According to Rusal, an on-going situation surrounding illegal attempts to challenge Rusal’s rights of ownership to the plant and the recent decision of the Supreme Court of Nigeria to cancel the sale of Alscon shares to Rusal have impeded long-term investment in the smelter.
The ownership issue has made it impossible to sign long-term contracts, claims Rusal, and has hindered development and obstructed the implementation of structural, production and material improvements at the facility.
Depressed aluminium prices – which declined by 15.7% in 2012 – have added to the woes of the industry as whole and has led to a significant share of global production falling below breakeven point, claims Rusal.
The Russian aluminium giant has focused on long-term efficiency and cost control, but it claims that a 'negative market environment and low LME price level' have affected the operations of its subsidiaries.
Alscon will continue to generate electricity while Rusal will focus on securing continuous gas delivery, obtaining judicial determination that Rusal is the rightful owner of company, and preparing to restart operations.
Rusal insists that its decision to suspend operations will not affect social stability or living standards in the region. Financial compensation will be provided for 'those employees who terminate their employment' at the Ikot Abasi plant and those residing in Alscon's housing estates will be allowed to remain there. All contracts with local companies will be honoured and social programmes (for healthcare, education, youth support and sports) will continue.
According to Rusal, 'smelting operations will resume as soon as the legal uncertainty has been resolved and the continuous power supply has been secured.'