UC RUSAL announces the company's results for the third quarter and nine months of 2015.

Main results:

In the third quarter of 2015, aluminum prices on the London Metal Exchange (LME) continued to decline sharply and averaged USD 1,589 per ton, the lowest level since the second half of 2009. Thus, the price reduction amounted to 20.0% compared to 1,987 US dollars per ton in the third quarter of last year. This negative trend was accompanied by significant reduction in realized premiums to the price of aluminum on the LME to an average of USD 206 per ton in the third quarter of 2015, which is 51.2% lower than USD 422 per ton in the third quarter of 2014. Despite this, the company managed to overcome the impact of negative industry factors and ended the third quarter of 2015 with an adjusted EBITDA of USD 420 million and an adjusted EBITDA margin of 20.3% compared to 19.0% in the same period last year . Adjusted EBITDA for the nine months of 2015 reached $1,709 million, with an Adjusted EBITDA margin of 25.1% compared to $863 million and 12.6% in the same period last year.

As a result of the company's efforts to improve efficiency and reduce costs, as well as the weakening of the local currency, the cost per ton in the aluminum segment decreased by 17.2% to $1,440 in the third quarter of 2015 compared to $1,739 in the same period last year.

The company's revenue in the third quarter of 2015 decreased by 16.3% to $2,073 million compared to $2,477 million in the third quarter of 2014. The average realized aluminum price decreased by 19.8% to US$1,843/t in the third quarter of 2015 from US$2,298/t in the third quarter of 2014. Adjusted net income and normalized net income in the third quarter of 2015 were $181 million and $287 million, respectively, compared to $25 million and $250 million in the same period last year. In August 2015, the Board of Directors of the company approved a new dividend policy for subsequent periods on the payment of dividends at the level of 15% of the covenant EBITDA of the company. The payment of dividends will be made in accordance with the terms of the company's loan agreements, subject to financial covenants, and in accordance with the laws of Jersey. In October 2015, the Company's Board of Directors approved interim dividends for the financial year ending December 31, 2015 in the amount of US$250 million (US$0.01645493026 per ordinary share). Dividends were paid on November 6, 2015.

Commenting on the results of the third quarter of 2015, CEO RUSAL Vladislav Solovyov noted:

“Declining prices and premiums continued to put serious pressure on the aluminum industry in the third quarter of 2015. The negative price trend is associated with a larger-than-expected market surplus caused, on the one hand, by weaker demand in some developing countries, and on the other hand by growth production capacity in the Middle East, India and China. Taking these factors into account, we have revised our forecast for 2015, lowering our forecast for demand growth for the year from 6% to 5.6% and increasing our forecast for a market surplus to 373,000 tons in 2015.

Production discipline and cost control remain key principles of RUSAL's operating strategy. The company maintained its cost of sales at the level of the previous quarter, while the cost of aluminum production per ton reached a multi-year low of $1,440. While the fall in prices in the third quarter of 2015 led to a reduction in revenue and adjusted EBITDA, the company managed to close the period with an adjusted EBITDA margin of 20% and normalized net income of $287 million. While the situation in the sector remains extremely difficult, in the run-up to the UN World Conference on Climate Change (COP21), sustainability aspects of the aluminum industry are becoming increasingly important. Aluminum production requires huge amounts of electricity, which is often generated by burning fossil fuels such as coal. RUSAL is one of the world's most efficient producers in terms of carbon dioxide emissions through the use of hydro generation.

Russia (along with the US, Canada and China) is the largest aluminum producer in the world.

In 2000, Russian aluminum enterprises produced 3.3 million tons of aluminum and exported, according to estimates, about 3.23 million tons.

Despite some decline in the early 1990s, the Russian aluminum industry managed to maintain a stable level of production. The sharp decline in domestic consumption was offset by an increase in supplies to the external market. Russia retained the 2nd place in the world in aluminum production after the USA. At the same time, as can be seen from Table 2.2.1.1., the decline of the early 1990s was already overcome by 1998.

Table 2.2.1.1.

Dynamics Russian production and export of aluminum.

	Aluminum production in Russia, thousand tons

Graphically, the dynamics of primary aluminum production is shown in Figure 2.2.1.2:.

