Vekselberg is throwing a party to celebrate the opening of a 160 Km (100 mile) rail line - the first to be built in Russia with private funds since the nineteenth century - linking the country's largest bauxite mine to Russia's vast state network.

Having built the rail link, he has his eyes on a more ambitious goal - constructing a refining and smelting complex near Timan at a cost up to $1.8 billion to turn the grey bauxite ore into primary aluminium ready for export to metal-hungry industries in the West.

Vekselberg is chairman of SUAL Holding, which controls Russia's second-largest aluminium business and is ranked ninth in the world. He badly needs foreign partners to make his dream come true.

Timan lies in the Komi Republic, a sparsely populated territory bordering on the Urals mountain range.

Production at the Timan deposit, which was discovered in the 1960s, could rise to more than 2.5 million tonnes of bauxite from 700,000 at present. But SUAL does not currently have the refining and smelting capacity to process it.

The deposit has proven reserves of 250 million tonnes and another 250 million tonnes in probable reserves, making it the largest on the Eurasian landmass.

SUAL is following a path trodden by other Russian companies since a 1998 financial crisis to woo investment from abroad. It is hiring foreign managers to fill key positions in the group and introducing international accounting standards.

"The idea is to sell shares in SUAL International to international investors," said Aleksey Goncharev, director of SUAL's media and investor relations. "For that we need transparent financials."

SUAL is owned by the Renova Group, which is partly controlled by Vekselberg.

BRINGING IN FOREIGN INVESTORS

The company also needs to persuade foreign investors that building a refinery in the harsh climate of the Komi Republic to turn the bauxite into alumina and erecting a smelter nearby to transform the alumina into aluminium is good business.

"We have to demonstrate that our levels of technology, environmental protection and management expertise are world class," said William Shor, a former investment banker who is vice president of SUAL's New Projects Group.

"We want an industrial partner who can give us more than money," he said. French smelter technology was regarded by SUAL as state-of-the-art, a hint that the Russian company might want French aluminium group Pechiney as a partner.

The Mozal smelter complex in Mozambique, owned by BHP Billiton and Mitsubishi Corp. in partnership with Mozambican government and a South African investor and launched in 1998, is seen as a model by SUAL, said Shor.

He said he believed low labour and energy costs would allow construction of a refining and smelting plant in the Komi Republic at significantly less than the average price for similar projects elsewhere in the world.

"In Russia we can build cheaper and at a significant discount to the world average," he said.

CHEAP BUILDING COSTS

The world average for building an alumina refiner is $700 to $1,000 per tonne of refining capacity and $4000 to $5,000 per tonne of smelting capacity for an aluminium smelter, said Shor. "We can build it at below the low end of the world average price," he added.

The availability of cheap electricity from a Soviet-era power station in the nearby town of Pechora with 500 Megawatts of spare capacity would also ensure that operating costs of the complex would be highly competitive if it is built.

SUAL's Goncharev said the nearby Pechora power plant had sufficient spare capacity to supply an alumina refiner but would have to be upgraded if a smelter were also built.