Rusal cut Q1 Al output by 7.2% to save cash

Troubled aluminium producer United Co Rusal reduced production by 7.2% in the first quarter of the year compared with the corresponding period of last year as part of a cost-cutting programme.

It also cut alumina output by 25% to 2.1 mln tn and bauxite production by 34% in response to poor global demand for aluminium, the company, owned by Russian oligarch Oleg Deripaska, said.

The curtailments in the first quarter generated savings of $554 mln and the company anticipates that this figure will rise to $1.1 bln by the end of the year.

The funds will be used to pay off its debt of $14 bln — $7 bln of which it owes to international lenders.

The company has until next month to re-negotiate payment terms of its debt with foreign banks.

Production was cut at high-cost operations and smelters that were environmentally unsound, Rusal said.

The majority of aluminium was curtailed at its Urals smelters, with a cut of 3.2% at its Siberian plants. Alumina production fell due to the suspension of its Alpart and Windalco operations, it added.

“Electricity costs were reduced by more than 19% as a result of signing long-term energy contracts, optimisation of the share of the regulated sector as well as introducing energy-saving technologies,” the company said in a statement.

Raw materials expenses dropped by 35% thanks to “favourable terms” when purchasing raw materials, it added.