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UC Rusal suspends aluminium production at Nigerian smelter

UC RUSAL : 15 March, 2013  (Company News)
UC Rusal is to temporarily suspend the smelting operations at the Alscon plant n Nigeria. Before this decision was taken, Rusal had been covering the plant’s losses in the expectation that a sustainable gas supply would be made available enabling it to operate at its full capacity. Rusal insists that the suspension of operations is a temporary measure, one necessary to avoid completely shutting down of the plant. Smelting operations will resume as soon as the legal uncertainty has been resolved and the continuous power supply has been secured.

According to Rusal, despite all measures undertaken by the company, Alscon does not have a reliable and continuous gas supply. Aluminium production at the plant is deeply loss-making, which renders it impossible to fully utilise existing capacity.

According to the company, the on-going situation around the illegal attempts to challenge Rusal's rights of ownership to the plant and the recent decision of the Supreme Court of Nigeria to cancel the sale of Alscon shares to Rusal impede long-term investment in the smelter. In particular, legal issues relating to ownership render it impossible to sign long-term contracts and hinder development.

The decline of aluminium prices on the LME in 2012 by 15.7% has resulted in the significant share of global aluminium production falling below breakeven point. To minimize the negative impact of such external factors, Rusal has focused on long-term efficiency and cost control, but the negative market environment and low LME price level have affected the operations of Rusal’s subsidiaries. In particular, the global market situation exacerbated Alscon’s losses and was a factor in the decision to suspend operations.

Despite the continuing uncertainty around the plant, Alscon will continue to generate electricity. During the suspension period, the main efforts will be focused on securing continuous gas delivery, obtaining judicial determination that Rusal is the rightful owner of ALSCON, and preparing to restart operations.

Rusal says it is intending that this decision will not affect the social stability or standard of living in the region, and is committed to minimising any negative consequences of the suspension for the personnel and local communities of Ikot Abasi, Nigeria, where the smelter is located.

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