MOSCOW (Reuters) - Russian aluminium giant Rusal has delayed the Dian-Dian bauxite project in Guinea until the end of 2017 amid weak aluminium prices, the company said in a statement on Thursday.
Dian-Dian is the world's largest bauxite deposit with reserves of 564 million tonnes. Bauxite is used to produce alumina, which is used in aluminium production.
Rusal, the world's largest aluminium producer, and Guinea have signed an annex to the Dian-Dian concession agreement, which splits the development of the bauxite mine into three stages, the Russian company said in the statement.
They also agreed to resume operations at the suspended Friguia alumina complex.
The first stage at Dian-Dian should be completed by the end of 2017 and foresees the construction of a mine with an annual bauxite capacity of 3 million tonnes, Rusal said.
When launching the project in 2014, Rusal, controlled by businessman Oleg Deripaska, planned to complete the first stage of the project with the same annual capacity by 2016.
It said on Thursday that during the second stage of the project its mining capacity would rise to 6 million tonnes by late 2021 and will have the potential for further increase.
By the end of 2020, the parties will also discuss possible opportunities to build an alumina refinery for with Dian-Dian with an annual capacity of 1.2 million tonnes.
"Taking into consideration the current situation in the global aluminium market, Rusal's management and the Government of the Republic of Guinea have agreed that today there is no economic rationale behind the launch of new refining facilities," Vladislav Soloviev, Rusal chief executive, said in a statement.
"It has been agreed that the focus will be on resuming operations at the existing Friguia facilities and on the stage-by-stage development of the Dian-Dian mine in line with the agreed schedule."
The Friguia bauxite and alumina complex, suspended by Rusal in 2012, will resume operation in January 2017, it added.
Rusal has been hit by weak metal prices and is currently in talks to refinance up to $700 million of its debt. [nL5N17T4J2]
(Reporting by Polina Devitt; editing by Lidia Kelly and David Evans)