MOSCOW/LONDON, Feb 20 (Reuters) - Russian state development bank Vnesheconombank, or VEB, is considering participating in the possible creation of a government state stock of aluminium, Interfax news agency reported on Thursday, citing VEB Chairman Vladimir Dmitriev.
Russia’s loss-making aluminium giant Rusal has been a proponent of creating such a fund since last year, as it has been hit by weak aluminium prices and has a heavy net debt level of around $10 billion.
Rusal has offered to buy 1 million tonnes of aluminium worth $1.7 billion at current prices for the stock.
“This issue is being discussed,” Dmitriev told reporters in Moscow on Thursday, in response to a question on whether the creation of the fund had been being discussed and whether VEB might be involved in it.
Creation of an aluminium stock has been controversial. Deputy prime minister Arkady Dvorkovich said in August the country’s budget does not have the money for such an effort. The source of the project financing remains an open question, Dmitriev’s comments indicated on Thursday.
“It’s one thing to be an operator, but another to finance the creation of this fund. This activity (financing) is not a core activity for VEB,” Dmitriev said.
Rusal remains positive towards the project. The company’s press service said in an email on Thursday that VEB may be an agent to purchase aluminium for the state fund.
In the event that the government approves creation of the aluminium state fund by end-March, purchases may start in July or August, Rusal said. The company has offered to stockpile the metal at its warehouses and to buy it back in seven years.
Several Russian metals and mining companies proposed that the government create state metals stocks after the financial crisis in 2008 but the idea was never realised. (Reporting by Polina Devitt and Susan Thomas, editing by Megan Davies and David Evans)