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. Last Updated: 07/27/2016

Trans-World Threatens to Halt Work On Smelter

ALMATY, Kazakhstan -- British-based metals trading firm Trans-World Group has threatened to suspend its large aluminum project in Kazakhstan where it says an unauthorized group has illegally taken control of its business.

Sergei Sukholinsky-Mestechkin, a Trans-World director, said Monday from Moscow that the move was due to the company's loss of control over the Alyuminii Kazakhstana aluminum smelter in the north of the former Soviet republic.

"The situation at Alyuminii Kazakhstana is out of control and its management has been illegally seized by a group of persons unauthorized to represent our company," he said.

"We are being forced to suspend work on this project," he added. "We do not say that we stop work altogether, but stress that further work on the project appears to be impossible."

The $1.2 billion project aims to build the first aluminum smelter in Kazakhstan, a resource-rich Central Asian state of 16.7 million. Trans-World has pledged to invest $200 million, attracting the rest from a consortium of banks.

The smelter, to be built near Alyuminii Kazakhstana, which produces alumina to feed the plant, was designed to have a capacity of around 200,000 tons of primary aluminum a year.

Trans-World says it has invested a total of around $750 million in its operations in Kazakhstan.

But Trans-World Group, which owns majority stakes in the Aksu Ferroalloys Plant, Alyuminii Kazakhstana, Sokolovsky Iron Plant and the Eurasian Energy Corp., claims three Kazakh nationals based in Belgium have used fraud to replace the management of its operations in Kazakhstan.

On Dec. 1, Trans-World filed a criminal suit in Brussels against the three Kazakh nationals, alleging several hundred million dollars of damages and asking the Belgian justice system to take appropriate action, including freezing the individuals' assets and restitution of the misappropriated funds.

"These three enjoy the support of some officials, who misled the state regarding their authority to represent the company [Trans-World]," Sukholinsky-Mestechkin said.

The three could not be reached for comment Monday.

While the criminal suit in Brussels goes on, London's High Court last week barred the three Kazakh nationals from presenting themselves as directors of one of Trans-World's operating companies, Whiteswan Ltd.

Whiteswan holds 56.47 percent of Alyuminii Kazakhstana. Another Trans-World official said by telephone from London that two similar suits are going on in the British Virgin Islands where the group's other two subsidiaries -- Japan Chrome Corp. and Ivedon -- are registered.

JCC owns a 58.8 percent stake in the Eurasian Energy Corp. and has 57.15 percent in TNK Kazkhrom, whose main component is the Aksu Ferroalloys Plant. Ivedon has a 50.5 percent share in the Sokolovsky Iron Plant.

But even if Trans-World wins all the suits, it still does not have the two-thirds of voting shares in its Kazakh plants needed to make management changes.