Rusal unable to extract bauxite and alumina from Australian collaboration following sanctions on Russia

United Co. Rusal International PJSC can’t get hold of its share of alumina contained in an Australian joint venture therefore increasing the pressure on Russian aluminium giant to find sufficient amount of raw material it needs to feed the company plants.

Two weeks back when Australian Prime Minister Scott Morrison announced the ban of alumina exports to Russia, it was unclear whether Rusal would still be able to claim ownership of its share of production from the joint venture with Rio Tinto Group and eventually ship it elsewhere. But according to the people concerned and who wish to remain unnamed, the matter is not quite simple.

The Prime Minister of Australia clearly said, “Russia must pay a very high price for its brutality. It must pay that price economically. It must pay the price in diplomatic terms as well.”

The production of aluminium is not a simple process, bauxite ore is mined at various locations then sent to refineries where through Bayer Process, alumina is extracted which mainly comes in powder form. This alumina is then transported to smelters where they put the material in high temperature to produce aluminium, the finished metal. Though the aluminium industry is not being directly flagged with sanctions but Rusal’s access to raw materials is under immense supervision. Escalating situation in the war field might disrupt further trade and decrease availability of raw material. Following the Ukrainian conflict, the production capacity of aluminium has witnessed a steady downfall.

Russia generally depends on Australia for 20% of its alumina and aluminium ore demand. If the import of these two is less then gradually Russia will have to refrain from producing aluminium which will in turn break its economy.

Alumina supplies to Rusal from Ukraine is “severely curtailed” because of the war and the company is in search of a new supplier. Chinese traders intervene to rescue the dying Russian economy as 30,000 tonnes of alumina has been loaded onto two vessels destined for Siberia. This is may be the beginning of a crisis time friendship that China and Russia both are opting towards.

On March 20^th, one fifth of Russia’s alumina supplier, Australia announced its ban on shipments to the Soviet Nation.

Rusal owns a solid 20% stake in Queensland Alumina Ltd, a collaboration of Australian Rio Tinto and is authorized to share the same proportion and production. At this moment, the inability to access raw ore and other essential materials for production is the worst and technically has no indication of change in the upcoming days.