Aluminum Price to Rise, Help Rusal, Prokhorov Says

May 15 (Bloomberg) -- Aluminum prices will continue to recover from a seven-year low, helping to keep United Co. Rusal profitable, the Russian company’s second-largest shareholder said. “Aluminum prices will grow in the future,” while production costs will fall, Mikhail Prokhorov, rated Russia’s richest man by Forbes magazine, told reporters today in Yelets, Lipetsk region. “The stabilization point has been found; Rusal is a profitable company.” Aluminum slid to the lowest price since November 2001 in February and has since rallied 18 percent. The lightweight metal, used in packaging, construction and aerospace, remains the only benchmark industrial metal in London to have fallen this year as 2009 supply is forecast to exceed demand by 1.7 million metric tons, according to Metal Bulletin Research. Rusal, the world’s largest aluminum producer and controlled by Oleg Deripaska, slashed output and is seeking to defer payments on $14 billion of debt, including $4.5 billion to Russia’s bailout bank VEB, after commodity prices collapsed last year. Rusal this week extended a freeze on debt repayments by a month to June 11. Prokhorov owns 18.5 percent of the company. Prokhorov said Rusal’s options to restructure the VEB loan, due in October, include extending the facility and VEB selling bonds convertible to stock in Rusal. Alternatively, Russia may take a stake in Rusal if the company fails to repay the loan or seize Rusal’s 25 percent stake in OAO GMK Norilsk Nickel held as collateral by VEB, Prokhorov said. “All these options are possible,” Prokhorov said. The final decision is up to the government, he said. Separately, Prokhorov said OAO Polyus Gold, Russia’s largest producer of the precious metal, won’t change its strategy after billionaire Suleiman Kerimov bought a stake. “The new investor is familiar with the company’s strategy, and it won’t change with the arrival of the new investor,” Prokhorov said.