Russian Metal Producers Eye Hydro Power
Date: 12-Sep-07
Country: RUSSIA
Author: Olga Popova and Robin Paxton
Vyacheslav Sinyugin said metals producers had approached the
hydroelectric power firm, which groups 49 power stations across
Russia, with a view to forming projects similar to its Boguchany
joint venture with United Company RUSAL in Siberia.
"We are in negotiations with a small circle of potentially
interested investors," Sinyugin said at the summit in Moscow. He
did not name the companies, but said they included international
firms.
"Major energy consumers are very important clients for
hydroelectric companies the world over. Russia is no exception."
Sinyugin said large energy consumers such as metals
producers were attracted by stable prices for long-term supply.
"What attracts these clients? First and foremost, price
stability. The only factor influencing prices is tax payments,
compared with fuel prices that can fluctuate widely.
"Secondly, if you refer to existing stations, it's the
attractive prices."
Hydro OGK posted a tenfold increase in net profit to US$831
million last year and will become the world's second-largest
hydro power generating company, behind Canada's Hydro Quebec, on
completion of a restructuring programme.
The company is being spun off from former Russian power
monopoly Unified Energy System (UES) under sector reforms aimed
at increasing competition.
Hydro OGK and United Company RUSAL, the world's largest
aluminium producer, are building a power and aluminium complex
in Siberia that will produce 600,000 tonnes a year of the metal
from 2011 using hydroelectric power.
Norilsk Nickel, the world's largest nickel miner, has
acquired a majority stake in OGK-3, another of the companies
being spun off from UES.
Hydro OGK also signed a memorandum of understanding last
year with Hydro Aluminium, a unit of Norwegian energy and metals
group Norsk Hydro, and SUAL, the Russian aluminium firm since
folded into United Company RUSAL.
The firms at the time proposed a 600,000 tonnes a year
aluminium smelter in the Russian Far East that would be supplied
by Hydro OGK plants in the region.
