(Reuters) - Russia’s United Company Rusal is heavily dependent on foreign operations to supply raw materials to its aluminum smelters.
World No. 2 aluminum producer Rusal may be forced to divest most of its portfolio of overseas operations if the aluminum giant cannot restructure them to evade U.S. sanctions and ensure a flow of raw materials. [L8N1RT4ZQ]
Rusal’s international network of plants accounted last year for 53 percent of its output of raw material ore bauxite and 64 percent of production of semi-processed sister alumina.
Below are details of the overseas operations, which are 100 percent owned by Rusal unless otherwise noted:
GUINEA: The West African nation is vital for Rusal, responsible for 27 percent of its production of bauxite, the ore that is refined into alumina and finally is smelted into aluminum metal.
Rusal produced 3.12 million tonnes of bauxite in Guinea last year, but this could double once a new mine opens, which is due later this month. Dian-Dian is the world’s largest bauxite deposit.
The Friguia alumina refinery has been shut since 2012 and Rusal had been planning to reopen it, but analysts said sanctions will likely delay that.
IRELAND: The Aughinish refinery near Limerick is Rusal’s biggest alumina operation and it is the largest such plant in Europe. It produced 1.9 million tonnes in 2017, a quarter of Rusal’s total alumina output.
The refinery will have to find another source for raw material after its supplier Rio Tinto declared force majeure.
Prime Minister Leo Varadkar held talks with managers of the plant in an effort to safeguard 450 jobs there, local media reported at the weekend. “The question is to what extent could the state step in,” said senior analyst at CRU Anthony Everiss said.
JAMAICA: The Windalco operations produced 1.95 million tonnes of bauxite and the Ewarton refinery produced 582,000 tonnes of alumina in 2017.
The government was assessing the impact of sanctions on Rusal’s operations there, local media said.
“In Jamaica we’ve seen a something of a renaissance in the alumina industry and I think there’s a desire by the state to maintain the business,” Everiss said.
Rusal agreed in 2016 to sell its Alpart alumina refinery to China’s state-owned Jiuquan Iron & Steel Group [JISCO.UL].
UKRAINE: The Nikolaev Alumina Refinery produced 1.68 million tonnes in 2017.
GUYANA: Rusal’s 90 percent owned Bauxite Company of Guyana produced 1.05 million tonnes of bauxite last year.
AUSTRALIA: Rusal owns 20 percent of Queensland Alumina Ltd, which produced 3.95 million tonnes of alumina per year. Rio Tinto, which holds the remaining stake, said it was reviewing Rusal’s stake in view of the sanctions.
SWEDEN: The Kubal smelter is Rusal’s only primary metal production facility outside of Russia. It produced 123,000 tonnes of metal last year or 3 percent of the total.
The plant was continuing to operate, but deliveries had been frozen, local media reported. The plant did not respond to email enquiries.
“We cannot do anything until we know the exact details in how this will hit Kubal specifically,” Swedish foreign ministry spokesman Per Enerud said.
Reporting by Eric Onstad, editing by David Evans