Post by radovic on Jan 14, 2009 11:52:23 GMT -5
Deripaska’s Balkan Aluminum Plant May Shut, Seeks Aid (Update1)
Email | Print | A A A
By Thomas Biesheuvel
Jan. 14 (Bloomberg) -- Russian billionaire Oleg Deripaska’s aluminum smelter in Montenegro may close unless it gets government aid after plunging metal prices made the plant unprofitable.
“The current economic downturn has left us no alternative but to start talks with the government over an urgent aid package,” Peter Lidov, a spokesman for EN+, a unit of Deripaska’s Basic Element holding company, said in a statement e-mailed yesterday. “At this stage we can’t completely rule out a possibility of stopping production.”
The closure of Kombinat Aluminijuma Podgorica, which accounts for 51 percent of Montenegro’s exports, would add to output cuts made by producers including Alcoa Inc. and Rio Tinto Group. United Co. Rusal, the Russian producer controlled by Deripaska, has reduced supplies from its Ukrainian operations as prices trade near a five-year low.
Aluminum for delivery in three months fell $9, or 0.6 percent, to $1,506 a ton at 11:14 a.m. on the London Metal Exchange. Prices dropped 36 percent last year, the most since at least 1988, on falling demand from automakers and construction.
KAP can produce 120,000 metric tons of the lightweight metal annually, according to the company’s Web site. Global aluminum smelter cutbacks this year will total 3.5 million tons, according to Standard Bank Plc analyst Leon Westgate. He estimates there will be surplus output of 900,000 tons in 2009.
2005 Purchase
Basic Element bought KAP in 2005 and agreed not to halt the plant’s modernization, cut jobs or curtail production. All three measures are required to keep the smelter operating, Lidov said.
“In the current crisis environment the only possible way to operate it is with the government’s support,” Lidov said
KAP posted a loss of as much as 30 million euros ($39.6 million) for the first eight months of 2008, state-operated RTCG TV reported in October.
Forbes magazine said in April that Deripaska was Russia’s richest man. Deripaska, 41, is seeking investors for closely held Rusal and other companies under his control as he tries to pay off loans. He’s among Russian investors that pledged some of their holdings as collateral for government support after a plunge in commodity prices and the ruble.
To contact the reporter on this story: Thomas Biesheuvel in London tbiesheuvel@bloomberg.net
Last Updated: January 14, 2009 07:07 EST
Email | Print | A A A
By Thomas Biesheuvel
Jan. 14 (Bloomberg) -- Russian billionaire Oleg Deripaska’s aluminum smelter in Montenegro may close unless it gets government aid after plunging metal prices made the plant unprofitable.
“The current economic downturn has left us no alternative but to start talks with the government over an urgent aid package,” Peter Lidov, a spokesman for EN+, a unit of Deripaska’s Basic Element holding company, said in a statement e-mailed yesterday. “At this stage we can’t completely rule out a possibility of stopping production.”
The closure of Kombinat Aluminijuma Podgorica, which accounts for 51 percent of Montenegro’s exports, would add to output cuts made by producers including Alcoa Inc. and Rio Tinto Group. United Co. Rusal, the Russian producer controlled by Deripaska, has reduced supplies from its Ukrainian operations as prices trade near a five-year low.
Aluminum for delivery in three months fell $9, or 0.6 percent, to $1,506 a ton at 11:14 a.m. on the London Metal Exchange. Prices dropped 36 percent last year, the most since at least 1988, on falling demand from automakers and construction.
KAP can produce 120,000 metric tons of the lightweight metal annually, according to the company’s Web site. Global aluminum smelter cutbacks this year will total 3.5 million tons, according to Standard Bank Plc analyst Leon Westgate. He estimates there will be surplus output of 900,000 tons in 2009.
2005 Purchase
Basic Element bought KAP in 2005 and agreed not to halt the plant’s modernization, cut jobs or curtail production. All three measures are required to keep the smelter operating, Lidov said.
“In the current crisis environment the only possible way to operate it is with the government’s support,” Lidov said
KAP posted a loss of as much as 30 million euros ($39.6 million) for the first eight months of 2008, state-operated RTCG TV reported in October.
Forbes magazine said in April that Deripaska was Russia’s richest man. Deripaska, 41, is seeking investors for closely held Rusal and other companies under his control as he tries to pay off loans. He’s among Russian investors that pledged some of their holdings as collateral for government support after a plunge in commodity prices and the ruble.
To contact the reporter on this story: Thomas Biesheuvel in London tbiesheuvel@bloomberg.net
Last Updated: January 14, 2009 07:07 EST