Rusal cuts aluminium output, may hit prices

MOSCOW: The production cut trend is continuing in aluminium industry. Following fall in demand due to recession, several companies had reduced production. Except for China, most of the markets had witnessed a fall in demand and this had put pressure on producers to cut output. Alcoa Inc, the largest US aluminum producer, Rio Tinto and Norway’s Norsk Hydro ASA had reduced output as the global recession curbs demand for the lightweight metal. The latest in announcing production cut in aluminium is UC Rusal, the Russian aluminum producer controlled by billionaire Oleg Deripaska. The company announced that it has decided to cut alumina production at its Friguia plant in Guinea by around 50 per cent next month. The reduction is just for July, the Moscow-based company said. Friguia has the capacity to refine about 640,000Mt of alumina and 1.9Mt a year, according to Rusal’s website. Guinea is the world’s largest exporter of bauxite. This move is likely to affect the aluminium prices in global market. The decision to reduce production was made as part of an optimisation program, Rusal said. Although in April Guinea’s military government threatened legal action against Rusal over the Friguia complex contract, which it said had been bought well below the market value. No jobs will be lost as a result of the lowered production in Guinea, said Rusal, which employs about 1,100 people at Friguia. Aluminum, the most-traded contact on the London Metal Exchange, has advanced 7.1% this year, the least among all nonferrous metals traded on the bourse. Inventories tracked by the LME have jumped 87% in 2009, weighing on prices.