May 2009- Nigeria. Switzerland. China. At first glance, these countries seem to have little in common. Their citizens don’t speak the same language, their climates vary and they exist on different continents.
They do share one thing, however: a connection to United Company Rusal, Moscow. As the world’s largest producer of aluminum and alumina, Rusal operates on five continents, in 19 countries. It employs 90,000 across its international operations and offices, and it aims to grow more, as soon as the market recovers from the worldwide economic slowdown.
At the moment, the company is focused on supporting the sustainability of the group’s operations during the global challenges and positioning itself to recover quickly after the economic crisis, according to Artem Volynets, director for corporate strategy at Rusal.
"The history of Rusal began in 2000," says Volynets. "It was at this time the idea emerged to join the separate aluminum smelters and alumina refineries of Russia in order to use them as a basis for establishing the global aluminum leader, and Rusal succeeded in consolidating the Russian aluminum industry."
In 2002, the company began its international expansion by managing bauxite and alumina assets in Guinea, which were later privatized. This solved the problem with raw material supplies to Siberian plants. In 2005, Rusal purchased the shareholding of QAL, the largest alumina refinery in the world.
A year later, Rusal acquired an aluminum smelter in Nigeria, purchased a cathode plant in China and signed an agreement with HydroOGK to build the Boguchanskoye Energy and Metals Complex in Russia.
In March 2007, with the merger of Rusal, Sual and the alumina assets of Glencore International AG, Rusal became the global aluminum leader.
As a result of the merger, the Swedish aluminum smelter Kubal joined the company, as well as alumina refineries: Italian Eurallumina; Aughinish, the largest and one of the most energy-saving alumina refineries in the world; and Alpart and Windalco in Jamaica, one of the world’s bauxite-richest countries, Volynets says.
That same year, Rusal began large-scale modernization efforts at Bratsk aluminum smelter, the world’s largest aluminum plant. Additionally, the Khakas aluminum smelter, the first aluminum production facility built in Russia during the last 20 years, reached its design capacity.
In 2008, the Bratsk and Krasnoyarsk aluminum smelters reached the capacity of 1 million metric tons annually.
Rusal has also diversified its business into energy and other metals to reduce its dependence on individual commodity cycles, and it’s enhanced opportunities to implement large-scale projects.
In 2008, Rusal created a joint venture with Samruk-Kazyna, a Kazakhstan state-controlled national welfare fund, to produce and supply coal at the Ekibastuzskoye coal field in the Pavlodar region of Kazakhstan, and it acquired 25 percent, plus two shares, of Norilsk Nickel, the largest public metals and mining company in Russia and the world’s largest producer of nickel and palladium, says Volynets.
Today, Rusal accounts for about 12 percent and 15 percent of global production of aluminum and alumina, respectively. The company is made up of 15 aluminum smelters, 12 alumina refineries, seven bauxite mines, three foil mills, two cathode plants and one foil rolling mill.
Running the gamut
Although Rusal’s main products are primary aluminum and alumina, it also offers aluminum alloys, foil and packaging, wires, silicon, powders, and other aluminum-related products and services.
Specific products for sale include aluminum ingots, T-bars, slabs and billets (with a cylindrical and square cross section), and wire rod.
Construction and packaging, respectively, are the top two industries the company serves. Transportation accounts for about 16 percent of the business, followed by electronics, machine building and consumer goods.
Volynets says Rusal always strives to expand its product offerings, using customers’ suggestions as a jumping-off point.
"We’re ready to work out new technological decisions for producing new alloys and materials, together with customers, in order to satisfy specific requirements," he says. "We monitor quality indicators and customer satisfaction on a regular basis, and such an approach helps us to develop long-term relationships with our global clients."
One such company is Synergy Cables Ltd., Kiryat Bialik, Israel, which has worked with Rusal for three years. Synergy is a large cable manufacturer focused on medium- and high-voltage cable. It uses rods from Rusal for its cable production processes.
"Rusal is considered a reliable supplier in comparison to other [copper] rods suppliers [in terms of] deliveries, price support, fixation terms and flexibility in orders quantity," says a Synergy official. "We really appreciate Rusal’s support."
Additionally, Rusal continues to make scientific and technical advancements in terms of aluminum production. The company is one of the few that has its own proprietary technology, RA-300 and RA-400, for this purpose.
"Apart from investments in production growth, [Rusal] also considerably finances R&D and modernization of facility laboratories, achieving improvements in the quality of products and satisfying customer demands," says Volynets. "Rusal is continuously working on enhancing production, quality and introduction of new services. [Our] global strategic effort is aimed at developing value-added cast house production."
Making a mark
These efforts include the production of flat-shaped, lithographic-quality ingots made of foil. This material must be 5 microns to 6 microns thick (a strand of human hair is 30 microns thick).
"Exceptional purity of the metal is required for such production since any impurity may cause holes in the foil," says Volynets. "In order to be able to solve this challenge, Rusal introduced effective Mitsui filters and special equipment for the metal’s purity analysis. It took a while to master the process, but it paid off."
Another challenge Rusal met and exceeded is the introduction of double-length ingot production at its Krasnoyarsk aluminum smelter.
"Typical ingots have a length between 4 meters and 6 meters, while the double-length ingots are 8 meters long," says Volynets. "The weight of one such ingot can be more than 30 metric tons. These products are in high demand in Germany and other countries where modern, large-scale rolling plants exist."
Last year, Rusal also developed flat-shaped ingots used to produce foil tape for cans. The casting center that makes these ingots is at the company’s Krasnoyarsk aluminum smelter.
"The center acquired a Wagstaff casting system, enabling production of up to 80,000 metric tons of ingots per annum," says Volynets. "The majority of ingots produced are 3104 series ingots, which can be rolled into foil tape for cans."
Adjusting to change
The changing market environment has prompted Rusal to diversify its exports, with the European Union, Asia and the United States being its main export markets, and make other changes.
"One of the fundamental factors causing the decline of the aluminum price is the rapid drop in demand from key consuming industries: heavy engineering, the world’s largest car and aircraft manufacturers, and the construction and packaging industries," says Volynets. "Rusal is committed to supporting the sustainability of the group’s operations during the global economic downturn and also positioning the company to recover strongly after the crisis."
A key component of this effort is the Cost Efficiency Leader program, which Rusal launched in February. The seven-step initiative focuses on reducing costs, scaling back production at some facilities, cutting down on management expenses, freezing hiring, revising investment plans, changing sales strategies and bringing in new clients.
Looking ahead, Rusal is in a solid position to continue its growth and diversification, in no small part because of its ability of keep production costs low, says Volynets.
"Primary aluminum production consumes substantial energy, the most significant cost in production," he says. "We believe that access to low-cost power resources provides a significant competitive advantage."
Further, all of the company’s aluminum smelters are in regions with abundant power sources, the majority of which are environmentally friendly hydro sources in Siberia.
"We have a proven existence to do business in challenging geographies throughout the world," says Volynets. "Through [our] investments in modernization, expansion and equipment retooling of production capacities, [Rusal] has brought its facilities with international environmental standards and considerably improved the production efficiency. This demonstrates [our] strength and abilities." MM