Russian Ministry Proposes Import Duty Adjustments to Support Rusal’s Alumina Project

Russian Ministry Proposes Import Duty Adjustments to Support Rusal’s Alumina Project

Policy Changes for Import Duties

The Russian Ministry of Industry and Trade is considering optimizing import duties or offering tariff exemptions for essential raw materials in the production of metals, including bauxite. This policy change, part of the metallurgical industry development strategy, aims to bolster Rusal’s new alumina refinery project in Ust-Luga. The proposal suggests adjusting “rates of import customs duties and providing tariff benefits” specifically for bauxite, crucial in aluminium production. The suggested timeline for these measures extends from 2023 to 2030.

Rusal’s Alumina Refinery Plans

Rusal, a major aluminium producer, intends to establish a refinery in the Leningrad region with an annual capacity of 4.8 million tonnes, alongside a deep-water port. The project, valued at 400 billion rubles, plans to commence its first production phase (2.4 million tonnes per year) by the end of 2028, followed by a second phase completion in 2032.

Bauxite’s Role and Rusal’s Operations

Bauxite is the primary ore for alumina, which in turn is the key raw material for aluminium production. Rusal operates several bauxite mines in Russia, Jamaica, Guyana, and Guinea. However, the company faced challenges after Australia’s 2022 ban on alumina and bauxite exports to Russia and losing control over the Nikolaev alumina refinery. These events have affected the availability and costs of alumina and bauxite, prompting a reassessment of supply chains and an increase in transportation expenses.

Financial Impact and Production Figures

In 2022, Rusal reported a decrease in bauxite production to 12.3 million tonnes from 15 million tonnes in 2021. Additionally, there was a significant rise in aluminium sales costs to $10.77 billion (a 30.2% increase) and a 149.3% increase in alumina purchasing costs, amounting to $1.847 billion.

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