RUSAL Signs for $3 Billion Power and Smelter Project in Global Top Spot Drive

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Researched by Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). In line with its aggressive strategy to become the world's premier aluminum company, Rusal (Moscow, Russia) has signed a memorandum of understanding (MoU) with the state’s RAO Unified Energy Systems (Moscow) to form a joint company to complete the 3,000 MW Boguchanskaya hydropower facility and construct a new aluminum smelter, which will become the power station's anchor client.

On its ten year strategy horizon, Rusal plans to boost aluminum production to five million tons per annum, alumina production to eight million tpa and alloy production to 50% of overall output. Over the past five years, the company has raised its aluminum production by 49%, from 1.8 million tpa to 2.7 million tpa. Alumina production grew 217%, from 1.2 million tpa to 3.8 million tpa. Currently, Rusal produces about 10% of world aluminum output and 75% of the Russian total.

Rusal and HydroOGK, an RAO subsidiary, will prepare a pre-feasibility study of the joint $3 billion hydroplant and smelter project, which is scheduled to take between five and seven years to complete, and for the hydroplant to operate at full 3,000 MW capacity. The 500,000 to 600,000 tpa smelter will be constructed in the Krasnoyarsk Region.

The project will boost the development of the Lower Angara Region in Siberia, which holds major natural resources in oil, gas, gold (about 10% of Russia's total proven reserves), and timber. There are also deposits of niobium, zinc, lead, bauxite, and magnesium carbonate in the area. Inadequate power supplies and lack of the necessary infrastructure have prevented the exploitation of the resources. That situation will change when the hydropower plant comes into operation and the smelter becomes a center of industrial activity and skills.

In another move to back the company's development strategy, it has appointed Valery Matvienko, former director of the Aluminum Division, as head of the new Division for Construction. The new division will have a $1 billion budget and will focus on the company's new aluminum smelters in Russia and the CIS states, the Rogunskaya and Boguchanskaya hydropower stations, and the bauxite and alumina complex in Komi. It will also support greenfield initiatives in Russia and internationally. Construction will join the company's organizational structure of Aluminum, Alumina, Packaging, Cans, and Extruded Products divisions.

In April 2005, Rusal signed a 50/50 agreement with the other Russian aluminum major, SUAL (Moscow), for the second stage of a project to build a 1.4 million tpa alumina refinery in the Koma Republic at Sosnogorsk. The bauxite alumina complex will use Eurasia's largest Middle Timan bauxite deposit, with proven reserves of 260 million tons of ore. Bauxite extraction will rise from the current 1.5 million tons tpa to over six million tpa in 2008. The partners will contribute equally to the $1.2 billion investment in the project. SUAL, a global top ten aluminum producer, completed stage one of Komi after a 1997 project start-up.

Infrastructure at the deposit has been put in place, and a 158-kilometer rail line has been constructed to link Komi with the federal rail network.

In the company's construction, modernization, and re-equipment programs, $120 million has been invested to date in construction of the Khakass aluminum smelter, which will boost Rusal's output by 14% when it starts production in 2006, using the company's internally developed RA-300 technology.

The Sayangorsk smelter has commenced installation of RA-400 cells.The new casting pit at this location has reached its full capacity of 90,000 billet tpa.

Krasnoyarsk Aluminum smelter has recently commissioned a fourth dry scrubber and increased the capture of dust by a factor of four. Flouride emissions control will double in efficiency. A total of $215 million was invested in the first six months of the year in the construction, modernization, and re-equipment program.

Rusal's revenues grew by over 14% in the first half of 2005, to $3 billion, boosted by an increased proportion of value-added products, which included alloys, wire rod, ingots, billets, and extreme purity aluminum. International sales represented 76% of the revenues.

For related news item see June 7, 2004 - RUSAL Spawns New Aluminum Projects on Kazakhstan and Siberia Aiming for Number One Industry Spot.

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