United Company RUSAL Plc: Production Results for the Year Ended 31 December 2012

  United Company RUSAL Plc: Production Results for the Year Ended 31 December
  2012

Business Wire

HONG KONG -- February 7, 2013

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the whole or any part of the contents of this announcement.

             UNITED COMPANY RUSAL PLC (Paris:RUSAL) (Paris:RUAL)
        (Incorporated under the laws of Jersey with limited liability)
                              (Stock Code: 486)

This announcement is made by United Company RUSAL Plc (“UC RUSAL” or the
“Company” and together with its subsidiaries the “Group”) pursuant to Rule
13.09 of the Rules Governing the Listing of Securities on The Stock Exchange
of Hong Kong Limited, Inside Information Provisions under Part XIVA of the
Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and applicable
French laws and regulations.

Shareholders and potential investors of UC RUSAL are advised to exercise
caution when dealing in the shares of UC RUSAL.

UC RUSAL announces its key production data for the year ended 31 December 2012

Key highlights

  *Total aluminium output reached 4,173 thousand tonnes in 2012, an increase
    of 1% compared to 2011 mainly due to restart of production at Sayanogorsk
    aluminium smelter partially interrupted in 2011 following railway bridge
    collapse. Total aluminium output in the fourth quarter of 2012 decreased
    by 2% to 1,038 thousand tonnes compared to 1,060 thousand tonnes in the
    fourth quarter of 2011.
  *Alumina output totaled 7,477 thousand tonnes in 2012, a decrease of 8%
    compared to 2011. Alumina output in the fourth quarter of 2012 decreased
    by 13% to 1,806 thousand tonnes compared to 2,082 thousand tonnes in the
    fourth quarter of 2011.
  *Bauxite production totaled 12,365 thousand tonnes in 2012, a decrease of
    8% compared to 2011. Bauxite output in the fourth quarter of 2012
    decreased by 15% to 2,788 thousand tonnes compared to 3,288 thousand
    tonnes in the fourth quarter of 2011.

                                            Year ended                Change
Key operating data^1                     31 December            year-on-
                                                                      year
(‘000 tonnes) unless otherwise              2012      2011         (%)
indicated
                                                                      
Aluminium                                   4,173        4,123        1%
Alumina                                     7,477        8,154        (8%)
Bauxite                                     12,365       13,473       (8%)
Nepheline                                   4,947        4,608        7%
Aluminium foil and packaging products       86           81           6%
                                                                      

^1 UC RUSAL assets also include two quartzite mines, one fluorite mine, two
coal mines, one nepheline syenite mine and two limestone mines. The Company
also has three aluminium powder metallurgy plants and produces cryolite,
aluminium fluoride and cathodes. The detailed production results of these
businesses are disclosed on pages 10-11.

Global Aluminium Industry

Key Highlights

UC RUSAL forecasts that:

  *Global demand for aluminium will maintain its growth and increase by 6%
    reaching 50 million tonnes in 2013
  *Aluminium consumption growth primarily to be driven by China, other Asian
    countries and the United States (US)
  *Aluminium premiums will continue to grow in 2013
  *About 1-1.5 million tonnes of the global aluminium production to be idled
    in 2013 under the current circumstances as significant amount of the
    global production will be at the break-even point
  *The aluminium market will remain balanced in 2013

Global aluminium consumption in 2012

Global aluminium consumption rose by 6% in 2012 to 47.4 million tonnes. While
aluminium demand in Europe remained subdued, this was offset by strong
consumption growth in China and the US in the fourth quarter of 2012 which has
continued into the first quarter of 2013 and ensures positive sentiment for
the year ahead.

Aluminium consumption in the US grew by 5.4% in 2012 to 5.9 million tonnes.
Demand in the fourth quarter of 2012 was boosted by increased production
across the automotive industry, of particular relevance due to increasing
levels of aluminium parts being used in manufacture of cars and significant
uplift in construction sector activity.

In China, continued spending on large infrastructure projects combined with
domestic economy stimulus plans led to improved growth in the Chinese economy
in the fourth quarter of 2012 to 7.9% and industrial production to 10.3%.
Chinese automotive production grew 6.3% year-on-year to 20.6 million units in
2012. Chinese aluminium consumption in 2012 grew by 9.3% to 21.8 million
tonnes.

