UC RUSAL, RusHydro postpone Siberian smelter launch

MOSCOW, April 1 (Reuters) - The word's top aluminium producer United Company RUSAL and Russian hydro-electricity giant RusHydro said on Wednesday that they had agreed to postpone launching a major aluminium smelter for two years. But the two partners in the Siberian Boguchany energy and metal project said that in spite of the global economic crisis they were still working on launching next year a utility aimed to feed the plant in accordance with the initial plan. "UC RUSAL and RusHydro have agreed to postpone to 2012 the launch of the first stage of the Boguchany aluminium plant due to a sharp fall in demand for aluminium on the world market," RUSAL said in a statement issued to Reuters. But we continue working with RusHydro in order to launch the hydroelectric power station in time, it added. State-controlled RusHydro confirmed that the partners were trying to stick to the initial launch plan for the 3,000-megawatt installation. "We have serious financial problems in implementing the project. But we believe that there is no reason to freeze the construction of the utility and hope that it will be launched in time," RusHydro spokesman Yevgeny Druzyaka said. In 2007, RUSAL and RusHydro started building the $2.3 billion Boguchany smelter, which they believed would produce 1 million tonnes of the metal used in cooking foil, beverage cans, cars and construction within 5 to 7 years. Hit by the global liquidity crunch and burdened by debt, RUSAL announced major cuts in its output and staff last month, with further cost-cutting measures detailed last week. [ID:nL5747714] [ID:nLP7750]. But last month it insisted it would concentrate on implementing the Boguchany project. RusHydro has also announced a 17 percent cut in its staff in November [ID:nLE697846] and a cut in its 2009 capital expenditure plans this month. [ID:nLC956287] Industry sources told Reuters a postponement in the launch of the power station could not be ruled out. One source said that banks had refused to provide project financing as they did not have sufficient guarantees that the electricity produced by the utility would find consumers before the launch of the smelter. The source also said that the government had cut part of its investments in the project for 2009 and investment volumes for 2010-2012 were not yet clear. Another source added that the decision on the launch of the power station would depend on the government, adding that it could be taken at a special meeting on the power sector that is now scheduled for April 9 after several postponements.