Debt-laden Rusal, the world's largest smelter of aluminium, is hoping that industry-wide efforts to cut excess capacity will help lift prices enough for it to pay a dividend, although an analyst said this might not happen for at least two years because capacity cuts took time to flow through to profits. Vladislav Soloviev, Rusal's first deputy chief executive, said after the firm's annual meeting that it might mothball annual capacity of 350,000 tonnes up to 400,000 tonnes, cutting annual output by between 8 and up to 10 per cent, by the end of the year. 'The board will make a decision soon,' he said, adding that the shutdown would be mostly at its smelters in western Russia, which had higher operating costs. The company said last month that it planned to cut its annual smelting capacity by at least 300,000 tonnes, starting in the second half of this year. It may cut up to 600,000 tonnes longer term if it considered it necessary. Some 40 per cent of global smelters were barely breaking even or losing money, Soloviev said, adding that he did not expect the aluminium price to fall below US$1,900 a tonne and may even hit a high of US$2,300 later this year. Prices needed to rebound to at least US$2,500 on an annual average basis before Rusal could generate enough cash to meet its investment needs, service the interest on its debt and have spare cash for a dividend, he said. The three-month aluminium futures contract is trading at around US$1,954 a tonne, a two-year low. Paul Cliff, ING's London-based metals and mining analyst, said dividends were a long way off for Rusal. 'We expect the aluminium market to remain challenging in the next two years, the global aluminium market is in huge oversupply and excess capacities are being mothballed too slowly,' Cliff said. 'I don't expect Rusal to be able to generate sufficient cash flows to justify paying a dividend in the next two years.' Rusal's share price yesterday closed 2.8 per cent higher at HK$4.75, down 56 per cent from its initial public offering price of HK$10.8. Laden under US$11 billion of net debt at last year's end after it spent US$14 billion for a quarter stake in the world's biggest nickel miner, Norilsk Nickel, at the height of the market in 2008, it has been unable to pay a dividend. Substantial shareholder Sual Partners, controlled by Viktor Vekselberg who resigned in March as non-executive chairman, had urged Rusal's board to sell the stake to pay down its debt, but the board, controlled by majority shareholder and chief executive Oleg Deripaska, said the asset had strategic value and market conditions were not good for an asset sale.