UC RUSAL proposes Siberian smelter relaunches

* Proposes launching Boguchany, Taishet smelters on time * Initial aluminium capacity a reduced 150,000 tonnes each * May cut 500,000 tonnes of capacity elsewhere * Wants partner RusHydro to share construction costs MOSCOW, April 16 (Reuters) - The world's top aluminium firm, UC RUSAL, has proposed re-launching two Siberian smelter projects to provide an outlet for a major hydro power station it is building with power giant RusHydro (HYDR.MM). Proceeding with the construction of the Boguchany and Taishet smelters would be a reversal of RUSAL's earlier decision to postpone the projects. The company, which has debts of around $14 billion, is considering cutting output by up to a fifth. RUSAL spokeswoman Vera Kurochkina said the proposed relaunch of the projects was closely linked to the development of the Boguchany hydro power station. "The launching of the two plants provides a guarantee for banks that the energy will be consumed so that they could provide financing for the completion of the power station," she told Reuters when asked about the timing of the move. Russian Prime Minister Vladimir Putin said on Wednesday that electricity companies must stick by their investment programmes despite the economic crisis which is expected to slash Russia's electricity consumption by nearly 10 percent this year. To compensate for the 300,000 tonne growth in output from the new smelters, UC RUSAL may cut production elsewhere by 500,000 tonnes, the company said in a statement on Thursday. UC RUSAL, controlled by billionaire Oleg Deripaska, is building the Boguchany project together with state-controlled RusHydro. The project includes a new smelter and the completion of a half-built power utility. UC RUSAL is struggling with a decline in aluminium prices and this month said it was postponing for two years construction of the $2.3 billion Boguchany smelter, which is expected eventually to produce 1 million tonnes of aluminium annually. [ID:nL1118345] In its statement on Thursday, UC RUSAL said it had proposed to the government that it restart construction of the 20 percent built Boguchany and half-built Taishet so that they could both reach an initial nameplate capacity of 150,000 tonnes. At the same time, RUSAL proposed cutting capacity by 500,000 tonnes from the current 3.9 million tonnes by closing "ecologically imperfect and economically inefficient" production units, the company said. UC RUSAL said it was prepared to supply $150 million to cover half of the cost of building the Boguchany smelter with reduced capacity on the condition that RusHydro provides an equal sum to finance the other half.