RUSAL Demonstrates Steady Growth Amid Rising Global Demand

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RUSAL, one of the worldÂ?s leading aluminium producers, today announced continued growth across all main product lines. Primary aluminium production showed a 6% year-on-year growth to 664 966 tonnes, mainly a result of the companyÂ?s continuing efforts to introduce best practices at its production facilities.

RUSAL, one of the world’s leading aluminium producers, today announced continued growth across all main product lines. Primary aluminium production showed a 6% year-on-year growth to 664 966 tonnes, mainly a result of the company’s continuing efforts to introduce best practices at its production facilities.

During the quarter, RUSAL continued to focus on steady growth that will allow the company to accommodate soaring global demand. The company carried on its modernisation drive as well as continued to streamline its structure – all aimed to achieve further operational efficiency. Following its market-driven strategy, RUSAL continued its upgrading initiatives designed to raise the share of alloys and other value added products in the aluminium division’s mix. These type of products showed a 32% year-on-year growth for the quarter.

Commenting on the results, Alexander Boulygine, CEO, said: “In this quarter our focus continued to be both on growth and efficiency and our results demonstrate that commitment. Taken together with a major restructuring and management realignment, we are now prepared to embark on a new phase -- expansion. This is happening at a time when the market is displaying remarkable strength.”

Mr. Boulygine underlined the progress made in the company’s restructuring programme. RUSAL reorganized into a divisional structure with two new divisions created – alumina and aluminium. “The new structure,” Mr. Boulygine said, “will help to ensure that RUSAL remains competitive at each stage of the value chain by having clear profit centers and improved accountability of managers.”

Substantial progress has been made in the company’s drive to strengthen its raw material base. The feasibility study for the expansion of Friguia refinery in Guinea to 1.4 mln tonnes commenced during the quarter. The $350 mln project is to be completed within three years. Upgrade programmes continued at Nikolayev and Achinsk alumina refineries.

“We are focused on increasing production of bauxites and alumina,” Mr. Boulygine said. “At the same time, though our own raw material supplies do not yet cover our growing needs, we were practically unaffected by current unfavorable market conditions for alumina due to long-term supply contracts we sought following 2001, when managers anticipated the potential squeeze in the alumina market arising from rising Chinese demand.”

During the quarter, RUSAL continued streamlining its technological base. This included introducing a more efficient project structure at VAMI (All-Russia Aluminium and Magnesium Institute) acquired last year, which will facilitate the institute’s integration into RUSAL. VAMI is cooperating with RUSAL’s Engineering and Technological Center on modernisation and expansion projects, such as the comprehensive modernisation of Krasnoyarsk and Sayanogorsk smelters.

Increasing the output of value-added casthouse products and comprehensive modernisation of casthouse areas at all aluminium smelters continued. The first stage of RUSAL’s joint project with Norwegian Hydro Aluminium for production of extrusion ingots, completed during the quarter, has tripled the Sayanogorsk smelter’s annual billet capacity to 80 000 tonnes. One of the important achievements was the introduction of A380.1-grade alloy designed mainly for the Northern American automotive industry.

Other highlights

• As part of the significant modernisation of the casthouse areas of the smelters, the new casting complex is capable of producing an added 35,000 tonnes of alloys per year were added at Krasnoyarsk smelter.

• Krasnoyarsk Aluminium Smelter received the ISO 14001 environmental management system certification.

• Works on the transition of Krasnoyarsk, Bratsk and Novokuznetsk smelters to dry anode technology continued. Substantial progress had been made on Bratsk smelter where 8 pot rooms are now switched to dry anode technology.

• Earth works started on a $10 mln. project at the Friguia refinery in Guinea where RUSAL is upgrading the heat station providing electricity and heat to the refinery and the town.

• RUSAL began introducing lean production methods at its plants. Experimental business units have been created at all smelters.

• RUSAL’s $750 mln Sayanogorsk Smelter Expansion Project is proceeding successfully, and the first major contracts have already been awarded for fabrication and supply of pot tending assemblies and transfer gantry cranes.

• Nikolayev Alumina Refinery production capacity was raised to 1.3 bln. tonnes annually.

Table – Production results (tonnes, unless otherwise noted)

Products        Q1/2004     Q1/2003 Yr on Yr

                                     Change (%)

Bauxite        1,237,616 1,005,430    23.09

Alumina         783,009    722,147     8.43

Primary aluminium

& value-added

casthouse prod's 664,966    626,705     6.11

Semi products     53,032     61,617.7 -3.9

Aluminium foil     8,671     10,380.9 -16.47

(see note 1)

Aluminium beverage

cans (000s cans) 246,728.5 206,177.1 19.67

(Note 1: Decrease due to temporary closure of Armenal foil mill, under renovation)

About RUSAL

RUSAL, a world leader in aluminium production was formed in March 2000 from the merger of a number of the largest smelters and other aluminium producers located in the CIS. The company accounts for 75% of Russia's primary aluminium output and 10% of the global primary aluminium output. RUSAL is a fully vertically integrated company with a complete production cycle from bauxite mining and the production of raw materials, to the production of primary metal, semi-products and aluminium-based end products. RUSAL is headquartered in Moscow.

Further information:

http://www.rusal.com
Eugenia Harrison, Moscow, +7 095 720 5170, or zharrison@RUSAL.ru; Fred Harrison, London, +44 (0) 20 7431 7517, or fharrison@ansdellconsult.com; Stan Neve, New York, +1 212 333 3810, or neve@brunswickgroup.com

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Fred Harrison

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