ERG ships Kazakh alumina to China in drive to find new buyers -sources

BEIJING/ALMATY, Feb 22 (Reuters) - Eurasian Resources Group (ERG) has started shipping alumina from Kazakhstan into northwest China’s Xinjiang region, according to four people with knowledge of the matter, as the miner seeks to reduce reliance on major buyer United Company Rusal.

Purchases of the raw material, used in aluminium production, from Kazakhstan are a rare occurrence in China, the world’s top producer of the metal. China did not import any alumina from the Central Asian country in 2017 or 2018, according to customs data.

Over 10,000 tonnes of alumina arrived at Xinjiang Tianlong Mining Co this week, having travelled by rail via China’s border city of Alashankou, two of the people said, the first time the company, which has a 250,000 tonnes per year aluminium smelting capacity, has imported the material.

Tianlong signed a deal to take a total of 12,000 tonnes from Astana-based ERG initially, one of the people said. “If it can be used well, perhaps a one-year contract will be signed,” the source said.

All of the sources declined to be identified because they were not authorised to speak to media.

Tianlong and ERG did not immediately respond to requests for comment.

ERG, which produces 1.5 million tonnes of alumina a year in Kazakhstan, stepped up its search for new customers last year after the United States said it would slap sanctions on Rusal, which takes two-thirds of ERG’s alumina, another of the sources said.

The volumes recently sent to China were part of the supply previously earmarked for Rusal, he added.

The remainder of ERG’s alumina goes to its own smelter in the city of Pavlodar in northeast Kazakhstan.

The U.S. sanctions were withdrawn in January but ERG’s contract with Rusal expires at the end of 2019 and ERG executives last year spoke of reducing the company’s dependence on alumina sales to the Russian giant.

Rusal did not immediately respond to a request for comment. (Reporting by Tom Daly in BEIJING and Olzhas Auyezov in ALMATY; Additional reporting by Mariya Gordeyeva in ALMATY; Editing by Kenneth Maxwell)