RusAl, which is by far the biggest of the three companies, with annual aluminium production of 2.7 million tonnes, is understood to be unhappy with the price being demanded by Sual, its smaller Russian rival.

Another sticking point is thought to be the huge bonus that Brian Gilbertson, president of Sual, will receive if he lists or merges the company. Sources close to the deal said that this bonus was worth about $50 million.

The parties have until the end of the month to agree terms in a deal that is being watched closely by the Kremlin.Sources close to RusAl, which is owned by the oligarch Oleg Deripaska, said that it was willing to pay between $3.5 billion and $5 billion for Sual and up to $4 billion for Glencore, the Swiss-based alumina refiner and trader.

Sual, headed by Mr Gilbertson, the former chief executive of BHP Billiton, is pushing for considerably more — understood to be about $8 billion. Sual is threatening to seek an initial public offering (IPO) in London on its own if RusAl does not sweeten the deal.

Mr Gilbertson, speaking yesterday at the aluminium industry’s annual conference in Moscow, said: “There has been a lot of speculation about Sual and a possible IPO or merger with RusAl and Glencore.

“Sual is considering its options very carefully and we will reach a decision in the near future. But I can forecast that within two years Sual will rank higher among the leaders in the industry than it is today.”

However, Mr Gilbertson’s ability to use an IPO in London as a bartering tool may be hampered by the political realities of doing business in Russia.Sources in Moscow said that President Putin, who has been briefed on the merger by both Mr Deripaska and Victor Vekselberg, Sual’s main shareholder, is refusing to allow Sual to seek an international IPO before RusAl, which is still at least a year away from a London listing.

Mr Putin is thought to believe that RusAl, the much larger company, should represent Russian interests in the international commodity market. He wants to create a global power capable of setting commodity prices and dictating market terms, for the benefit of Russia.

Another difficulty is that RusAl is arguing that the $50 million bonus to be paid to Mr Gilbertson if he pulls off a deal should be paid by Mr Vekselberg, who has agreed the bonus. A further potential glitch is the choice of chairman of the merged group. Mr Gilbertson is thought to want the job, but the Kremlin would prefer a Russian.

The RusAl-Glencore merger is progressing in a less heated environment. The companies have been in talks for about a year and RusAl has effectively completed its due diligence.

RusAl has brought in a number of Western executives to help with a shake-up to meet stock market requirements. After a merger the company could list with a market capitalisation of up to $30 billion.

A merger of RusAl and Sual would create the largest aluminium producer in the world, with at least 3.7 million tonnes of production a year, overtaking Alcoa, of the United States, and Alcan, of Canada, which produce 3.5 million tonnes each.

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