City, Siberian Aluminum Consider Alliance

Siberian Aluminum is nearing an agreement with the Moscow city government that could see mogul Oleg Deripaska financing Mayor Yury Luzhkov?s projects in exchange for access to the capital?s aluminum-hungry construction market.

Not so long ago it would have been hard to imagine that the aluminum tycoon would simultaneously align himself with Sibneft magnate Roman Abramovich, long believed to be affiliated to the circle of Kremlin insiders known as the "family," and with Kremlin rival Luzhkov.

Siberian Aluminum and Sibneft shareholders this year created the Russian Aluminum holding that controls about 75 percent of the nation?s aluminum production.

Vladimir Malishkov, head of City Hall?s department for the consumer market and services, said an agreement on a social and economic partnership between Moscow and Siberian Aluminum would be signed "in the next two to three weeks."

Under the agreement, Deripaska?s holding would be entitled to participate in "the task of strengthening the Moscow foodstuffs market as well as the construction, renovation and use of premises designated for trade and social food supply."

Siberian Aluminum confirmed that it was considering a deal with the city.

"Moscow has indeed suggested that we invest in a number of city projects, but at this stage it is not easy to say how exactly we will participate," a Siberian Aluminum manager said. "We don?t plan to get involved in a totally new type of business such as retail. But we are prepared to supply aluminum construction materials and other products."

He said total investment in Luzhkov projects would be determined after an agreement has been signed.

No agreement will be implemented before the start of next year, the Siberian Aluminum manager said.

An agreement would be the first of its kind that Siberian Aluminum has signed with regional authorities.

Siberian Aluminum first suggested setting up an alliance two and a half months ago at City Hall, the company said.

"Our group needs stable sales ? foil, construction using materials made from aluminum, buses, etc. Moscow is a very promising market," a Siberian Aluminum representative said.

The aluminum firm may be looking to Moscow as a potential market for the goods produced at its two most recent purchases ? the Pavlovsk bus factory and the Belokalitvensk metallurgical production association.

One stipulation of any agreement will be that City Hall will assist Siberian Aluminum with sales, officials said.