Japanese aluminium consumption grew by 3.1% to 2 million tonnes in 2012 while
consumption in South Korea grew by 3% to 1.3 million tonnes for the same
period. Other Asian economies are expected to benefit from continued growth in
Chinese economic activity and as a result of the growth in the export of
products containing aluminium.

2013 Outlook

UC RUSAL expects that the uncertainties seen in 2012, namely the current
Eurozone financial crisis and slowdown in Chinese growth, will lessen during
2013 thanks to the strong financial stimulus programs that have been taken by
central banks in key regions and growing data from China.

Global primary aluminium consumption is forecast to reach 50 million tonnes
(6% growth), with China the largest growing market (9.5% growth), followed by
India (6% growth), Asia excluding China (5.8% growth), North America (5%
growth) and Russia & CIS (4% growth). Consumption growth in Europe in 2013 is
expected to be 2% lower than 2012 levels.

As a consequence UC RUSAL forecasts that the global aluminium market to be
balanced in the current year.

China

Chinese infrastructure investments were boosted by 20.6% in 2012. The
continued urbanization process will require significant investment in
infrastructure, including housing, transportation, and social services in
2013.

According to official statistics real estate sales in China were strong
towards the end of 2012 with sales in October and November by floor area
increasing by 23% and 30% year-on-year respectively, suggesting improved
economic sentiment as freer credit conditions allowed households to get access
to loans.

According to WardsAuto forecast, Chinese car production is expected to exceed
European production in 2013. China is forecasted to manufacture 19.6 million
cars and light vehicles in 2013 (a 10% increase year-on-year). The emerging
economies like China and India should be the ultimate beneficiaries of
aluminium demand from the car sector given that the aluminium penetration in
those countries remains well below the level in North America and Europe.

China’s stimulus program for home appliance purchases in rural areas boosted
sales of products containing aluminium like television, air-conditioners,
washing machines and refrigerators.

Other Asia

The trend of Japan’s automotive and electronics’ plants moving to low-cost
countries in South East Asia or to North America and Eastern Europe continued
and were a negative factor for aluminium demand in the past year. This is
likely to impact the level of consumption growth in Japan in the medium to
long term. The strong value of the YEN against the USD also affected exports
in 2012. In addition to this, geopolitical tensions between China and Japan
affected production of aluminium die casters in Japan. Aluminium stock
adjustments in Q1 2013 will result in a fall in imports in Q1 but growth is
expected as the stimulus plans announced in December resulted in a 13%
devaluation of the Yen, which will be positive for exports and the consumption
of aluminium.

South Korea’s consumption growth is estimated at 3% in 2012 due to weaker
demand in the fourth quarter as a result of negative impact of demand for
aluminium semis and goods in the US and especially in Europe for
export-oriented sectors. The ongoing recovery in the US and strong demand in
SE Asia is expected to support exports and aluminium consumption in 2013. The
new government is reacting to the 2012 slowdown by increasing public
infrastructure investment, which will in turn increase domestic demand.
Renewable energy projects are planned and the transmission lines associated
with the new generation capacity will have a positive influence on aluminium
demand.

Primary aluminium consumption in India increased by about 5.5% in 2012. The
electrical power sector is the largest aluminium consumer sector, responsible
for 40% of total aluminium consumption in India in 2012. In the medium and
long term, there are several electrification plans that will continue to boost
aluminium demand from this sector. The transportation sector is also a large
consumer of aluminium in the country. Demand from transportation will show the
highest year-on-year percentage increase in the future.

North America

According to WardsAuto passenger car production increased by 17.5% to 15.4
million units in 2012 compared to 13.1 million units in 2011. The level of
automotive production capacity utilization reached 92.7% in the third quarter
of 2012 compared to 78.7% in the third quarter of 2011.

According to Ducker Worldwide Research, the aluminium content in American cars
has now reached 150 kg per vehicle in 2012 and will continue to grow at a
compound annual growth rate (CAGR) of 3.7% until 2020.

The North American building and construction sectors supported the demand for
aluminium in 2012. The US construction market as a whole continues to show
solid growth. According to official statistics US housing demand climbed by
12.1% month-on-month in December, continuing to signal a recovery in demand
for the construction sector. In annual terms US housing rose by 36.9% in
December to 954,000 units and by 27.7% year-on-year in 2012.