There are currently 11 aluminum smelters operating in the Russian Federation. The largest of them - Bratsk, Krasnoyarsk, Sayan and Irkutsk - are located in Eastern Siberia. The remaining 7 plants (Novokuznetsk, Bogoslovsky, Ural, Volgograd, Volkhovsky, Nadvoitsky and Kandalaksha aluminum smelters) account for just over a quarter total production RF (see Table 2.2.1.3).

Table 2.2.1.3.

The largest Russian aluminum producers

Consolidation companies, factories					Share in output (%)
Russian Aluminum, including:
Brotherly
Krasnoyarsk
Sayan
Novokuznetsk
SUAL-Holding, including:
Theological
SUAL (Irkutsk + Ural)
Kandalaksha
Aimet UK Ltd., including:
Volgograd
Volkhovsky
Nadvoitsky *)

*) Note. In June 2001, SUAL-Holding acquired a 37% stake in the Nadvoitsy Plant, but has not yet been able to collect a controlling stake. Therefore, the Nadvoitsky plant is shown in the table as an independent one.

Recent years have been characterized by an intensive process of concentration of production in the aluminum industry. For this export-oriented industry, concentration has become the most important factor in ensuring competitiveness and the possibility of increasing production efficiency.

At present, the largest Russian company is OAO Russian Aluminum. Its share in the total volume of aluminum production is 74%. RUSAL includes: Nikolaev Alumina Refinery, Achinsk Alumina Refinery, Sayan, Krasnoyarsk, Bratsk and Novokuznetsk aluminum smelters, Samara Metallurgical Plant, Dmitrov Canning Tape Plant, Sayanskaya Foil, Belokalitvensky Metallurgical Production Association.

In September 2000, SUAL-Holding was registered. This company has brought together production resources enterprises such as SUAL (Ural and Irkutsk aluminum smelters), Bogoslovsky and Kandalaksha aluminum smelters, Novocherkassk electrode plant, South Ural bauxite mine, Sevuralboksitrud, Polevsky cryolite plant. Rolled products and products from aluminum are manufactured at the Kamensk-Uralsk Metallurgical Plant, the Kamensk-Uralsk OCM Plant, the Artemovsky OCM Plant, Krasny Vyborgets, MIHALYUM, the Irkutsk Cable Plant, the Kirsinsky Cable Plant and a number of other enterprises. Measures are being taken to establish control over the Nadvoitsky aluminum smelter.

In the process of registration is the association of enterprises, including Volkhov aluminum, Pikalevo association "Glinozem", Volgograd aluminum plant. These and some other enterprises are controlled by Aimet UK Ltd.

Share of production volume attributable to own and tolling raw materials (in dynamics)

In 1997, the output of primary aluminum from imported raw materials (by tolling) increased by 12.9% compared to the previous year. The share of tolling in the total volume of primary aluminum production increased over this period from 43.9% to 75.4%.

In 1998, the production of primary aluminum from imported raw materials increased by 16.6%, while the share of tolling in the total volume increased from 75.4% to 85.8%.

In 1999, primary aluminum was produced by tolling by 8.2% more than a year ago. In 1999, compared with 1998, the share of tolling products in the total volume of primary aluminum production increased from 85.8% to 89.4%.

In 2000, primary aluminum from imported tolling raw materials (by tolling) compared to 1999 was produced less than in 1999 by 15.9%, that is, 73.5%.

The dynamics of the share of production volume from give-and-take raw materials is shown below in Figure 2.2.2.1.:

The share of primary aluminum production by tolling in dynamics is shown in Figure 2.2.2.2.:

All aluminum produced in the country is sold. Therefore, the volume of sales in dynamics completely repeats the dynamics of aluminum production in Russia

The total capacity of aluminum producing enterprises

Despite the difficulties with the sale of products (slowdown in economic growth in most countries of the world, the danger of "collapse" of prices due to excessive supply of products, etc.), Russian aluminum industry enterprises are steadily increasing production volumes and even taking measures to increase production capacity. To a large extent, this became possible due to the restructuring of the aluminum industry, which manifested itself in the construction large corporations with a vertically integrated structure, uniting industry enterprises of various stages of aluminum production - from bauxite mining and alumina production to foil production and other finished products from aluminium. Such a reorganization of the industry has led to a significant increase in the financial capabilities of new production structures.

