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from Summit Notebook:

Would the last person to leave the smelter please turn out the lights?

For UC RUSAL, one simple act is crucial to reducing costs. Bonuses for managers at the world's largest aluminium company depend on the company's 75,000 workers heeding the message. "We have to introduce a new culture: if you leave the office, turn off the lights," Artyom Volynets, UC RUSAL's deputy chief executive for strategy, said at Reuters Global Mining and Steel Summit on Monday. "We have 16 smelters, each with their own headquarters and offices. We employ 75,000 people. If each one of them is switching off the lights at the end of their shift, that would help tremendously." UC RUSAL embarked on a major drive to slash production costs last year as part of an ultimately successful attempt to secure Russia's largest ever private sector debt restructuring. Easy access to Siberian hydroelectric power, compared with relatively high-cost coal used to power smelters in other parts of the world, affords UC RUSAL a distinct cost advantage when making aluminium used in transport, construction and packaging. In the first half of 2009, it cost UC RUSAL an average $1,400 to produce a tonne of aluminium. The metal is now selling at above $2,200 a tonne. UC RUSAL has cut costs by sourcing cheaper raw materials of better quality and improving throughput rates at its smelters in Siberia, which account for about 80 percent of its total output. But cheap power in Siberia had also led to complacency. "Our smelters are located in probably the only remaining major energy-long region in the world. Therefore, if you buy power at 2 cents per kilowatt, you don't really care how much you spend," Volynets said. "For my colleagues on the operational side of the business, their key performance indicators are 100 percent tied to cost improvements," he said. "They will not be compensated if these improvements are not implemented." (Writing by Robin Paxton in Moscow)

from Commodity Corner:

Live from London Metal Exchange Week 2009

The great and good of the global metals industry gather for London Metal Exchange week -- the flagship event for the industry.

With most base metal prices running way ahead of fundamentals, real and apparent demand unclear and leading economies at different stages of recovery or not, its a key time to take the temperature of banks, producers, consumers and funds involved in metals.

To follow us on Twitter look for hashtag LME.

from MacroScope:

“Tinny” signs of recovery

One of the most significant comments about the world economy this week may have come from Klaus Kleinfeld, the chief executive officier and president of Alcoa, America's largest aluminium producer. Amid the reporting of  pretty horrible earnings  -- a $497 million net loss versus a year-earlier gain of $303 million -- Kleinfeld said things may not get much worse.

"There are some signs in many of our end industries for a bottoming out," he said.

A key element was that inventories have been drained across the board, throughout Alcoa's supply chain, among its customers and among its customers' customers.  They are unsustainably low, Kleinfeld said.

That is the kind of thing to lift the spirits of anyone seeking signs of future demand in the economy. Not only is it rare these days for an industrial company's CEO to find anything positive to say, it also implies that  industrial production is primed for a lift.

Unless, of course, it means that everything is about to come to a grinding halt