Europe

While the US, China and rest of Asia are expected to drive aluminium demand in
2013, our view on the European consumption of aluminium remains negative for
2013. Despite the efforts taken by the European Central Bank (ECB) to solve
the debt problem, European countries are still suffering from weak economic
activity, large budget deficits and cuts in capital spending which are
unlikely to stimulate economic growth and consumption activity. Aluminium
consumption in Europe declined by 3% to 7.7 million tonnes in 2012.

The automotive industry, a key aluminium end-user, remains depressed in
Europe. According to EUROSTAT, in 2012, new car registrations totalled around
12 million units, a decrease of 8.2% from 2011. The demand for new cars fell
to the lowest level recorded since 1995. After two years of production growth,
unit production started to fall again in 2012 (-7%), under-shooting the
pre-crisis level from 2007 by around 15%. It is expected that there will be a
further, albeit less pronounced, decline of car production in 2013. However
any reduction is expected to be partially offset by an increase in the
aluminium content in cars, which has increased to 135 kg per vehicle in 2012.

LME stocks and premiums

LME stocks have sustained the 5.2 million tonnes level seen at the end of
2012. The current warehouse incentives in Europe and the US will continue to
attract surplus metal which will be supported by strong contangoes resulting
from ongoing low costs of finance and renewed interest from the hedge funds.

Financial deals continue to be a dominant factor for LME aluminium pricing. As
more than 65% of LME stocks are locked in financial deals, ongoing low costs
of finance and renewed interest from the hedge funds increase financial
trading of aluminium contracts which is significantly exceeding a physical
demand. Fundamental pricing factors including rising producers’ costs and real
demand growth for physical metal are currently less defining for aluminium
price.

The increase in demand and the tight metal availability continued to push
regional premiums to historical highs in all major regional markets in 2012
and this trend will possibly continue in 2013. As at the end of December, the
Japanese premium stood at USD254 per tonne, the US Mid-West premium was at
USD248 per tonne and the European Rotterdam in-warehouse premium was reported
to be at USD285 per tonne.

Aluminium production results

UC RUSAL’s total attributable aluminium output (see footnotes 2 below table)
amounted to 4,173 thousand tonnes in 2012, compared to 4,123 thousand tonnes
in 2011 (an increase of 1%).

The increase in volumes during the period was mostly due to increased
production across the lower cost aluminium smelters located in Siberian Region
(Russia), as well as at KUBAL (Sweden) and at Alscon (Nigeria).

The significant increase in the output at the Sayanogorsk aluminium smelter in
2012 (by 42 thousand tonnes or by 8%) was due to the reduced production in the
second half of 2011 following the collapse of the railway bridge over the
Abakan River in Khakas region that was used to deliver, among other freights,
raw materials to the Sayanogorsk and Khakas aluminium smelters.

As announced in the third quarter of 2012 the Company has begun a long-term
phased programme of production optimization which has seen aluminium output
decrease in 2012 at certain less-efficient smelters located in the European
part of Russia and the Urals (mainly at the Bogoslovsk and Nadvoitsy aluminium
smelters, by 21 thousand tonnes and 15 thousand tonnes respectively).

The table below shows the contribution from each facility.

                                    Year ended                        Change
Asset           Interest^2    31 December                    year-on-
                                                                      year
(Kt)                                2012          2011             (%)
                                                                      
Russia
(Siberia)
Bratsk
aluminium          100%             995              988              1%
smelter
Krasnoyarsk
aluminium          100%             1,000            995              1%
smelter
Sayanogorsk
aluminium          100%             541              499              8%
smelter
Novokuznetsk
aluminium          100%             291              286              2%
smelter
Irkutsk
aluminium          100%             413              403              3%
smelter
Khakas
aluminium          100%             295              293              1%
smelter
                                                                      
Russia —
Other
Bogoslovsk
aluminium          100%             103              124              (17%)
smelter
Volgograd
aluminium          100%             168              168              —
smelter
Urals
aluminium          100%             71               77               (8%)
smelter
Nadvoitsy
aluminium          100%             60               75               (20%)
smelter
Kandalaksha
aluminium          100%             71               68               4%
smelter
Volkhov
aluminium          100%             16               16               —
smelter
                                                                      
Ukraine
Zaporozhye
aluminium          97.6%            —                7                —
smelter
                                                                      
Sweden
Kubikenborg
Aluminium          100%             129              111              16%
(KUBAL)
                                                                      
Nigeria
ALSCON             85%              22               15               47%
                                                                      
Total                               4,173            4,123            1%
production
                                    ==========       ==========
                                                                      

^2 Presents total production of the plants, each of which is a consolidated
subsidiary of the Company.

