Rusal Announces suspension of production at Nikolaev Alumina Plant in Ukraine

Rusal recently announced that due to the inevitable logistics and traffic challenges in the Black Sea and surrounding areas, it had to temporarily shut down production and suspend its alumina exports at the Nikolaev alumina refinery in the Nikolaev region of Ukraine.

It is reported that the Ukrainian Nikolaev alumina refinery is owned by Rusal and is the second largest alumina refinery of Rusal, with a production capacity of 1.7 million tons per year and operating at nearly full capacity in 2019. The output in the four quarters was 42.3 million 41.4 tons, accounting for 21.5% of Rusal's 7.86 million tons of alumina production in 2019, and converted to 850000 tons of primary aluminum output (accounting for 22.5% of the total raw aluminum output).

According to professionals, Nikolaev alumina is shipped to Russia's Bratsk, Krasnoyarsk and Sayanogorsk smelters, which have a combined annual production capacity of 2.5 million tons.

Although alumina production in this area will be severely reduced in the short term, it will not immediately have a broader impact on the aluminum production of the relevant aluminum smelters of the Group, and the output of the aluminum smelters will not be reduced immediately.

According to foreign media reports, Rusal may transfer alumina from its Irish Aughinish refinery and supply it to its Russian smelter. Aughinish refineries supply alumina to European smelters, and any transfer would reduce supply to the European market, which is already in shortage.

Although the United States said previously that it would not impose sanctions on Rusal, with the change of the situation in Russia and Ukraine and the escalation of sanctions against Russia by Western countries such as Europe, the United States and Britain, the result of market concern about sanctions is that if Rusal is unable to trade, Rusal's overseas alumina will be affected, or will repeat the mistakes of 2018. The United States imposed sanctions on Rusal in April 2018 and lifted them in early 2019.

The reduction in alumina supply will mean a reduction in the supply of aluminum used in the transport, packaging and construction industries. It is expected that there will be a shortage in the aluminum market this year and next.