Australia issued a ban to stop the export of alumina and bauxite to Russia
The Australian government announced on March 20 that it would immediately stop exporting alumina and bauxite products to Russia. So, this move will bring more pressure on Rusal and further push up the international market price of aluminum raw materials.
As reported, nearly 20% of Russia’s alumina are from Australia. And about 40% of alumina in Russia are from Australia and Ukraine. In Russia, factories that are using alumina and bauxite may face the risk of supply chain interruption.
Russia is a major supplier of aluminum to Turkey and Japan. Thus, the export ban on Australian aluminum raw materials may bring greater inflationary pressure to the global economy, the report said.
Report says Rusal is assessing the impact of the ban. Rusal owns 20% of the shares of Queensland alumina Co., Ltd. And also shared the same proportion of output. Now Rio Tinto is managing that plant. Rio Tinto may continue to supply aluminum to Rusal at present unless it is directly prohibited by the government.
Rio Tinto said it would comply with all instructions from the Australian government. In the meantime, it will reiterate that it was terminating commercial relations with Russian companies. Rio Tinto plans to stop supplying bauxite to Rusal’s Aughinish plant in Ireland.
Due to the impact of logistics and transportation caused by the conflict between Russia and Ukraine, Rusal also reduced the output of the alumina refinery in Nikolaev, Ukraine. The analysis shows that whether Rusal will reduce the output of metal aluminum will depend on the quantity of its alumina inventory.
The Australian government said the ban would apply to “all relevant goods” destined for Russia. Alumina producers usually exchange goods with other suppliers in different locations to save freight. However, it is unclear whether Rusal can bypass the ban by shipping from its Queensland plant.
Some analysts and commentators believe that once the sanctions are implemented, Rusal will not be allowed to profit from the sale of alumina at all.
Rusal was founded by Russian tycoon Oleg Deripaska. He holds Rusal shares by holding the shares of en + group international, the major shareholder of Rusal. This month, the Australian government announced a new round of sanctions against those close to Russian President Vladimir Putin, including Deripaska.
Earlier this month, en + group said it was considering splitting Rusal’s international business and establishing a new company to store its alumina, bauxite and aluminum assets around the world, which will no longer be owned by Russia.
It is reported that Russia accounts for 6% of the global aluminum supply and is also a major exporter of natural gas. Europe mainly uses natural gas for power generation, while the aluminum industry is a power-intensive industry. Last year, the power shortage has led to the shutdown or reduction of many aluminum smelters in Europe.
Trimet, a German aluminum manufacturer, announced that it would halve production at its main aluminum plant in Essen in the coming weeks because of the current high energy costs. Although the affected output is not very large, it means that Europe is likely to further reduce aluminum production.
At present, the aluminum inventory in the registered warehouse of the London Metal Exchange is 704850 tons, far lower than nearly 2 million tons a year ago. The cancellation of warehouse receipts accounted for 34%, indicating that more aluminum will leave the LME warehouse in the next few days.
