Russia RUSAL sees end-year aluminum at $3,000/tonne

(Reuters) - The world's top aluminum producer, Russia's UC RUSAL (0486.HK), believes that the metal may reach $3,000 per tonne by the end of this year due to the earthquake in Japan and events in Northern Africa.

"There is a chance, that they (prices) can very well hit $3,000, maybe by the end of the year," Maxim Sokov, RUSAL's director for strategy, told the Reuters Global Mining and Steel Summit in an interview.

"This year the average aluminum price will be above $2,600."LME aluminum rose about 1 percent to its highest level since September 2008 at $2,654.50 a tonne on Friday.

"The recent events in the world support our positive estimate of (price) developments. Both what happened in Japan and Northern Africa," Sokov said.

The earthquake, he said, will lead to an increase in demand for metals to rebuild the destroyed infrastructure. That will raise demand for aluminum, steel and nickel.

The conflict in oil-rich Libya also pushes up the price of energy, a key component in the price of aluminum, Sokov said.

Strong demand for different aluminum-based financial instruments restricts available physical aluminum volumes to be used in construction and in rebuilding Japan's infrastructure, he added.

Sokov said he expected a physically backed aluminum ETF to be launched in the second quarter of this year.

"Serious work is (going) on to create an ETF. We expect that in the second quarter of this year it will be ... implemented," he said.

Sokov said, however, that the new ETF may prevent some aluminum volumes from London Metals Exchange warehouses from being consumed.

"Probably 70 percent of all LME stocks in the second quarter will stop being available for consumers," he said.

ALUMINA DECOUPLINGSokov said that the process of decoupling the price of alumina, an intermediate product for aluminum smelting, has begun.

"Alumina prices have started rising faster than those of aluminum," Sokov said.By Polina Devitt and Aleksandras BudrysMOSCOW | Fri Mar 25, 2011 1:39pm EDT "We, for our needs, calculate the price of alumina based on CRU/Metals Bulletin/Platt's data basket. At a certain stage I think this (calculation) will assume a global form."He said to set the alumina price an index will be formed, which will not be traded on the LME.

"Then it may assume some other form. Closer to those of aluminum," Sokov said.

NEW NORILSK BOARDSokov, who is also a member of the recently elected board of the world's top nickel and palladium producer Norilsk Nickel (GMKN.MM), said the board now has a "more balanced composition."Norilsk shareholders gave the board majority to mining tycoon Vladimir Potanin and his allies, giving him the upper hand in a battle for control with RUSAL, which owns a quarter of Norilsk.

Potanin and Oleg Deripaska, who is the largest shareholder in RUSAL, have been battling for the last three years over control of the company.