SYDNEY, April 2 (Itar-Tass) - RUSAL /Russian Aluminium Company/ plans to cut by the yearend production of aluminium by 300,000 tonnes and to keep this production level for about three years, RUSAL’s CEO Oleg Deripaska said in an interview with The Australian on Tuesday.
While commenting on the current state of the market he said: “We are at the final stage of the sector’s restructuring. The gained huge deposits affect future development, adding negative estimation of the industry and thus affecting the metal price. The excessive offer is characteristic not only for aluminium, but for the entire market of raw materials.”
He estimated that as much as 30 per cent of global aluminium production was at or below break-even, The Australian writes.
"The key priority and the only investment now should be in curtailing capacity in order to raise efficiency," the newspaper quoted him as saying.
The industry needed to cut output by 10-12 per cent to have a situation in three years where "demand will justify the price". That will be of cold comfort to Rio, which is trying to offload a portfolio of Australian smelters and the Gove alumina refinery, now held by its loss-making Pacific Aluminium subsidiary.
Deripaska's advice was that it was a big mistake to be selling aluminium assets "right now," saying it simply changed ownership of the asset without tackling market oversupply, the news paper reports.
"The key issue is how you manage this asset," he told the newspaper. "If you just decrease the capacity utilisation rate and help to reduce the stock in the global market, these smelters may return to profitability in the next few years."
Deripaska said he could not understand why Australia’s government taxed Queensland Alumina heavily because of its dependence on coal, even though the joint venture had lower emissions than the average overseas competitor's refinery. He also cited the inconsistency of the government imposing a carbon tax while, at the state level, aged and ailing coal-fired smelters such as Alcoa's Point Henry smelter near Geelong had received taxpayer funds to continue operating, the newspaper writes.
"In Victoria, the government has rewarded the Point Henry smelter with additional compensation, while having emissions far above the world smelting average. It appears to be an irrational policy that is applied inconsistently," The Australian quotes Deripaska as saying. "The net effect of the government's carbon policy is to give preference to the export of unprocessed raw materials. Rusal believes that local processing is in Australia's self-interest and should be preserved."