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. Last Updated: 07/27/2016

Dutch Firm: Azeri Aluminum Deal Terminated

BAKU, Azerbaijan -- Dutch firm Fondel Metal Participation said Monday that Azerbaijan's government had terminated an agreement for it to manage the country's only aluminum smelter and other aluminum assets.

Fondel said in a statement the government had ended the agreement earlier this month.

"We do not know the reasons," Peter Booster, one of Fondel's directors, said. "We have started the process of international arbitration."

Azerbaijan's First Deputy Prime Minister Abbas Abbasov declined to comment on the Dutch company's statement.

Last Wednesday, Abbasov said Russian Aluminum might invest $1 billion or more in building a new aluminum plant in Azerbaijan.

On Monday, he said RusAl could create 5,000 to 6,000 jobs "at the existing facilities." He declined to comment further.

RusAl denied it had any interest in the existing Azeri assets.

"The company has not demonstrated any interest toward the aluminum and alumina assets in Azerbaijan and does not consider them as objects for RusAl's business development in the republic," RusAl said in a statement issued to Reuters.

Rotterdam-based Fondel won a tender to manage the Azeraluminium firm for 25 years in 2000.

The deal includes the existing Sumgait smelter near the capital, Baku; the Ganja alumina plant 360 kilometers west of Baku; and an alunite raw material mine.

RusAl, the world's third-largest aluminium producer, said last week it was considering building an aluminum smelter in Azerbaijan with annual capacity of 300,000 tons.

Azerbaijan's sole aluminum smelter produces around 30,000 tons of the metal a year.

The country produces over 400,000 tons of alumina, an intermediate product from which aluminum is made.

RusAl is owned by billionaire Oleg Deripaska.