Moscow, 16 October 2008 – UC RUSAL, the world’s largest aluminium and alumina producer, is pleased to announce its production and summary financial results for the first nine months of 2008.

Highlights



Bauxite output rose 3.4% to 13.5 mln tonnesљ compared to the same period last year

Alumina output grew 2% to reach 8.4 mln tonnes

Primary aluminium production increased 6.5% to 3.3 mln tonnes

Output of value-added casthouse products increased 10.8% to constitute 51% of the company’s total aluminium output

Foil production rose 5.7%

Total revenues for the first nine months of 2008 increased 14% to USD 12.3 bn

Revenues from sales outside Russia in 9 months of 2008 rose 14.6% and reached USD 9.3 bn

Revenues from sales on the Russian market increased 12.2% and were USD 3 bn

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Figures for H1 2007 reflect the combined production results of United Company RUSAL, formed through the completion of the merger of RUSAL, SUAL and Glencore’s alumina assets. Figures are preliminary and may be revised following audit completion.

Commenting on the nine months results, Alexander Bulygin, UC RUSAL CEO, said:

“We have completed the first nine months of 2008 with positive results and growth in the entire product range. The global aluminium industry is facing a challenging time. 75% of aluminium producers in Europe, the USA and China are already operating below break-even with the aluminium price at USD 2,500 per tonne. As a result, today the aluminium industry is the only metals and mining sector with such a high concentration of unprofitable production facilities. This will inevitably lead to fundamental changes in the global aluminium industry. Uncompetitive companies will be forced to cut production at unprofitable plants, reconsider investment programmes, abandon new projects and put on hold expansion programmes that are already under development. In this environment, even if the global economy falls into recession during the coming year and in the worst case scenario, the demand for aluminium drops by 10%, supply will still be far behind demand in the medium term. This will support the future sustainable growth of the aluminium price.

“I am confident that the situation in the aluminium industry today provides an opportunity for companies to become even more competitive and enhance their efficiency by exploring new opportunities. UC RUSAL intends to take advantage of this challenging time to strengthen its position in the mining and metals industry.”

Key projects and initiatives

UC RUSAL has signed a Memorandum of Understanding to create a joint venture with the Libyan State Economic and Social Development Fund for the construction of an energy and metals complex in Libya. The complex will include a 600 ktpa aluminium smelter and a 1,500 MWt natural gas-fired power plant. Should the conclusions of the preliminary feasibility study be positive, the parties intend to sign final documents on the joint venture in 2009, and launch the construction of the power plant and aluminium smelter in 2010.

UC RUSAL purchased 25% plus two shares in Norilsk Nickel from ONEXIM Group and became a strategic investor in the world’s largest nickel producer.

The company has almost completed Stage One of a comprehensive environmental modernisation project at the Krasnoyarsk aluminium smelter, which has lasted five years and will help reduce general emissions at the smelter by 30%. Over the first nine months of 2008, UC RUSAL has invested about USD 13 mln while the overall project budget will total USD 300 mln. On the construction site of the Taishet aluminium smelter, the company began assembly works at the smelter’s potrooms. In 2008, UC RUSAL plans to spend over USD 700 mln on this project.

Following research and test works, UC RUSAL successfully started the test production of colloidal anode paste. Colloidal anodes are the key component of a unique initiative, whose objective is to invent a ‘clean smelting technology’, which will be used at later stages of the ongoing modernisation programmes at UC RUSAL’s largest smelters. The total investment in this research project amounts to approximately USD 25 mln. The company intends to introduce the new technology at all of UC RUSAL’s Soederberg aluminium operations during 2010-2015.

UC RUSAL and Ust-Luga Company have signed a memorandum of cooperation to construct and launch a trans-shipment complex in the Leningrad Region. The complex will consist of two terminals designed to ship aluminium and alumina at the Ust-Luga trade sea port. UC RUSAL will invest over USD 300 mln in the project. The parties plan to launch the complex by 2011 with an initial shipment capacity of 2.5 mln tonnes of alumina and 2 mln tonnes of aluminium.



Production figures

Production	9 months, 2008	9 months, 2007	(%)
Bauxite mln tonne	13.5	13.0	3.4
Alumina mln tonne	8.4	8.3	2.0
Primary aluminium and casthouse products mln tonne	3.30	3.1	6.5
- value-added casthouse products alone mln tonne	1.7	1.5	10.8
Aluminium foil thous. tonne	54.5	51.6	5.7
Powders thous. tonne	15.8	15.0	5.4
Silicon thous. tonne	46.1	41.3	11.6

Bauxite mining rose by 3.4%, which was facilitated by increased supplies of bauxite from CBK (Compagnie des Bauxites de Kindia) in Guinea to Eurallumina (Italy), and also following the commissioning of modern mining equipment and machinery at BCGI in Guyana.

The 2% growth of alumina production is the result of an upgrade to the railway system and acquisition of modern rolling stock in Fria’s alumina and bauxite complex (Guinea) and also due to several process improvements at Nikolaev (Ukraine), Alpart and Windalco (Jamaica) and an increase in production at Aughinish (Ireland).

The сompany increased its total aluminium output by 6.5% after the Khakas aluminium smelter reached its full design capacity of 300 ktpa, and, as a result, the smelter nearly doubled the previous year’s production figures. In addition, the сompany’s overall output has risen following the commissioning of Alscon in Nigeria, the launch of Potline 5 in Irkutsk, and the continuing modernisation projects and improved efficiency at the Bratsk and other aluminium smelters.

A significant 5.7% increase in foil output is mainly due to the gradual ramp-up of the ARMENAL foil mill (Armenia) to its design capacity, and was also made possible after several improvements of the production technology at Sayana Foil, SAYANAL and Urals Foil mills.

The continuing activities focused on the improvement and optimisation of production and management systems at Silicon and Silicon Urals plants, have ensured an extra 11.6% of silicon output.