Rusal Aughinish back to pre-tax losses despite revenue rise

The largest alumina refinery in Europe, Rusal Aughinish, last year went back into the red to record pre-tax losses of $12.2m (€10.8m). The loss came despite revenues having increased by $22m from $607.8m to $629m.

Based on the Snannon estuary, the principal activity of Limerick Alumina Refining Ltd and subsidiaries is the production and sale of alumina. Separate figures provided by Aughinish Alumina to the Environmental Protection Agency confirm the output at the refinery was 1.955m tonnes of alumina hydrate, representing a marginal increase on the 2013 output.

The plant extracts alumina from bauxite, the firm sources around 70% of the bauxite processed at the refinery from Guinea in Africa with the remainder coming from Brazil. The finished product, alumina, is exported for smelting to aluminium metal.

Operating profits last year fell by 65% from $17.7m to $6m. The pre-tax loss recorded last year follows a profit in 2013 of $15.5m. The chief factor behind the pre-tax loss was net interest payments of €17.49m from a $400m deal with Glencore where Rusal has agreed to provide alumina to the former owner of Aughinish Alumina between 2014 and 2016.

“An amount of $400m was received in advance during the year for these volumes,” said the directors. “The advance is subject to interest at a market rate. During they year, interest of $17.5m was charged on the advance and at December 31, 2014, a total of $348.9m was due to Glencore AG.”

The directors said that $154.37m of this amount was classified as due within one year and $194.5m has been classified as due after more than one year and that the assets and shares of the group have been pledged as security for this advance.

At the end of December 2014, the group had accumulated profits of $202m, the Aughinish Alumina refinery has been valued at $1.2bn by its Russian parent, United Company Rusal.

The Russian company is controlled by Russian oligarch Oleg Deripaska. Aughinish Alumina was bought from the commodities trading giant Glencore, in 2007.