On the surface, it looks like another nice development story for a boom state – Russia’s giant aluminium company, Rusal, is negotiating with the Queensland Government to build a baseload electricity generator to supply a new aluminium smelter. All up, a $3.5 billion investment.

That’s according to the Oz’s Nigel Wilson who’s being jollied around Russia at present courtesy of Rusal.

The other way of looking at the story though is that Australia is going to be subsidising Rusal with our cheap coal-fired electricity whoever pays for the generator as we’re the ones who at some stage have to own up to the greenhouse cost. Not under this government perhaps, but an accounting it looming out there somewhere. Reports Wilson:

Alumina division director Pavel Ovchinnikov said in Moscow that the company was looking to build a plant with between 500 megawatts and 1100 megawatts capacity, which could be fuelled either by Queensland coal, natural gas from Papua New Guinea or by coal seam methane.

Rusal in June entered an agreement with the Queensland Government to investigate power options after the aggressive company, which plans to be the No1 aluminium company in the world by 2013, decided not to take part in the bidding process for bauxite leases at Arukun on Cape York….

Mr Ovchinnikov conceded that Queensland electricity could not be supplied at the incredibly low price of under US1c a kilowatt/hour that Rusal obtains from hydro operators in Russia, which gives it a competitive edge internationally.

But, he said, Rusal hoped to obtain supplies in Queensland at around 4c a kilowatt/hour.

Last time I looked, the PNG gas looked less and less a goer – and we all know what the cheapest source of electricity is in this country. And Russia has no shortage of gas itself. Sounds to me like it doesn’t make much sense unless it’s coal-fired.

As previously reported, there is an Australian connection with Rusal. Former WMC boss Andrew Michelmore is a deputy-chairman and Brian Gilbertson of BHP-Billiton fame is seeking the top job through a merger with Sual, which he chairs. Both know all about Australia’s greenhouse policy, or lack thereof.