Alumina production results

UC RUSAL’s total attributable alumina output^3 amounted to 7,477 thousand
tonnes in 2012, compared to 8,154 thousand tonnes in 2011, a decrease of 8%.

The decrease in the volume of alumina production in 2012 compared to that of
2011 was predominantly attributable to the Nikolaev alumina refinery (Ukraine)
and the Friguia Alumina Refinery (Guinea) with operations interrupted in April
2012.

^3 Calculated based on the pro rata share of the Group’s ownership in
corresponding alumina refineries.

                                    Year ended                        Change
Asset              Interest    31 December                    year-on-
                                                                      year
(Kt)                                2012          2011             (%)
                                                                      
Ireland
Aughinish            100%           1,926            1,927            —
Alumina
                                                                      
Jamaica
Alpart               100%           —                —                —
Windalco
(Ewarton and         93%            514              554              (7%)
Kirkvine Works)
                                                                      
Ukraine
Nikolaev Alumina     100%           1,429            1,601            (11%)
Refinery
Zaporozhye
Alumina              97.6%          —                —                —
Refinery^4
                                                                      
Italy
Eurallumina          100%           —                —                —
                                                                      
Russia
Bogoslovsk           100%           1,006            1,052            (4%)
Alumina Refinery
Achinsk Alumina      100%           945              977              (3%)
Refinery
Urals Alumina        100%           768              741              4%
Refinery
Boxitogorsk          100%           —                55               —
Alumina Refinery
                                                                      
Guinea
Friguia Alumina      100%           150              574              (74%)
Refinery
                                                                      
Australia (JV)
Queensland           20%            740              673              10%
Alumina Ltd.^5
                                                                      
Total production                    7,477            8,154            (8%)
                                    ==========       ==========
                                                                      

^4 Zaporozhye Alumina Refinery (ZALK) is a fully consolidated subsidiary of
the Company
^5 Pro-rata share of production attributable to UC RUSAL.

Bauxite production results

UC RUSAL’s total attributable bauxite output^6 was 12,365 thousand tonnes in
2012, compared to 13,473 thousand tonnes in 2011 (a decrease of 8%).

The decrease in the volume of bauxite production was mainly due to the reduced
mining operations at the Friguia bauxite mine in Guinea following production
interruption at the Friguia alumina refinery; this was partially offset by the
increased output at other facilities in Russia, Guinea and Guyana. The table
below shows the contribution from each facility.

In December 2012 the Company announced the signing of the Annex 11 to the
Dian-Dian Concession Agreement with the Republic of Guinea specifying details
of the development of Dian-Dian, the world’s largest bauxite deposit.
According to the signed document, the project development will be divided into
four phases to be realized by the end of 2019 and will involve the development
of a bauxite mine and construction of an alumina refinery.

                                    Year ended                        Change
Bauxite mines     Interest    31 December                    year-on-
                                                                      year
(Kt Wet)                            2012          2011             (%)
                                                                      
Jamaica
Alpart               100%           —                —                —
Windalco
(Ewarton and         93%            1,812            1,842            (2%)
Kirkvine)
                                                                      
Russia
North Urals          100%           2,954            3,350            (12%)
Timan                80%            2,212            2,030            9%
                                                                      
Guinea
Friguia              100%           491              1,921            (74%)
Kindia               100%           3,331            3,002            11%
                                                                      
Guyana
Bauxite
Company of           90%            1,566            1,328            18%
Guyana Inc.
                                                                      
Total                               12,365           13,473           (8%)
production
                                    ==========       ==========
                                                                      

^6 Calculated based on pro-rata share of the Company’s ownership in
corresponding bauxite mines and mining complexes. The total production of the
Company’s fully consolidated subsidiaries, Timan and Bauxite Company of Guyana
Inc., are included in the production figures, notwithstanding that minority
interests in each of these subsidiaries are held by third parties.

Nepheline production results

UC RUSAL’s nepheline syenite production was 4,947 thousand tonnes in 2012,
compared to 4,608 thousand tonnes in 2011 (an increase of 7%).

