INTERVIEW-RUSAL considers aluminium ETF

* RUSAL considers aluminium ETF

* Adding 334,000 tonnes of capacity next  year

* Holds a 3-year contract to supply 70,000 tonnes to Glencore

By Polly Yam

HONG KONG, March 12 (Reuters) -  Russia's UC RUSAL, the world's biggest aluminium producer, is considering launching an aluminium exchange traded fund (ETF), that could lock up more than 1 million tonnes of the metal, a top company official said on Monday.

"We are investigating the demand (for the ETF)."  Vladislav Soloviev, RUSAL's first deputy chief executive officer, told Reuters in an interview after a news conference in Hong Kong.

"We will do it,” he said of the ETF, adding that details  would probably be finalized in the second half of 2010 and the ETF should start with one million tonnes of aluminium or more.

Soloviev said the ETF could be a future financing channel for RUSAL.

RUSAL, in its first annual report since its January IPO, forecast demand and prices for aluminium will be supported by the major developed countries as the global economy revives.

The strong outlook boosted RUSAL shares in Hong Kong by 1.6 percent to stand at HK$9.55 by the midday close, outpacing the broader market, which was almost flat.

CAPACITY RISE

Soloviev said the company would add 334,000 tonnes of annual aluminium capacity in 2011.

RUSAL aimed to complete the construction of the first phases of Taishet smelter and Boguchansky smelter in the second half of next year and the full projects in late 2013, depending on progress of project financing.

The Taishet smelter would have designed capacity of 750,000 tonnes a year with a first phase of 147,000 tonnes, he said.

Boguchansky would have designed capacity of 588,000 tonnes a year with a first phase of 187,000 tonnes.

RUSAL, which now has 4.6 million tonnes of annual production capacity of primary aluminium, will rely on the two new smelters for capacity growth in the next few years.

The Boguchansky smelter was part a joint venture project that included the construction of a hydro-electric power plant to power the smelter with 60 percent of its output.

He added the remaining 40 percent of the hydro electricity could be sold to adjacent China, the world's top aluminium producer.

ALUMINIUM SALES  

RUSAL had sold aluminium to global traders last year because of a weak market and aimed to sell to end-users this year, Soloviev said.

He added the company had sold out aluminium for the second quarter and expected it would have metal to offer to Asia for third and fourth quarter shipments this year.

But RUSAL still held a 3-year contract to supply global investment and trading firm Glencore, a shareholder, with 70,000 tonnes of the metal per month from last year, he said.

Soloviev said he did not think high aluminium stocks on the London Metal Exchange would be a problem for the global market this year because he believed most financing deals have locked up stocks for another 3 years, keeping the metal out of the market.

Aluminium stocks on the LME stood at about 4.58 million tonnes on Monday, a step away from a record of 4.64 million tonnes seen in January this year.

(Editing by Clarence Fernandez)