Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

RusAl Saves $554M On Costs, Production

United Company RusAl said Tuesday that it slashed costs by $554 million in the first quarter, half of what it had planned to save for the whole year, but workers said they thought that the reductions were taking a toll on efficiency and safety.

RusAl said in an e-mailed statement that it cut management expenses by 60 percent, reduced raw materials expenses by 35 percent and cut production costs by 23 percent.

The company planned to cut production costs by another 26 percent by the end of the year to reach its savings target of $1.1 billion.

"We have reduced costs, optimized production at economically inefficient facilities and progressed in negotiations with our key creditors," RusAl chief executive Oleg Deripaska said in the statement. "Our proactive steps will also strengthen our position as the world's most efficient aluminum company."

RusAl's debt, among the highest in Russian industry, is estimated at $14 billion. The firm signed a two-month standstill agreement with about 70 foreign banks on $7.4 billion of debt on March 11, and it is in restructuring talks.

Aluminum prices have plunged nearly 60 percent since July to $1,431 per ton as of Tuesday.

Aluminum output fell 7.2 percent to 1 million tons in the first quarter, year on year. The company planned a full-year cut of 11 percent from last year's level, or 500,000 tons. The production of bauxite, a key aluminum component, dropped by 34.2 percent to 3 million tons in the first quarter, year on year. RusAl planned to cut bauxite production by 5.6 million tons for the year.

Workers at RusAl's bauxite mine in Severouralsk, in the Sverdlovsk region, said the austerity measures, such as not replacing drilling equipment, had hurt productivity and forced them to cut corners on safety regulations.

"They haven't cut the production plans for my mine, but it falls anyway when you're running around for half the shift looking for a perforator," Vladimir Murzin, a Severouralsk miner, said by telephone. "They stopped buying some new components and instruments, so we have to exchange with each other.

"Since we don't have enough iron supports to build the mine, we have to go back to spent sectors to get more, which is prohibited by the safety rules," he said.

A RusAl spokeswoman said none of the cuts would affect the technology process or the safety work at the mine and that the miner's comments did not reflect the overall situation at the mine or RusAl. The Federal Inspection Service for Natural Resources Use inspects RusAl's mines for safety violations monthly, she said.

A call to the service's local office went unanswered after office hours on Tuesday.