Debt-laden Rusal, the world's largest smelter of aluminium, is hoping that industry-wide efforts to cut excess capacity will help lift prices enough for it to pay a dividend, although an analyst said this might not happen for at least two years because capacity cuts took time to flow through to profits.
Vladislav Soloviev, Rusal's first deputy chief executive, said after the firm's annual meeting that it might mothball annual capacity of 350,000 tonnes up to 400,000 tonnes, cutting annual output by between 8 and up to 10 per cent, by the end of the year.
'The board will make a decision soon,' he said, adding that the shutdown would be mostly at its smelters in western Russia, which had higher operating costs.
The company said last month that it planned to cut its annual smelting capacity by at least 300,000 tonnes, starting in the second half of this year. It may cut up to 600,000 tonnes longer term if it considered it necessary.
Some 40 per cent of global smelters were barely breaking even or losing money, Soloviev said, adding that he did not expect the aluminium price to fall below US$1,900 a tonne and may even hit a high of US$2,300 later this year. Prices needed to rebound to at least US$2,500 on an annual average basis before Rusal could generate enough cash to meet its investment needs, service the interest on its debt and have spare cash for a dividend, he said.
The three-month aluminium futures contract is trading at around US$1,954 a tonne, a two-year low.
