DUSHANBE, July 29, 2016, Asia-Plus – EurasiaNet.org reported on July 28 that the Tajik Aluminum Company (TALCO) continues to lose money despite production at the aluminum smelter being on the increase.

The Ministry of Finance (MoF) reportedly links the losses to falling prices for the metal on the international market and the rise in cost for inputs.

According to EurasiaNet.org, the MoF said this week that at the end of the first quarter TALCO had outstanding debts of 2.5 billion somoni ($318 million) and that the company was itself owed 465 million somoni ($59 million).

The ministry and international advisors have recommended root-and-branch restructuring for the company and an overhaul of equipment.

In 2007, the company churned out a record 419,000 tons of aluminum.  That fell through the years, down to 121,000 tons in 2014.  Last year, TALCO’s primary aluminum output returned to growth for the first time in seven years, up to 139,000 tons,

EurasiaNet.org says the bulk of the money generated by the plant passes to its tolling partner, British Virgin Islands-registered TALCO Management Ltd, or TML.  TML effectively acts as a financial middleman between TALCO and the world, buying raw materials for the factory and selling its finished product.  TALCO, as a separate legal entity, receives a relatively modest fee for its part in the process.

Although the government touts TALCO as its industrial champion, accounting as it does for around one-third of Tajikistan’s exports, the reality is that the company is also a major debtor to the state.  TALCO plants reportedly eat up around 40 percent of the electricity supply, which is in particularly short supply over the winter, and it often fails to pay for its power bills.

Management at TALCO clearly sees diversification as the company’s way out of the doldrums.

Late last year, the government approved giving the company a 25-year mining license for gold reserves in the Ayni district of the northern Sughd province.

Also, TALCO announced last week that three chemical factories for materials used in the aluminum production cycle will be put into operation next month in Yovon, around 60 kilometers outside Dushanbe.  The purpose of these plants is to provide annual import substitution of goods worth around $126 million, the company said.

Typically, while $37 million for construction of these plants came out of TALCO’s own coffers, the other $88.5 million came courtesy of loans from China’s state-run Eximbank.