Nepheline                           Year ended                        Change
mines             Interest    31 December                    year-on-
(Achinsk)                                                             year
(Kt Wet)                            2012          2011             (%)
                                                                      
Kiya Shaltyr
Nepheline            100%           4,947            4,608            7%
Syenite
                                                                      
Total                               4,947            4,608            7%
production
                                    ==========       ==========
                                                                      

Foil and packaging production results

The aggregate aluminium foil and packaging material production from the
Company’s plants increased by 6% to 86 thousand tonnes in 2012, primarily due
to increased production at Sayanal in Russia.

The table below shows the contribution from each facility.

                                    Year ended                        Change
Foil Mills        Interest    31 December                    year-on-
                                                                      year
(kt)                                2012          2011             (%)
                                                                      
Russia
Sayanal              100%           40.666           36.372           12%
Ural Foil            100%           16.509           17.305           (5%)
Sayana Foil          100%           2.808            2.164            30%
                                                                      
Armenia
Armenal              100%           26.263           25.313           4%
                                                                      
Total                               86.246           81.154           6%
production
                                    ==========       ==========
                                                                      

Other business

The Company’s aggregate output from its non-core business has shown
multidirectional dynamics. Silicon increased by 6% to 59,348 tonnes in 2012
while secondary alloys decreased in 2012 by 9%, cathodes by 67%, powder by 4%
and fluorides by 11% compared to 2011. The decrease in the production was due
to weaker demand for the products.

                                            Year ended                Change
                                         31 December            year-on-
                                                                      year
(t) unless otherwise indicated              2012      2011         (%)
                                                                      
Secondary alloys                            24,635       27,105       (9%)
Cathodes                                    11,177       34,000       (67%)
Silicon                                     59,348       56,171       6%
Powder                                      19,110       19,934       (4%)
Fluorides                                   69,514       77,760       (11%)
Coal (50%) (Kt)                             22,012       20,320       8%
Transport (50%) (Kt of                      7,793        8,160        (4%)
transportation)
                                                                      

Coal production results

The aggregate coal production attributable to the Group’s 50% share in LLP
Bogatyr Komir increased by 8% to 22,012 thousand tonnes in 2012, compared to
20,320 thousand tonnes in 2011. The increase in volume in 2012 compared to
2011 was due to a higher demand for coal in Kazakhstan.

Transportation results

The aggregate coal and iron ore transported by the Company’s 50% share in LLP
Bogatyr Komir Trans by railway decreased by 4% to 7,793 thousand tonnes in
2012, compared to 8,160 thousand tonnes in 2011. The decrease in volume in
2012 compared to 2011 was due to a greater volume of coal delivered to Russia
during the period, which is further away than the internal railing in
Kazakhstan.

Forward-looking statements

This announcement contains statements about future events, projections,
forecasts and expectations that are forward-looking statements. Any statement
in this announcement that is not a statement of historical fact is a
forward-looking statement that involves known and unknown risks, uncertainties
and other factors which may cause UC RUSAL’s actual results, performance or
achievements to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. These
risks and uncertainties include those discussed or identified in UC RUSAL’s
prospectus dated 31 December 2009. UC RUSAL makes no representation on the
accuracy and completeness of any of the forward-looking statements, and,
except as may be required by applicable law, assumes no obligations to
supplement, amend, update or revise any such statements or any opinion
expressed to reflect actual results, changes in assumptions or in UC RUSAL’s
expectations or changes in factors affecting these statements. Accordingly,
any reliance you place on such forward-looking statements will be at your sole
risk.

By Order of the board of directors of
United Company RUSAL Plc
Vladislav Soloviev
Director

8 February 2013

As at the date of this announcement, the executive Directors are Mr. Oleg
Deripaska, Ms. Vera Kurochkina, Mr. Maxim Sokov and Mr. Vladislav Soloviev,
the non-executive Directors are Mr. Dmitry Afanasiev, Mr. Len Blavatnik, Mr.
Ivan Glasenberg, Mr. Maksim Goldman, Ms. Gulzhan Moldazhanova, Mr. Christophe
Charlier, Mr. Artem Volynets, Mr. Dmitry Yudin, Mr. Vadim Geraskin, and the
independent non-executive Directors are Mr. Barry Cheung Chun-yuen, Dr. Peter
Nigel Kenny, Mr. Philip Lader, Ms. Elsie Leung Oi-sie and Mr. Matthias Warnig
(Chairman).

All announcements and press releases published by the Company are available on
its website under the links http://www.rusal.ru/en/investors/info.aspx and
http://www.rusal.ru/en/press-center/ press-releases.aspx, respectively.

Contact:

United Company RUSAL Plc
 
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