Rusal Sees 2007 Aluminum Output Up 200,000 Tons Vs 06

Rusal, the world's third-largest producer of primary aluminum, expects its output of primary metal this year to rise around 200,000 tons, or 7.2%, from the 2.77 million tons produced last year, Chief Executive Alexander Boulyguine said Tuesday.

Boulyguine told a conference call that the company also expects the average price for aluminum to be "no more than $200 a ton, more or less" than last year, when prices for the metal rose to a record high.

Boulyguine told a conference call that around three quarters of the additional output, or 150,000 tons, would come from the first two lines of its newly-commissioned smelter in Khakasia in western Siberia. The remainder would come from incremental production at its other four smelters "plus a minimal contribution" from the Alscon smelter in Nigeria which it bought last year.

Production of alumina, which Rusal has historically lacked, will lag output of primary metal, rising only 100,000 tons this year, Boulyguine said.

Rusal expects to close its deal to merge with Russia's other large aluminum group, OAO Sual (SUAL.YY) this year, and with the alumina refineries currently owned by Swiss-based trader Glencore AG.

Boulyguine's forecasts refer only to Rusal in its current state.

He noted that the company has a total investment program of $2 billion this year, most to be diverted to the Boguchansk integrated smelter and hydropower project in eastern Siberia, with the remainder being spent to bring the Khakas smelter up to its capacity of 300,000 tons a year, and on other smelters such as Alscon and Taishet in eastern Siberia along with the Komi alumina project.

Boulyguine said the Komi project, being developed jointly with Sual, is "on track", and said he expected production there to start in 2009.

Boulyguine also noted that the company will probably be able to discuss by autumn the results of preliminary work on the feasibility of the construction of new atomic power stations with generator Rosenergoatom.

Russia intends to build some two dozen new reactors in the next two decades. Rusal, which accounts for over 7% of Russia's electricity consumption, and which has enjoyed huge windfalls from the aluminum boom of recent years, is expected by some analysts to be extensively involved in financing the construction of the next generation of nuclear stations.