Focus on Russian metals firms

Moscow - Confusion surrounded Russian metals companies' plans in South Africa on Friday on the eve of a visit to the resource-rich country by a Russian government delegation headed by Prime Minister Mikhail Fradkov.

South Africa is interested in cooperation with Russia's top aluminium firm RUSAL in building a 750 000-tonne smelter and a 1 300 megawatt power station, the Russian Natural Resources Ministry said on Friday.

"Currently, Rusal is looking for coal deposits and energy sources for further developing this project," minister Yuri Trutnev, part of the Russian delegation, said in a statement.

But Rusal denied involvement in the project.

"South Africa is one of the countries potentially interesting for our business development, but today we have no concrete projects in that country," a company spokesperson said.

South African government officials could not be immediately reached for comment.

Top produce

Rusal, the world's No.3 aluminium producer, is in the process of merging into the world's top producer of the metal with smaller local rival Sual and assets belonging to commodities trader Glencore.

Last September, Trutnev, during a visit to South Africa, said Rusal may agree to build an aluminium smelter in South Africa - a move, according to local officials, could force Canada's Alcan to commit to a long-delayed $2bn investment in a smelter project.

Rusal at the time denied any knowledge of such a plan.

Last November, Alcan Inc, the world's second biggest primary aluminium producer, said it had reached a long-term power-supply agreement with South African state-owned energy firm Eskom for the proposed 720 000-tonne per year Coega aluminium smelter.

Alcan said at the time that if it and partners decided to go ahead with the $2.7bn project, the first metal would be produced before the end of 2010.

Russia's second aluminium producer, Sual, said in September it too was interested in taking part in the smelter project if it could secure sufficient energy resources.

An investment vehicle of Sual's owner Viktor Vekselberg, Renova, owns 49% of South Africa's United Manganese of Kalahari.

Denied problems

It is involved in a project to build a pit with an annual capacity of 1.5-2.0 million tonnes of manganese ore and a ferro-manganese plant with the initial capacity of 250 000 tonnes of the metal.

The natural resources ministry's statement said the project "is facing problems with the energy supplies and with railway communications between the mine and the plant". It did not elaborate.

A Renova spokesperson denied the project faced problems.

The ministry statement said that the building of the pit was expected to start in the third quarter of this year and Renova was finishing a banking feasibility study for the plant.

The deposit is estimated to hold 300 million tonnes of ore with manganese content of 37%, the statement said. Manganese is used to toughen steel. About 80% of world reserves are in South Africa.

Renova is also ready to participate in joint ventures in South Africa to prospect and develop deposits of uranium ore, coal, platinum group metals and other minerals, the statement added.