Rusal cuts output by 8% amid weak aluminium prices

Russia’s United Company Rusal , the world’s biggest aluminium producer, said its drive to cut output had helped it to rein in costs and it might take further steps to reduce overheads due to weak aluminium prices.

Rusal, led by Russian tycoon Oleg Deripaska, said on Thursday its programme to reduce output had allowed it to save $40 per tonne in the cash cost of aluminium.

The firm’s aluminium costs per tonne were $1,911 in the second quarter, while aluminium futures were trading around $1,841 per tonne on Thursday.

As well as low aluminium prices, Rusal has the expense of servicing its net debt of around $10 billion.

“Rusal continues to react to the current market conditions and may consider further actions to improve its cost position in the industry,” Vladislav Soloviev, its first deputy chief executive, said in a statement.

Rusal has cut aluminium production by 324,733 tonnes, or by 8 percent of 2012 production volume, the company added. This compares with its goal to cut output by 357,000 tonnes this year as a whole, Reuters reports.

The company also plans to cut 2014 aluminium production by 647,504 tonnes, or by 15 percent of 2012 volume.

As of Oct. 17, aluminium production had been mothballed at the Volgograd, Urals and Volkhov aluminium smelters, as well as at the first phase of the Novokuznetsk smelter and at the Alscon smelter in Nigeria. Aluminium production has been mothballed at some potrooms of the Bogoslovsk smelter and of the Nadvoitsy smelter as well.

Output cuts at the above-mentioned facilities will amount to 247,009 tonnes in 2013 and will result in an output decrease of 516,062 tonnes in 2014, Rusal said.

Production volume at the Sayanogorsk, Irkutsk, Novokuznetsk and Khakass aluminium smelters has also decreased. Output reduction at these smelters will amount to 77,724 tonnes in 2013 and an expected 131,442 tonnes in 2014, the company added.

In early October it also postponed the start of production of its Boguchansk aluminium project until June 2014.