The ratio of capacities and volumes of production of primary aluminum for the largest Russian enterprises in 2000 is given in Table 2.2.4.1 below. Production Capabilities enterprises are calculated taking into account the measures taken over the past two years to expand existing capacities, their reconstruction and technical re-equipment.

Table 2.2.4.1.

Ratio of production capacities and production volumes of primary aluminum

Enterprises	Production capacity		Release
	thousand tons		thousand tons
Bratsk Aluminum Plant
Krasnoyarsk Aluminum Plant
Sayan aluminum plant
Novokuznetsk aluminum plant
Bogoslovsky aluminum plant
Irkutsk aluminum plant
Kandalaksha aluminum plant
Volgograd aluminum plant
Nadvoitsy aluminum plant
TOTAL

Figure 2.2.4.2. a graphical representation of the distribution of capacities of the aluminum industry in Russia is given:

On the chart 2.2.4.3. data on the utilization of production capacities of enterprises in the industry in 2000 are given:

On average, the production capacities of aluminum industry enterprises are loaded at 95%, which is a high level for this indicator in world practice. However, strong competition in the world market and insufficient growth of domestic consumption in Russia do not allow sufficient capacity utilization of enterprises for products of a higher degree of readiness. For a number of semi-finished products and other types of products, production volumes decreased by 4-5 times compared to the beginning of the 1990s. At the same time, the orientation of the aluminum industry towards domestic consumption makes it possible to increase the capacity utilization for the production of aluminum products.

Price level for Russian aluminum in the domestic and world markets (in dynamics)

Aluminum prices, like many other commodities, are highly volatile and the slightest imbalance in supply and demand can have serious consequences. Thus, a sharp reduction in aluminum consumption in the countries of the former USSR and of Eastern Europe(in Russia, demand fell from 2387 thousand tons in 1990 to 450 - 500 thousand tons in 1998) was accompanied by an increase in exports from Russia from 600 to 2790 thousand tons. This caused aluminum prices to fall from $2,400 in early 1989 to $1,000 per ton in 1992-94. (Fig. 2.2.5.1.):

Then the market adapted to a new level of supply, which was offset by a rapid increase in demand, primarily from the developing countries of Southeast Asia. At the beginning of 1995, the price of aluminum again exceeded $2,000 per ton, but subsequently it continued to gradually decline. The last year and a half, the fall in prices was due to the economic crisis in Southeast Asia.

At the same time, in the first quarter of 2000 contract prices for the supply of Russian aluminum were 14% below the world average, and in the first quarter of 2001 this difference was about 21%.

According to experts, Russian aluminum exports in 2001 will decrease by value terms, while its physical volumes will change insignificantly.

The decline in exports in value terms was caused by the fall in world prices for aluminum, which amounted to 3.6% in the first quarter of 2001, combined with the peculiarities of Russia's foreign exchange policy. To ensure the profitability of Russian aluminum exports, the exchange rate should be at least 32 rubles per US dollar.

Despite such unfavorable conditions, producers are forced to maintain the maximum possible volume of export supplies of aluminum. This is explained by the fact that the Russian aluminum industry has a pronounced export orientation.

As a result, only about 20% of aluminum produced is sold on the domestic market. Moreover, the prices for it are not fixed and are of a contractual nature, and sometimes the nature of offsets between the producer and the consumer.

Average profitability of production

Prospects for the development of the Russian aluminum industry are associated with the establishment of cooperation ties destroyed in previous years. Overcoming the disproportions between the individual stages of aluminum production will contribute to increasing the level of production stability and a sharp increase in the volume of products of subsequent processing, improving financial indicators enterprises. The most recent progress in this direction has been achieved by the groups of aluminum companies Russian Aluminum and SUAL that have recently appeared. In this regard, the experience of the Russian Aluminum company, which accounts for almost ¾ of the volume of aluminum production in Russia, is especially clear.

