RUSAL says debt restructuring talks nearly complete

* Expects $7.3 bln debt restructure deal before July 28 * Cost reductions saved RUSAL $620 mln in H1 * Aluminium output down 10 pct in H1, alumina down 34 pct By Aleksandras Budrys MOSCOW, July 17 (Reuters) - Russia's United Company RUSAL, the world's largest aluminium producer, expects to sign a deal to restructure its $7.3 billion debt with foreign banks before the current standstill agreement expires on July 28. "The negotiations on the terms and conditions of the long-term debt restructuring are almost finalised. RUSAL is planning to sign the agreement within the validity period of the standstill agreement," the company said on Friday. UC RUSAL said in June that 70 international banks had agreed to extend a debt freeze until July 28 in order to allow the company to restructure its foreign loans, a bellwether case for Russia's ability to manage its $453 billion in foreign debt. RUSAL, majority owned by billionaire Oleg Deripaska, said cost reductions had saved the company more than $620 million in the first half of 2009, more than half of its full-year target of $1.1 billion. "RUSAL's half-year results demonstrate that we have developed and are successfully implementing a comprehensive programme of actions aimed at reducing production costs," Deripaska said in a statement. "By the end of the year we plan to reduce costs by another 7-8 percent." UC RUSAL cut its average aluminium production cost by 27 percent by July, compared with December 2008. Energy costs fell more than 20 percent and raw material expenses by 41 percent, the company said in the statement. FIRST HALF OUTPUT DOWN UC RUSAL produced 1.98 million tonnes of primary aluminium in the first half of 2009, 10 percent less than a year ago. Alumina output in the first half of this year was 3.7 million tonnes, 34 percent less than was produced a year ago, while output of the raw material bauxite fell 35.5 percent year-on-year to 5.8 million tonnes. UC RUSAL produced 4.4 million tonnes of aluminium in 2008, up from 4.2 million tonnes in 2007. The company in February announced cuts in its output and staff to combat the global economic crisis. [ID:nL5747714] In March, it said further cuts were possible. [ID:nLP7750] In the first half of 2009, RUSAL cut output by 4.5 percent at its Siberian smelters and 33 percent at its Urals smelters. Output was cut by 33 percent year-on-year at smelters outside Russia -- ZALK in Ukraine, ALSCON in Nigeria and Kubal in Sweden. UC RUSAL has also suspended operations at its Alpart and Windalco alumina refineries in Jamaica and Eurallumina in Italy, while cutting output by 39.5 percent at Aughinish in Ireland.