RUSAL, the world’s largest aluminium producer, has said it will cut its capacity by three to four percent by the end of the year.
That after the Russian group announced a 71.5 percent drop in second-quarter net profit, for a loss of 29.5 million euros.
It was hit by weak prices for aluminium, rising power costs and a big writedown on its investment in the African country of Guinea.
Its Friguia alumina refinery faces a challenge to its operations from Guinea’s government.
Chief financial officer Evgeny Kornilov said on a conference call: “Since April, the plant is on strike, which is illegal as ruled by the local court. Also, the plant has a high cost of production which makes operations there, at present, uneconomical.”
Unions say a 2006 contract that sold the Friguia refinery to RUSAL should be annulled.
RUSAL continues to operate in Guinea where it also owns Compagnie des Bauxites de Kindia (CBK), its largest raw materials asset which together with the Friguia complex accounts for over 40 percent of the company’s bauxite output. RUSAL also owns the Dian Dian bauxite project in Guinea.