Australian alumina and bauxite ban to further disrupt UC Rusal’s supply chain

The latest sanctions by the Australian government in banning exports of alumina and bauxite to Russia adds further disruption to UC Rusal’s supply chain and ultimately on its ability to maintain normal primary aluminium production levels, says Wood Mackenzie, a Verisk business (Nasdaq:VRSK).

Senior manager Uday Patel said: “Although the ban on bauxite exports is immaterial given that UC Rusal does not import any bauxite from Australia, the ban on alumina exports will have a material impact on the company.

“UC Rusal’s 20% share in the 3.95-Mtpa QAL refinery gives the company 790 Kt of equity production. This volume combined with sales from other parties meant that Australia exported around 1.5 Mt of alumina to Russia in 2021. We estimate that Australian alumina exports represent 19% of UC Rusal’s requirement.

“In addition to the latest action taken by the Australian authorities, UC Rusal’s 1.75-Mtpa Nikolaev refinery in Ukraine is out of commission due to the on-going conflict. Furthermore, there are supply chain issues at the company’s 2-Mtpa Aughinish refinery in Ireland.

“It is becoming increasingly likely that the only option for UC Rusal to source alumina will be via purchases through Chinese entities. One possible outcome could be Chinese buyers purchasing alumina and redirecting sales via Eastern Russian ports. However, this poses a significant political challenge for China and its trading relationship with the rest of the world.”