UC RUSAL Sees Global Aluminium Consumption up

HONG KONG, Jan. 12 -- United Company RUSAL (UC RUSAL), the world's largest aluminium and alumina producer, expects global aluminium consumption to rise in 2010 on demand from China, said Artem Volynets, deputy chief executive, strategy & business development.

"We expect to be one of the key beneficiaries in our industry from continued growth in the Chinese economy and the consequent growth in aluminium consumption," said Volynets, speaking to a news conference for the company's IPO in Hong Kong on Monday.

"Urbanisation and industrialisation of China are expected to generate significant demand for commodities," he said. "We are now coming to the public market as part of the next stage of our development."

Volynets added that he saw sufficient global consumption for aluminium in 2010.

"Based on the current outlook for commodity prices, we are more comfortable on fulfilling our debt reduction target," he said.

The company aims to reduce its debt by $5 billion by 2013 as one of the criteria the company has to meet before it can pay a dividend.

UC RUSAL, which is planning the first Hong Kong-Paris dual listing on Jan. 27, will offer 1.6 billion shares, or a stake of about 10 percent, with an indicative range of HK$9.10 to HK$12.50 per share.

In the Hong Kong IPO prospectus, RUSAL cites a base case average forecast of an 8.6 percent annual rise in aluminium prices between 2009 and 2013. Although should prices undergo a sustained fall of more than 20 percent, RUSAL's ability to meet its debt targets could be weaker.

The company's average cost for aluminium production was $1,402 per tonne in the first half of 2009, a very competitive level as a result of low power costs, Volynets said.

Aluminium on the London Metal Exchange MAL3 rose 46 percent to $2,235 per tonne last year, but the rise lagged a 141 percent rise in copper prices MCU3 because of record aluminium stocks at LME warehouses. At 0640 GMT, the price was at $2,335.

RUSAL produced about 4.4 million tonnes and 2 million tonnes aluminium in 2008 and the first half of 2009, respectively, accounting for about 12 percent and 11 percent of global output in those periods.

In late 2009, RUSAL entered into agreements with creditors to restructure $16.8 billion of debt. The restructuring has generally extended the maturity of RUSAL's debt obligations until 2013.