INTERVIEW-Venezuela alumina output slides further

CIUDAD GUAYANA, Venezuela, Sept 7 (Reuters) - Venezuela has fallen behind with exports of alumina to clients including Glencore because a lack of investment and low prices for basic materials has hit output at the state-owned Bauxilum company. Bauxilum president, Jesus Calvo said an expected drop in production to 1.4 million tonnes this year from 1.6 million tonnes in 2008 meant the firm was decreasing shipments to some overseas clients including Swiss-based commodities giant Glencore. "In the first five months of the year we were able to send seven shiploads to the external market, and we caught up with some delayed deliveries. Even so, with the problems we have had we will have to delay two ships," Calvo told Reuters. Each ship carries 25,000 tonnes of alumina, and the seven cargos sent this year were to meet orders from 2008 and 2009. The agreement with Glencore is for 350,000 tonnes per year. Calvo said Bauxilum was obliged to prioritize alumina supplies to Venezuela's domestic market before exporting. The company is looking for investment to increase production next year to 1.65 million tonnes and to 1.9 million tonnes by 2012. Lower alumina prices have also hurt the company, which has insufficient funds to repair broken equipment or to meet workers demands. Calvo said the world alumina price of $160 - $170 per tonne were about half the average cost of production. "Right now we need to recuperate production so we can have the cashflow needed to meet our labor obligations," Calvo said, adding that the firm needed to invest $284 million in the next 3 years, including $80 million to clean up its waste systems, for which the company has been criticized. Bauxilum will start work in coming days on expanding its tailings lakes, Calvo said. (Writing by Frank Jack Daniel; Editing by Diane Craft)