Rusal is considering closing several unprofitable plants – Kommersant

United Company “Rusal” (MOEX: RUAL) is considering the option of closing several unprofitable plants due to low prices for aluminum and financial losses from the introduction of export duties linked to the ruble exchange rate. About it “Interfax” Sources close to one of the company’s creditors said. Rusal did not comment on the information.

According to BKS expert Dmitry Kazakov, quoted by Interfax, the highest costs were incurred by the company’s three aluminum plants – Kandalaksha, Volgograd and Novokuznetsk. The capacity of these plants is designed to produce 500 thousand tons of aluminum (in 2022, the company produced a total of 3.83 million tons – 5.6% of global aluminum production).

Interfax notes that the depreciation of the ruble will compensate Rusal for the fall in aluminum prices. At the same time, the company covers the need for alumina through imports. In 2022, Rusal lost access to the Nikolaevsky alumina refinery in Ukraine, and also lost Australian alumina supplies. These two sources provided 40% of the company’s alumina consumption. The agency notes that after stopping work on Nikolaev alumina, the company switched to imported sources, which increased logistics costs.

On October 13, Rusal announced that it was having difficulty maintaining stability in the global market, including in the form of a refusal to purchase aluminum from Novelis Europe in 2024. On October 10, the American Novelis refused to purchase Russian aluminum. Rusal enterprises in the period from January to September 2023 reduced aluminum exports to 2.29 million tons, or 4.8% compared to the same period last year. Rusal’s adjusted net profit for the first half of 2023 decreased by 54.3% and amounted to $315 million.

Since 2018, Rusal has been raising the issue of shutting down some of its facilities. Thus, in August 2018, the company announced the completion of the mothballing of the electrolysis capacities of the Nadvoitsky Aluminum Plant (NAZ) due to sanctions imposed by the United States. In 2021, the company announced its intention to mothball part of the capacity of the former SUAL plants, which were included in OK in 2007. Then Rusal explained the need to reduce capacity by the loss of “hundreds of millions of dollars” against the backdrop of the introduction of an export duty on metals (which ceased to apply in December 2021). According to Interfax, Rusal did not notify SUAL Partners shareholders about its current plans to close unprofitable plants.