Rusal Contemplates Freezing or Closing Several Enterprises Amid Economic Challenges

Rusal Contemplates Freezing or Closing Several Enterprises Amid Economic Challenges

Pressures on Rusal’s Operations

Rusal, a major global aluminum producer, is facing severe economic pressures that may lead to the freezing or closure of several of its enterprises. This situation arises as the company grapples with dwindling profitability at numerous facilities. According to a statement by the Aluminium Association, Rusal’s enterprises are operating at the brink, with some already incurring zero or negative profitability.

Job Impacts and Industry Pressure

The potential shutdown or suspension of these enterprises could result in significant job losses. Approximately 5,000 positions within the industry are at risk, with an additional 30,000 jobs in related and service sectors potentially affected. The Aluminium Association emphasized the dire consequences of such actions, highlighting the long-term crisis looming over the Russian aluminum industry.

Supply Chain Disruptions and Rising Costs

The industry has suffered major supply chain disruptions, particularly in alumina, a key raw material. Traditionally, the industry relied on over 100% of its alumina needs from its own foreign production facilities. However, in 2022, alumina supplies from plants in Nikolaev, Australia, and Ireland were cut off, and traditional supply routes were severed. This led to the loss of over a third of the required alumina and forced the industry to seek alternative supplies from Asia at substantially higher costs.

Market Access and Competition Challenges

Furthermore, Rusal is grappling with the loss of traditional markets and heightened competition. The United States, United Kingdom, and Australia have imposed hefty barrier duties on Russian aluminum. In the European Union, key processors have adopted self-sanctioning practices against Russian aluminum, while impending EU sanctions threaten to include various aluminum products. This comes amid a backdrop of declining aluminum exchange prices and regional price premiums hitting a three-year low.

AlZn Alloy: A Silver Lining

In light of these challenges, Rusal’s recent announcement of a new AlZn alloy for the automotive industry stands as a potential bright spot. This innovative alloy promises lighter, stronger, and more cost-effective car parts, potentially boosting the company’s competitiveness in the face of current adversities. icon

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