By concentrating cooperative efforts, this group of companies managed, despite the fall in world prices for aluminum and the reorganization of enterprises, to ensure a relatively high profitability of production (for example, SaAZ - 15%), and also to maintain the main and working capital. At the same time, the rating of the main enterprise of the group remains the highest among Russian manufacturers aluminum.

In the cost structure for the production of one ton of aluminum at domestic plants, the cost of wages account for only 7%, electricity accounts for an average of 17-18%.

At the turn of 1995-1996, when aluminum prices began to decline on the world market, electricity tariffs began to rise sharply in Russia. As a result, already at the beginning of 1996, all Russian plants produced the most expensive aluminum in the world, and the average level of costs for them significantly exceeded the exchange price of this metal. Thus, domestic producers began to move from the category of profitable ones to the category of non-competitive ones. AT subsequent years the situation improved somewhat, and the profitability of production increased again.

Table 2.2.6.1. the most important indicators reflecting the production efficiency and financial stability of the aluminum industry in 1998-1999 are given:

Table 2.2.6.1.

efficiency and financial stability aluminum production

	Coverage ratio		Security ratio own funds		Profitability equity on net profit		Profitability of sales		Asset turnover
	1998	1999	1998	1999	1998	1999	1998	1999	1998	1999
Aluminum production

As you can easily see from this table, the overall situation in the aluminum industry has improved markedly. The coverage ratio, which reflects the level of liquidity of assets, has increased significantly (recommended level 1.7-2). Profitability also increased: the return on equity increased by almost 5 times, and the return on sales (the ratio of profit from sales to revenue) - by 1.2 points. The improvement of management within large groups has led to an acceleration of asset turnover. Data on sales volumes and the values ​​of the most important indicators of financial and economic activity in the context of the largest enterprises in the industry are given in the table below.

Table 2.2.6.2.

Indicators of financial and economic activity of aluminum industry enterprises

Company	Sales proceeds for 1999, million rubles	Coverage ratio	Equity ratio	Return on equity	Profitability of sales	Asset turnover
Pikalevo Alumina Association
Bogoslovsky aluminum plant
Kandalaksha aluminum plant
Krasnoyarsk Aluminum Plant
Boksitogorsk alumina
Bratsk Aluminum Plant
Sayan aluminum plant
Severo-Onega bauxite mine
Novokuznetsk aluminum plant
Volgograd aluminum
Achinsk Alumina Refinery
Volkhov aluminum plant
Sevuralboxytruda
South Ural Cryolite Plant

The industry average profitability was 20.6%.

According to the management of Russian Aluminum, in 2001 a management structure was created that made it possible to achieve a profitability of 22-23%.

The need for basic resources (in physical terms) to obtain a unit of output.

The production of primary aluminum is a complex and energy-intensive process. During the processing of natural bauxite, purified alumina is extracted, then aluminum itself is obtained from it by the electrolytic method.

Usually, it takes about 2 tons of alumina to produce one ton of aluminum. The amount of bauxite needed to produce a tonne of aluminum depends on the aluminum oxide content of the bauxite. Thus, Western companies usually require 3-4 tons of bauxite, while Russian factories domestic raw materials may require about 7-8 tons. Modern plants, both Russian and foreign, consume about 13.5 MWh of electricity to produce a ton of aluminum from alumina. With an average cost of one kWh per hour of 1 - 2.5 cents, the share of electricity alone in the cost of producing a ton of aluminum is 135 - 340 dollars.

In addition, caustic soda, electrode coke (neftekok), coal tar pitch, and fluorspar concentrate are used for aluminum production. Their consumption depends on the type of equipment and grade of smelted aluminum.

Average cost of aluminum production in Russia and comparison with the world average cost

In the early 90s. Russian aluminum was the cheapest, and it was profitable to produce it at prevailing world prices. In the mid-90s, on the contrary, it became more expensive, and even the increased price no longer covered the costs. This was facilitated by both external and internal factors: the exponential rise in energy and transport prices, the growth of environmental fines, the transition of the world's largest aluminum producers to a more economical and environmentally safer production technology.

This is the reason for the low profitability of mills producing rolled products in Russia, although on the world market the profit per tonne of high-stage aluminum rolled products reached $1,500 (against $200 per ton of primary aluminium).

