United Company RUSAL, the indebted Russian aluminium company controlled by Oleg Deripaska, cut production and costs in the first quarter to save $554 million, leaving it halfway towards its 2009 goal.
Our goal is to reduce costs further by Q4, providing us with cost savings of $1.1 billion in 2009, Deripaska, who is also UC RUSAL's chief executive, said in a statement on Tuesday.
Aluminium production fell 7.2 percent year-on-year in the first quarter to 1.0 million tonnes.
UC RUSAL, the world's largest aluminium producer, said it planned to cut 2009 output by 500,000 tonnes, or 11 percent of last year's production.
The company said it cut the average production cost of aluminium per tonne by more than 23 percent between December and March. A further 26 percent reduction is expected by the fourth quarter.
Output of intermediate product alumina declined 25 percent year-on-year in the first quarter. By the end of 2009, alumina output cuts are forecast to reach 3.9 million tonnes, or 34 percent of last year's production. Production of bauxite, the ore from which alumina is made, fell 34 percent in the first quarter to 3.0 million tonnes. UC RUSAL plans to cut bauxite output by 5.6 million tonnes in 2009.
UC RUSAL is holding debt restructuring talks with foreign lenders after signing a two-month standstill agreement in March on the $7.4 billion it owes to more than 70 international banks.
Russia's once-mighty billionaires are struggling to repay $130 billion in corporate debt due this year after the econominc slowdown shredded the value of their assets and the rouble lost about a third of its value against the dollar since mid-2008.
UC RUSAL, with total debts of about $14 billion, has also been hit by a decline of almost 60 percent in the price of aluminium since last July.
The company said it cut energy costs by more than 19 percent in the first quarter by signing long-term supply contracts and introducing energy-saving technology. Raw material costs fell by 35 percent and management costs were cut by 60 percent.
UC RUSAL cut output at its Siberian smelters by an average 3.2 percent in the first quarter.
Output cuts at smelters in the Ural mountains reached an average 26 percent, while its smelters outside Russia -- in Ukraine, Nigeria and Sweden -- cut output by an average 23 percent.
The company has suspended alumina production at the Alpart and Windalco refineries in Jamaica and at Eurallumina in Italy, and it has cut volumes by 25 percent at the Aughinish refinery in Ireland. (Reporting by Robin Paxton; Editing by Dan Lalor)
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