In a bid to minimize its dependency on China and adapt to the aftermath of the Ukraine crisis, Russia has amplified its alumina imports from India. This strategic move not only provides Russia’s Siberian plants with the required feedstock but also curtails costs in an era of financial constraints.
Post its foray into Ukraine, Russia witnessed the suspension of alumina production in Ukraine and faced an Australian embargo, thereby losing two pivotal alumina sources crucial for producing aluminium. The ramifications were compounded by China’s escalating aluminium production, putting price pressure on Russia.
Rusal, Russia’s premier aluminium entity and the globe’s top producer outside China, has been grappling to find a solution for the void left by these halted supplies, all while maintaining profitability amidst fluctuating aluminium prices. While it relies on its assets in nations like Ireland, Jamaica, and Guinea for 70% of its demand, the deficiency still stands.
Last year, China became Russia’s main alumina supplier. The consequence? Rusal’s expenditure for alumina soared by US$1.1 billion, pushing the cost to US$1.8 billion in 2022, due to increased raw material and shipping expenses. To counteract this, Rusal has now fortified ties with India and Kazakhstan to stabilize its supply chain.
Data from Indian customs reveals that in the first half of this year, India exported a whopping 189,379 metric tons of alumina to Russia, a contrast to the zero exports during the same period in 2022. India’s National Aluminium Co has emerged as the prime supplier to Russia, despite not commenting on the recent developments.
Predictions suggest that in 2023, Russia’s alumina imports from India will exceed 350,000 metric tons. Concurrently, even as China remains a vital supplier to Russia, its dwindling alumina surplus due to domestic aluminium production suggests a possible decline in shipments.
Rusal’s decision to construct a US$4.8 billion alumina plant in a Russian Baltic Sea port further underscores its commitment to self-sufficiency. With an envisaged production capacity of 2.4 million metric tons, the plant’s first phase is set to kick-off by 2028.