The difference in wages is especially noticeable. If a Russian electrolysis worker receives an average of 5,000 rubles a month, then his Western counterpart receives up to 5,000 US dollars. At present, in the structure of costs for the production of 1 ton of aluminum at domestic plants, the cost of wages is only 7%. At the same time, electricity accounts for an average of 17-18%.

The cost of production is ultimately affected by the economic scheme used at the enterprise. So, reverse side tolling, for example, were significant transportation costs, which in some cases amounted to 15-16% of the cost of aluminum production. Thus, transportation costs have become almost comparable to the cost of electricity. In turn, the growth of energy tariffs naturally led to the fact that in a certain period of time, energy costs literally became the dominant cost element in the total cost. end products. The response to this process was the lobbying of the interests of the aluminum industry at all levels of government. Attempts were also made to resubordinate the country's energy infrastructure “under itself”.

Aluminum production is not only energy-consuming, but also associated with environmental pollution. During the construction of the plants themselves, there was no experience in the design and operation of gas cleaning systems. As a result, to date, emissions from aluminum plants exceed all sanitary and hygienic standards by dozens of times. For example, according to studies conducted by the Siberian Branch of the Russian Academy of Sciences, in general pollution In the atmosphere of the city of Krasnoyarsk, KrAZ accounts for up to 50% of carbon monoxide, about 30% of dust and 15% of sulfur dioxide. Along with this, industrial emissions contain particularly harmful benzo(a)pyrene and fluorine compounds. The imperfection of gas cleaning results in a massive deterioration in health for the population, and for the enterprises themselves - an increase in the cost of the final product due to punitive environmental sanctions.

Meanwhile, industrial emissions can be viewed as direct losses of valuable raw materials that are literally thrown “down the pipe”. This applies both to the components of the anode mass and to the alumina-cryolite mixture. A preliminary expert assessment showed that it is these losses that lead to a significant increase in the cost of the final product. There is an alternative approach to solving this problem. There is an inexpensive domestic project that has no analogues in the world, the implementation of which is guaranteed to reduce the loss of raw materials in industrial emissions by almost 50% and thereby significantly improve environment.

For comparison, here is a scheme for distributing costs for the smelting of a ton of primary aluminum at Volgograd Aluminum (5% of the total Russian production) and in the world (data for 1998):

The return on equity in terms of net profit on average for the industry in Russia in 1998 was 2.3%, in 1999 - 12.1%. Return on sales was 17.8% in 1998 and 19% in 1999.

Transportation costs of deliveries of Russian aluminum to world markets, comparison of the average cost of Russian aluminum (including transportation costs) with the average global cost (including transportation costs)

Transport costs in some cases amount to 15-16% of the cost of aluminum production. Thus, transport costs become almost comparable to the cost of electricity.

Thus, the rail transportation of the holding "Russian Aluminum" is 34 - 35 million dollars a month, while the volume of all transportation of the company is about 12 million tons per year.

In addition, from August 1 of this year, in connection with the transition of domestic freight traffic through Russian railways for a single tariff, the cost of transporting aluminum will double. This is due to the fact that the Ministry of Railways will apply an increased tariff coefficient for the transportation of non-ferrous metals.

The pricing structure, in addition to the cost of exporting finished products, also includes the cost of importing the raw materials necessary for production. An analysis of the cost structure at the Bogoslovsky, Volgograd, Bratsk, Krasnoyarsk, Novokuznetsk, Volkhov, Ural and Kandalaksha refineries shows that the factor of imported alumina transportation distance raises the share of the cost of raw materials and materials to 67%, while abroad this figure is about 45%, which almost 1.5 times lower.

Only the lazy today do not talk about the oil and gas "needle" on which Russia "sits" securely. To be fair, it should be said that the list of resources extracted and processed here is limited not only by oil and gas, gold and diamonds. Russia mines coal, ore, copper and more than 200 other types of minerals.

Today it is hard to imagine that aluminum (Al), an important export commodity, in demand all over the world, was considered silver from clay some one and a half centuries ago and therefore was extremely expensive.

“Sooner or later, aluminum will replace wood, maybe stone. But how rich! Everywhere aluminum and aluminum ”(Nikolai Chernyshevsky, 1863).

