to buy power at production cost.
RUSAL also discusses a new non-regulated contract with power supplier Rosenergoatom as the previous deal expired in 2018. The discount price under a contract was subject to a formula tied to the prices of aluminum and power, with the maximum discount reaching 30%, a source in Rosenergoatom reported.
But now RUSAL says that the companies should prolong the contract until 2022 and reduce the price of power to 0.7 rubles per kilowatt-hour as prices for alumina have grown and prices for aluminum have contracted as compared with the prices in 2018.
A Gazprom Energoholding representative said that the company was aware of RUSAL’s offers but was against the idea of selling the hydropower plant. Finnish power producer Fortum, the owner of 29.45% in TGC-1, and RUSAL declined to comment, while a spokesperson for the Murmansk region’s administration said it was unaware of the proposal. (Prime/Ukrainian metal)