Digest for January 22-26, 2024
European Union Considers Complete Ban on Aluminium Imports from Russia
The European Union is actively discussing the possibility of implementing a complete ban on aluminium imports from Russia as part of its 13th sanction package against Kyiv. This proposal, initially advocated by the European Aluminium Association, aims to prohibit the importation of primary aluminium, a sector in which Russia dominates EU imports with an 85% share. Rusal, Russia's premier primary aluminium producer and a leading entity globally, could face significant challenges from such an embargo. Notably, Rusal's revenue from European sales constituted 31% in the first half of 2023. Despite Rusal's efforts to increase its aluminium exports to China—projecting shipments between 800,000 to 1 million tonnes by the end of 2023—the company might still prioritize the EU market due to geographical convenience and higher pricing, compared to the competitive Chinese market. The potential impact of these sanctions on Aluminium Rheinfelden, Germany's oldest aluminium smelter acquired by Rusal nearly three years ago, remains uncertain.
Anglo American and GLM Forge Partnership for Nickel's Future
Anglo American, a British mining giant, and GLM, a Chinese counterpart, have agreed to collaborate through a memorandum of understanding focused on the development of new nickel-based products and battery materials. This partnership highlights Anglo American's strategic pivot towards exploiting the vast Chinese market, amidst a global ferronickel oversupply primarily driven by Indonesia's increased exports. Anglo American's nickel production was anticipated to be between 38-40,000 tonnes (in terms of pure nickel) by the end of 2023, slightly fluctuating from the 39.8,000 tonnes produced in 2022.
Seligdar Achieves Production Milestones in Gold and Tin
In 2023, Seligdar Holding Company reported a remarkable 10% increase in gold production, reaching 8.27 tonnes, and a 4% rise in tin production, totaling 3,000 tonnes. These achievements mark historic production highs, facilitated by modernization efforts, technological advancements, and the expansion of its machinery fleet. Seligdar, a prominent figure in the Russian gold mining sector and the nation's sole tin deposit developer, has ambitious plans to construct a refined tin plant in Khabarovsk Krai and develop the Pyrkakayskie Shtokverki deposit in Chukotka, aiming for substantial increases in gold and tin production by 2030.
Anticipated Copper Shortages and Price Increases
Goldman Sachs forecasts a copper market shift towards a deficit of 428 thousand tonnes by the end of 2024, following a temporary surplus in the first quarter. This prediction stems from a confluence of factors, including reduced production at major mines and a slowdown in pure metal production growth. Despite current prices hovering around $8.5 thousand per tonne, down from over $9.4 thousand a year ago, the expected deficit could push prices to reach an average of $10 thousand per tonne in 2024. The demand for copper is projected to escalate, driven by the expanding electric vehicle market and the construction of new solar and wind power facilities worldwide.
Arconic to Divest its Chinese Operations
Arconic has announced its intention to sell its Chinese assets for an estimated $300 million, though the identity of the buyer remains undisclosed. This move affects two facilities in Hebei and Jiangsu provinces, which specialize in producing aluminium semi-finished products for various industries. While specific reasons for the sale have not been provided, it is speculated that deteriorating Sino-US diplomatic relations may have influenced this decision. This sale is part of a broader trend observed in 2023, where foreign firms divested approximately $12.5 billion in assets across various sectors of China's economy.
Impact of Potential Sanctions on Russian Aluminium and European Steelmakers
Should the EU proceed with sanctioning Russian aluminium imports, European steel manufacturers might not significantly benefit despite potential price increases in the EU market. High energy costs and subdued demand due to industrial and construction sector challenges could limit the advantages of such sanctions. Conversely, Middle Eastern and Chinese aluminium producers, benefiting from lower production costs and government export incentives, respectively, may attempt to capture the market share vacated by Russian aluminium.
