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UC Rusal indicated likely shutdown of Ja refinery

Tuesday, July 17, 2012

A senior official of Russian aluminium giant UC Rusal signalled from last month that his company was thinking of shutting down its refinery in Jamaica as part of a plan to reduce production capacity in response to a downturn in the global market.

In an interview published in a UC Rusal newsletter, a copy of which was obtained by the Jamaica Observer, First Deputy CEO Vladislav Soloviev is reported as saying that the company planned to reduce capacity by eight to 10 per cent of its current total production.

"This means a reduction of up to 400,000 tonnes per year, but at the moment we can realistically reduce production by between 250,000 and 300,000 tonnes per year. So in the last two quarters of the year we can shut down about half of this amount," Soloviev is quoted in the Rusal Newsletter dated June 29, 2012.

The publication was a reprint from an interview conducted last month at the 16th International Economic Forum in St Petersburg, Russia by Prime Business News Agency.

Prime describes itself on its website as Russia's leading business news agency.

According to the Rusal Newsletter, in the interview, Soloviev addressed current trends in the world aluminium market, UC Rusal's plans to reduce capacity, and aluminium prices in the near future.

Asked which capacities UC Rusal planned to shut down, Soloviev is reported as saying that the company's board of directors will make that decision by September.

"What I can tell you now is that we'll only be shutting down inefficient and environmentally outdated aluminium production facilities," he is quoted as saying. "We'll also be looking at the profitability of our alumina refineries, but not those in Russia. Most likely we may be shutting down our refineries in Jamaica."

Last week, after Jamaica's Energy Minister Phillip Paulwell informed the Parliament that he was advised that UC Rusal would be shutting down its plant in Ewarton in October this year, the Russian firm was reported by the Associated Press as saying that "the information about Ewarton's closing in October this year does not correspond to the reality".

According to the Associated Press report, UC Rusal acknowledged that it is considering curtailing operations at some facilities, but said a decision would not be made until September.

In response, Paulwell told the Observer that he was happy that there had been a change of heart subsequent to his representation to UC Rusal's Country Manager Igor Dorofeev at a July 6 meeting at the mining and energy ministry.

Last Friday, at a meeting between Paulwell and Dorofeev, the UC Rusal executive indicated verbally that UC Rusal's board of directors had not actually taken a decision to close the Ewarton plant, and submitted to Paulwell a press statement released from UC Rusal headquarters in Russia.

"In accordance with the company's adopted procedures, decisions on capacity curtailments and plant closures are in the competence of UC Rusal's board of directors," the news release said. "So far, the company's board has not considered issues related to capacity closures and has not taken any decision with this regard."

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