RUSAL Spawns New Aluminum Projects in Kazakhstan and Siberia Aiming for Number One Industry Spot

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). After showing 6% year on year growth to 664,966 tons of primary aluminum production RUSAL (Moscow, Russia) has initiated a number of new projects and project studies worldwide including a new aluminum smelter and an alumina refinery in Kazakhstan and a smelter in the Irkutsk region of eastern Siberia. Currently, ranked number three in the aluminum industry, after Alcoa (NYSE:AA) (Pittsburgh, Pennsylvania) and Alcan (NYSE,TO:AL) (Montreal, Quebec), the company is aiming to take the number one spot in the next ten years.

In a joint venture with the Kazakh Eurasian Financial & Industrial Co (KEFI), it is moving on a $3 billion project to construct a 500,000 ton per annum (tpa) smelter and a 1.5 million tpa alumina refinery at a site in Kazakhstan yet to be selected. The first phase in construction of the smelter will start within eighteen months of the incorporation of the new company Eurasian Aluminum Company. The MoU (Memorandum of Understanding) indicates that the first 250,000 tpa phase will be completed within 36 months of the incorporation and once this phase has been commissioned the second 250,000 tpa phase will be started and completed in 24 months.

The alumina refinery will be completed within six years of the start of the first phase of the smelter construction. As it is understood that the incorporation of the new company will happen before then of July this should see the smelter and refinery projects completed and running at full capacity by 2010.

Kazakhstan currently has no smelting capacity but a KEFI sister company, Alyumina Kazakhstan, is in the process of constructing a 240,000 tpa plant in the Pavlodar. The first phase of this project will be completed in 2007.

The RUSAL-KEFI project will create 9,000 local jobs at the plant site, which is expected to be near to the Pavlodar plant giving the host country an entry into the world aluminum market with a state-of -the -art smelter. RUSAL, which at present buys 40% of its feedstock in foreign markets, will gain alumina production and an electrical power supply at cheap and predictable rates.

RUSAL reports that it has made substantial progress in a drive to strengthen its raw material base. The feasibility study for the expansion of the Friguia refinery in Guinea to 1.4 million tons has started. This $350 million project is scheduled for completion within three years. Upgrades are in progress at the company's Nikolayev and Achinsk refineries.

In Irkutsk, the Bechtel Corporation is to conduct a study, to be completed in January 2005, on the feasibility for a project to construct a 600,000 tpa smelter which initial estimates say could be completed by 2009 after construction starts in 2006. The site will be five kilometers from the town of Taishet and a five kilometer rail spur will connect the smelter to the local station which is on the Trans-Siberian and Baikul-Amur rail routes. The electrical power for the project will be supplied by the local utility, Irkutskenergo. The site is 250 kilometers southwest of the company's smelter at Bratsk.

The company claims that the plant will be the most advanced smelter in Russia meeting international environmental standards and applying best technological practices. The smelter will apply the RA-300 technology developed in 2003 by RUSAL's Engineering and Technological Center.

RUSAL was formed in 2000 from the merger of a number of the largest smelters and other aluminum producers located in the CIS (former Soviet states). The company accounts for 75% of Russia's primary aluminum output and 10% of global output. It is a fully vertically integrated company with a complete production cycle from bauxite mining and the production of raw materials, to the production of primary metal, semi-products and aluminum-based and products. Metals tycoon Oleg Deripaska owns 75% of Rusal and the 25% balance is owned by Chukotka region governor Roman Abramovich who was one the 1990's oligarchs who earned billions in oil and metals and now has a profile spending hundreds of millions on Chelsea soccer club in London. Aleksandr Mashkevich of KEFI's holding company is said to enjoy close ties with Kazakh president Nursultan Nazarbaev.

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