Kommersant quoted a RUSAL source as saying Iran was "one of the possibilities" for its plans to diversify into other countries.

The cost of the smelter, to consist of two potlines of equal size, and a 650 megawatt power station, was estimated at $1 billion, Kommersant said.

Russia, whose biggest gas firm once withdrew from Iran's energy sector due to tightening international sanctions, built the Islamic state's Bushehr nuclear power plant, which joined the grid earlier this month.

The report follows an agreement between Russia and Iran to jointly develop the Mehdiabad zinc and lead deposit in Iran.

Kommersant said that Iranian authorities and the head of state industrial holding Russian Technologies, Sergei Chemezov, agreed to back RUSAL's talks of a Russian-Iranian business cooperation council at the same meeting on Sept. 11 where the zinc agreement was reached.

The talks between RUSAL and the Iranian Mines and Mining Industries Development and Renovation Organisation (IMIDRO) envisages cooperation on production of alumina and industrial mineral nepheline syenite in addition to the construction of the smelter.