-global output to be slashed by 5.6M tonnes
The Bauxite Company of Guyana Inc (BCGI) which is part of RUSAL last week announced the results of its cost-cutting programme which includes a package of measures to reduce the cash cost and strengthen the Russian parent company’s position.
According to a press release, in the first quarter of 2009 the reduction in the actual cash cost of one tonne of bauxite at BCGI amounted to 33.7% as compared with the fourth quarter of 2008 and 20.5% versus the average cash cost in 2008. Such significant results in terms of cash cost reduction, the release noted, were achieved due to the actions developed by the production facility within the programme.
In the measures taken a mining plan together with contractors’ services, equipment and fuel deliveries (through river transportation) were optimized; and excess vehicles were put out of operation and mothballed while mining of bauxite with lower cash cost was increased and the administrative budget was also optimized.
Meanwhile, the production facility aims to develop and take additional actions which will allow the cash cost to be reduced by 9.1% in the second quarter. And to be able to do this, BCGI says it plans to pay special attention to optimization of fuel consumption and electricity generation, reduction in bauxite transportation costs and to fully shift to direct supplies of diesel fuel and fuel oil.
According to the release, in the first quarter the economic effect from the package of measures to reduce the cash costs at all RUSAL’s production facilities amounted to US$554M. In 2009, the total cost reduction at all production sites should be US$1.1Bln.
In this year’s first quarter, bauxite mining was reduced by 34.2% as compared with the first quarter last year and totaled 3.0M tonnes. It plans to reduce bauxite mining by 5.6M tonnes by the end of the year. RUSAL is the world’s largest aluminium and alumina producer.
“Through implementing the ‘Cost Effi-ciency Leader’ programme we have achieved impressive results in the key areas of our business to date. Reduction in the cash cost, optimization of the production process at unprofitable production facilities and agreements reached with our main groups of lenders ensure the stability of our business, effective management and the ability to respond quickly to the variable economic situation,” said Pavel Ovchinnikov, Director of the Alumina Division.
He also noted that during the world economic crisis “it is extremely important to save the production and the personnel of BCGI, secure social and economic stability and continue the development of the company in the region.” In order to do this, the company said it needed to make the cash cost as low as possible by reducing the costs which will allow it to continue operations under the severe conditions of a competitive struggle in the world’s markets.
In this light, the cash cost optimization and expenses reduction are the key objectives for every employee of the company, the release stated.
In the meantime, support of trade unions and their cooperation will allow the company to live through these hard times with minimum losses and to become one of the first businesses to recover from the world financial crisis keeping its production capacities and competitive advantages in place, the release added.
In December last year, BCGI cut around fifty jobs.
