Russia's RUSAL may further cut aluminium output

MOSCOW, March 25 - The world's top aluminium producer Russia's UC RUSAL may widen output cuts and is taking steps to cut costs as it faces peak debt repayment of $8 billion this year, the firm and analysts said on Wednesday. The unlisted company, controlled by Russian businessman Oleg Deripaska, met analysts for the first time on Wednesday to soothe fears over its future as it is talking to Western banks to restructure over $7.4 billion in loans and has to repay $4.5 billion to the Russian state at the end of 2009. "We have already announced cuts to our production output by 500,000 tonnes or 11 percent," UC RUSAL press office said in a written statement. "We may also consider increasing our production cuts to up to 20 percent depending on the market situation, but no decision has been made yet." RUSAL produced 4.4 million tonnes of aluminium in 2008, up from 4.2 million in 2007. The company announced last months cuts in its output and staff, as it tackled the global economic crisis. [ID:nL5747714] On Wednesday, it said it plans to cut costs for the production of aluminium to $1,040 per tonne in the third quarter of 2009, from $1,385 in February and $1,509 in January 2009. This would be achieved through lower staff and management costs, costs of raw materials, energy and railway fees, as well as the rouble devaluation, a page from a presentation for analysts, made available to Reuters, said. Two analysts, who attended the meeting, told Reuters that UC RUSAL had told them it has to repay $8 billion in debts this year. The company is considering issuing bonds convertible into RUSAL's shares as one of the ways to restructure its $4.5 billion debt to state-owned VEB bank. UC RUSAL has won a two-months grace period to restructure the $7.4 billion debt it owes to 70 international banks. [ID:nL6502607] Russian officials have said they had no plans to provide RUSAL with more funds to refinance foreign debt and added the Kremlin would not oppose foreign creditors taking stakes in the company should they opt to convert debt into equity. [ID:nLK322394] Influential First Deputy Prime Minister Igor Shuvalov also said he would recommend to the government not to extend VEB's loan to UC RUSAL and added the state should not nationalise the company. (Reporting by Aleksandras Budrys and Polina Devitt; Editing by Keiron Henderson)