UC RUSAL Set to Restart Idled Capacity - Source

HONG KONG, Feb. 22 -- UC RUSAL (0486.HK: Quote), the world's largest aluminium producer, is set to restart about 100,000 tonnes of idled aluminium capacity due to increased demand, a company source said on Friday.

"UC RUSAL is in the preparatory stages of restarting some of the capacity it idled during the economic downturn because of renewed strength in its customer order book," the source said.

The restarts are likely to be around 100,000 tonnes of primary aluminium or about one-fifth of its idled capacity of 500,000 tonnes, the source told Reuters.

This decision came as RUSAL sees its order book total at a nominal 150 percent of 2009 production, the source said.

The Russian company had reassured investors that the current aluminium prices would allow it to recommission some of its idled aluminium capacity in the first quarter of 2010.

At 1025 GMT, the London Metal Exchange (LME) three-month aluminium price CMAL3 was at $2,093 a tonne.

Shares of RUSAL in Hong Kong rose as much as 3.6 percent on Friday before closing up 0.4 percent at HK$7.50 on market talks about the possible increase in output. They beat the blue chip Hang Seng Index .HSI, which ended down 2.6 percent.

But the stock has fallen 31 percent from its IPO price in less than a month on worries over its debt and uncertainties surrounding its CEO and major shareholder Oleg Deripaska.

It takes about two tonnes of alumina to make one tonne of aluminium. RUSAL will also restart an equivalent amount of idled alumina capacity, the source added.

RUSAL produced 3.9 million tonnes of aluminium last year against 4.4 million tonnes produced in 2008.