RusAl in talks with Azerbaijan on plant construction

According to RIA Novosti, Geidar Babayev said the talks comprised a range of issues related to the $1-billion project, including the location of the plant, energy supply sources, raw materials and the cost of products.

"We have a positive attitude to the Russian company's proposal to open an aluminum plant in Azerbaijan," Babayev said earlier this month.

RusAl is among the world's top three aluminum and aluminum alloy producers. It exports its products to customers in 40 countries and accounts for 75% of the aluminum produced in Russia and 10% of global aluminum output. The company was established in March 2000, following the merger of some aluminum enterprises operating in former Soviet republics.

The proposal to build the aluminum plant, with an estimated annual capacity of 300,000 metric tons, comes in the wake of a row between Azerbaijan and Dutch company Fondel Metal, which signed a 25-year contract to revive aluminum production in the Caucasus republic in 2001, but which, authorities said, has failed to meet its investment obligations under the contract.

Babayev said the ministry was looking into the problem and that the contract would either be terminated or resumed when Fondel Metal had provided explanations.

In a recent news release, the Dutch company accused Azerbaijani authorities of plans to sever the contract.

"With significant capital investment and effort Fondel transformed two industrial ruins [aluminum plants] into Azerbaijan's largest exporter outside the oil industry," the company said. Fondel also said it had created more than 3,000 jobs in some of Azerbaijan's most economically deprived regions. The company accused the authorities of politically motivated actions in the run-up and aftermath of the November 2005 parliamentary elections, when the state began interfering in the daily operations of Fondel and other companies.

The Dutch company was invited to work in Azerbaijan by ex-Economic Development and Trade Minister Farkhad Aliyev, who was arrested in October 2005 on charges of an attempted coup and embezzlement.