Australia's Alumina Ban Will Undermine Rusal's Aluminum Production

Aluminum ingots are stored in the foundry of Rusal’s Krasnoyarsk aluminum smelter in Krasnoyarsk, Russia, October 3, 2018. REUTERS/Ilya Naimushin/File photo

LONDON, March 21 – Australia’s ban on the export of alumina and aluminum ores, including bauxite, to Russia will further disrupt the supply chains and production of major aluminum producer Rusal (RUAL.MM), consultancy Wood Mackenzie said on Monday.

The Australian government announced the ban on Sunday as part of its ongoing sanctions against Moscow for its invasion of Ukraine, saying Russia is relying on it for a fifth of its alumina needs. More

The ban will make it harder for Rusal to maintain normal primary aluminum production, WoodMac senior manager Udai Patel said in a statement.

Rusal said it was evaluating the implications of Australia’s actions and would make additional statements if necessary.

“It is becoming more and more likely that UC Rusal’s only option for obtaining alumina will be through Chinese companies,” Patel said.

“One possible outcome could be Chinese buyers buying alumina and redirecting sales through eastern Russian ports.”

According to Patel, Rusal owns a 20% stake in the Queensland Alumina Ltd refinery, which has a capacity of 3.95 million tons per year, and thus provides Rusal with 790,000 tons per year.

In addition, Rusal’s Nikolaev refinery in Ukraine with a capacity of 1.75 million tons per year is not operating due to the conflict, he added.

There are also supply chain issues at Rusal’s 2mtpa Aughinish refinery in Ireland, WoodMac said.

Rusal is diverting shipments of bauxite from Guinea to its refinery in Ireland after the original destination in Ukraine was closed due to the Russian invasion, shipping data showed last week. https://reut.rs/368NN8t

Reporting by Erik Onstad Editing by Barbara Lewis and Mark Potter

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