RusAl Sees End to Profitability

United Company RusAl said Thursday that 75 percent of aluminum producers in China, Europe and the United States were unprofitable after the price of the metal fell on slowing demand.

The proportion of unprofitable producers will "inevitably lead to fundamental changes in the global aluminum industry," chief executive Alexander Bulygin said in a statement.

Aluminum has fallen 36 percent since July on concern that a global economic slowdown will cut demand. RusAl pays less for electricity than some of its rivals because the company has its own supplies of hydropower. Energy accounts for about 40 percent of the cost of aluminum smelting.

Rival companies will be forced to cut output and expansion plans, Bulygin said. Rio Tinto Group, the world's second-biggest producer after RusAl, said Wednesday that it idled some sections of its highest-cost plants.

RusAl will "take advantage of this challenging time," Bulygin said. "In this environment, even if the global economy falls into the recession during the coming year and in the worst-case scenario, the demand for aluminum drops by 10 percent, supply will still be far behind demand in the medium term," he said. That will secure "sustainable growth" for the aluminum price, Bulygin added.

RusAl, controlled by Oleg Deripaska, said Tuesday that it applied to Vneshekonombank for a loan to refinance credits from foreign banks used to build and modernize plants.