LONDON, May 20 --Russian aluminum producer United Co. Rusal PLC (0486.HK) is seeking natural gas price concessions from the Nigerian government in order to boost output at its Nigerian aluminum smelter, a Nigerian government official said Wednesday.
In Nigeria "natural gas is sold at a commercial rate...[but] they gave concessions in the past," to the aluminum smelter now owned by Rusal, Goni M. Sheikh, the Permanent Secretary for Nigeria's Ministry of Mines and Steel Development said on the sidelines of the World Mining Investment Congress in London.
Rusal is currently operating its Nigerian aluminum smelter at an output rate of about 67,000 tons annually, depending on gas input, Sheikh said.
The smelter was shut in 1999 following unresolved issues related to gas supplies and transportation problems. After Rusal acquired a 77.5% stake in the smelter in 2007, the plant was modernized and will eventually produce 197,000 metric tons a year.
Sheikh, who had a meeting with Rusal about a month ago, said the company told him it needs to buy gas at a cheaper price than the commercial rate to boost production at the smelter. Once production has increased, the company will then use the profits from the aluminum sold to expand the smelter's output capacity. Expanding capacity involves dredging a river and tapping new sources of water, Sheikh added.
Sheikh said Rusal didn't express any interest in disposing of its stake in the smelter.
Rusal wasn't immediately available to comment.