SHANGHAI (Interfax-China) -- UC Rusal will supply primary aluminium to the Chinese market when market conditions become favourable, a senior official with United Company Rusal (UC Rusal), one of the world's three largest aluminium producers, said at the Interfax-organized UC Rusal Press Conference, held in Shanghai today.
"China is expected to become a net importer of primary aluminium by 2009, as the aluminium supply in China has already begun to slow while demand is seen to be increasing. UC Rusal intends to fill the gap from possible supply shortages, and plans to export 200,000 to 300,000 tonnes of aluminium to China by 2009 at the earliest," Peter Finnimore, UC Rusal's aluminium sales director, said.
"Currently, there is still a price difference between aluminium prices on the London Metal Exchange and the Shanghai Futures Exchange. We believe that as the fundamentals change in aluminium demand and supply, China's aluminium prices will adjust accordingly and finally move parallel to the international market, thus making UC Rusal a competitive player in the China market," Finnimore said.
Currently, UC Rusal products are sold in 70 countries worldwide, with 23% of sales from Asia, mainly supplying Japan and Korea. UC Rusal has pledged to increase the proportion of sales to Asia to 30% of total sales over the next two to three years, with China included in this expansion plan.
Compared to other aluminium producers, including Alcoa [NYSE:AA] and Alcan [NYSE:AL; TSX:AL], UC Rusal aims to focus more on upstream aluminium supply to China, rather than downstream aluminium products.
UC Rusal's sole current operation in China is a cathode factory in the city of Linshi in China's Shanxi Province, acquired in April last year. The cathode plant supplies UC Rusal's smelters in Russia.
"UC Rusal will continue to seek opportunities for either plant expansion or other acquisitions. But we have no definite aluminium or alumina projects in China at present," Finnimore said.
Upon questioning, Finnmore commented that "why UC Rusal intends to make use of its various major smelters and new projects located in southern and eastern Siberia to access the Chinese market, rather than establishing smelters in China, is due to the high energy costs in China."
Chinese smelters are charged the highest power costs in the world, at between 3 cents and 4 cents per 1,000 kilowatts, while the global average is between 2 cents and 3 cents per 1,000 kilowatts. Russia and Canada only charge between 1 cent and 2 cents per 1,000 kilowatts.
UC Rusal was established in March 2007 through the merging of RUSAL, SUAL and alumina assets from Glencore. The company has a current production capacity of 3.9 million tonnes of primary aluminium and 10.6 million tonnes of alumina per annum, and owns approximately 12.5% and 16% of global aluminium and alumina production capacity, respectively.
(c) Interfax-China 2007. For more intelligence on Chinese metals and mining, click here or contact David Harman in Hong Kong at david.harman@interfax-news.com or (852) 2537-2262.
