Rusal Says It’s Still Profitable After Aluminum Price Tumbles

April 16 (Bloomberg) -- United Co. Rusal, Russia’s biggest aluminum producer, said it’s still profitable after the lightweight metal fell to a seven-year low. It also said debt restructuring talks will be completed next month. “We are marginally profitable in this market and have confidence that further steps are in place to reduce costs,” Oleg Mukhamedshin, Rusal’s director for capital markets, said today in e-mailed answers to questions from Bloomberg News. “Rusal had no losses in the fourth quarter,” he said. “Our rough estimations are that we’re doing much better than our main competitors.” Rusal, controlled by billionaire Oleg Deripaska, slashed output and is seeking to defer payments on $14 billion of debt after commodity prices collapsed. Alcoa Inc., the biggest U.S. aluminum producer, last week reported its first back-to-back losses in 15 years. Norwegian producer Norsk Hydro ASA in February posted a 6.02 billion-krone ($900 million) fourth- quarter loss. Rusal is in “active talks” with state-run Russian lender Vnesheconombank to restructure a one-year, $4.5 billion loan, Mukhamedshin said. The loan from VEB, as the bank is also known, pushed up the weighted average interest on Rusal’s loans to about 6 percent, he said. The company pays 2.2 percent on $7.4 billion of debt due to foreign banks including BNP Paribas SA and Sumitomo Mitsui Financial Group Inc., Mukhamedshin said. Debt Swap Rusal agreed with foreign lenders to a two- to three-month freeze in payments from March 11. It also agreed with Rusal investor Mikhail Prokhorov to swap $2 billion owed to him for new shares in the company. The swap is subject to approval by Rusal’s foreign lenders. Talks with all creditors are “making good progress,” Mukhamedshin said. Rusal intends to be in a position to sign a so-called restructuring term sheet in May, he said. Aluminum for three-month delivery on the London Metal Exchange has averaged about $1,411 a metric ton this year, down from $2,623 a ton in 2008. “We expect that the aluminum price could reach $1,500 to $1,600 this year, increasing to $1,700 to $1,800 in 2010 when the supply and demand balance stabilizes,” Mukhamedshin said. “By 2012, it will break the $2,000 threshold.”