Russia's Siberia-Urals Aluminum Holding is warning the Russian government it will be forced to halt production at a number of its smelters and cut output by 60 percent in the near future unless the government scraps certain taxes and introduces state control of electricity and railway transportation prices.
The letter says the current crisis in the Russian aluminum industry has been caused by low world prices. SUAL doesn't expect prices to rise above $1,300 a metric ton before the end of 2002, but a price of at least $1,500/ton is needed for the holding to continue normal operations and to implement its expansion plans.
As a first step in cutting overheads, SUAL intends to carry out a number of redundancies, starting shortly at the Kamensk-Uralsky metals plant.
SUAL originally planned to increase its aluminum output this year by 4.3% to 620,000 tons and alumina output by 3% to 1.7 million tons.
SUAL exports 50% of its output to Europe, 20% to Asia and 8% to the U.S. The remaining 22% is sold domestically. It controls the Bogoslovsky, Uralsky, Irkutsky, Kandalaksha and Nadvoitsky aluminum smelters.
General Director Valery Cherdyntsev said the current suppressed state of the world market would deal a blow to the holding company's investment plans. The management is now working on a program designed to stabilize the situation, which primarily includes delaying the opening of new facilities and suspending reconstruction of the existing plants.
SUAL had originally planned to invest $170 million before the end of 2002 in expansion and modernization. Dow Jones.