Rusal will build an alumina plant in the Leningrad region for 400 billion rubles
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Rusal intends to improve raw material security by building an alumina refinery with a capacity of 4.8 million tons and a deep-water port in the Leningrad Region. The entire project will cost the company 400 billion rubles. Alumina is the main raw material for aluminum production. Rusal intends to supply bauxite for alumina production in the Leningrad Region from its assets in Guinea. Rusal has historically sourced most of its alumina from foreign smelters, but in 2022 Ukraine took control of the Mykolaiv Alumina Refinery and Australia banned shipments to Russia.
Rusal plans to invest 400 billion rubles. in the construction of an alumina plant in the Leningrad region. The corresponding agreement was signed with the regional authorities on the margins of the SPIEF. The company will use its own and borrowed funds.
The total capacity of the plant will be 4.8 million tons. According to the aluminum company, the first stage of the plant with a capacity of up to 2.4 million tons per year will be put into operation before the end of 2028, the second stage with a similar capacity – in 2032. A deep water port will be built for the operation of the alumina refinery. The strategy for the development of the metallurgical industry until 2030 stated that the plant was planned to be built in Ust-Luga.
The Leningrad region is distinguished by optimal logistics for sea supplies of bauxites from Guinea, which serve as raw materials for the production of alumina, according to Rusal. In addition, the Boksitogorsk and Pikalevsky alumina refineries of the company are located in the region.
The company also noted that an important aspect of choosing a location was the availability of pipeline gas, sufficient depths off the coast of the Gulf of Finland, a developed construction base in St. Petersburg and the Leningrad Region, and the availability of labor resources.
There are no large bauxite deposits in Russia, which serve as raw materials for the production of alumina. Therefore, a number of bauxite mining and alumina producing enterprises are located abroad. Rusal produced 63% of the alumina it uses at foreign assets, among which was the Nikolaev alumina refinery in Ukraine, to which the Russian company lost access in 2022. In February 2023, the High Anti-Corruption Court of Ukraine nationalized the plant, which provided 20% of the company’s alumina production (total production – 5.9 million tons in 2022). Rusal’s 2022 IFRS report says the company intends to appeal the decision.
Rusal also lost potential supplies from Australia. This country in March announced a ban on the export of alumina and aluminum ores to Russia. In Australia, Rusal owned A 20% stake in Queensland Alumina, where Rio Tinto is the majority shareholder. Rusal in its reporting for 2021 reflected the production of alumina at this asset at 742 thousand tons (9% of the company’s total production).
Against this background, Russia has started buying alumina from China, India and Kazakhstan. In 2022, the volume of purchases from external suppliers increased by 263.4%. Problems with supplies and rising purchase prices led to an increase in the cost of purchasing alumina in 2022 by 149.3%, to $1.8 billion, Rusal reported in March 2023. The cost of a ton of aluminum increased by 31.8% to $2,325.
Due to the construction of a new alumina refinery, the company expects to meet up to 60% of its demand for this raw material and reduce its cost in the face of unfavorable global aluminum market conditions, Rusal reported.
The final cost of the project will be determined after the approval of the design and estimate documentation.
Rusal is also planning investments in Guinea. “They are necessary for the development of infrastructure that will ensure an increase in the production and transportation of bauxite in the republic, which will also create prerequisites for improving our trade and economic relations,” Rusal said.
Russia does not have large bauxite reserves. Two-thirds of the world’s reserves are concentrated in six countries: Guinea (20 billion tons), Australia (7 billion tons), Brazil (6 billion tons), Vietnam (3 billion tons), India (2.5 billion tons), Indonesia (2 billion tons).
Rusal owns bauxite mining operations in Guinea, Guyana and Jamaica.
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