And now, in terms of consumption, it ranks second among all metals in the world, second only to steel. And it seems that the leading positions of this flying metal as a key one will only be strengthened thanks to the latest developments in the automotive industry, the rapid growth of cities, and new opportunities for using this valuable non-ferrous metal in the energy sector as a replacement for copper.

World market

According to IAI, global aluminum production in 2017 was estimated at 63.385 million tons, which is 5.8% more than in 2016 (59.890 million tons).

IAI (International Aluminum Institute) - international organization- Union large companies- aluminum producers.

The largest players in the market are Russia, the undisputed leader (4.2 million tons) and Canada (2.9).

According to UN Comtrade, the market share that fell on Russia in 2016, which ranked first in the world in the supply of unalloyed unwrought aluminum, was 17%. Our closest competitors are Canada with a 15% share, Australia (10%) and India (8%).

Countries buy aluminum products of various degrees of processing: both semi-finished products and finished products, but Russia has so far established itself mainly as a leading exporter of unwrought aluminum, while for many other types of higher value-added products from this winged metal, we are not even in top ten.

Export from Russia

Back in the years of socialism in the Russian Federation, modern aluminum smelting plants were created. After the liquidation of the USSR, when the entire industry was falling apart before our eyes, aluminum rivers flowed from Russia abroad. The volumes of Russian deliveries, and this is the vast majority of the most valuable non-ferrous metal produced in the country, grew rapidly. By the beginning of the new millennium, they had already exceeded 3 million tons per year.

Today, metallurgy is the second most important group of domestic exports after oil and gas. Last year, non-ferrous metal exports, excluding precious metals, amounted to more than $37 billion, of which aluminum and its products accounted for $7.96 billion.

Source: FCS

Historical peaks in the export of raw materials are in the past (mid-2000s) due to increased domestic demand. In 2017, achievements in the development of the industry were recorded not so much quantitatively as qualitatively.

Rice. 1. Share of Al in the total volume of Russian exports, %
Source: FCS

Raw aluminum is one of the types of products in which Russia is confidently leading among other exporting countries. And these are products of a low degree of processing. Of the almost $8 billion received from the export of this valuable metal and its products, almost 85% came from unprocessed metal.

Source: FCS

Rice. 2. Raw Al in metal exports, billion dollars
Source: FCS

At the end of 2017, according to the Federal customs service, 3.7 million tons of raw metal was delivered from the Russian Federation abroad, and its share in the total export of aluminum and products from it has remained at the level of 89-92% in recent years.

Source: FCS

Almost the entire remaining part of our exports fell on semi-finished products: aluminum wire, plates, sheets and strips, rods and profiles, foil, containers and other products from this non-ferrous metal.

Rice. 3. Structure of Al export from Russia, %
Source: FCS

The key importer of this Russian goods remain the States. Almost 27% of the total export volume is sent to the American continent. Mostly it's all the same raw aluminum. This market has been very important for Russia for many years.

Rice. 4. Change in the shares of the main importers of Russian aluminum, %
Source: FCS

The top five buyers also included Turkey, Japan, the Netherlands and South Korea.

HOW IS THE WORLD
ALUMINUM MARKET

It's hard to believe, but just 150 years ago, aluminum was considered clay-made silver and was an extremely expensive metal. Today, aluminum ranks second in the world in terms of consumption among all metals, second only to steel. In the coming decades, the demand for aluminum will continue to grow at a faster pace. Latest developments in the automotive industry, the rapid growth of cities, the new possibilities of using aluminum as a replacement for copper in energy - these and many other trends will allow the winged metal to consolidate its leading position as a key structural material of the 21st century.

“Sooner or later, aluminum will replace wood,
maybe a stone. But how rich!
Everywhere aluminum and aluminum "

Nikolay Chernyshevsky
"What to do?", 1863

Between 1854 and 1890, only about 200 tons of aluminum were produced—the weight of a hundred all-aluminum F-150 pickup trucks that Ford today produces every hour and a half.

After the invention of the industrial electrochemical method of production, the production and use of aluminum began to develop almost exponentially.

Over the next 10 years, from 1890 to 1899, the production of aluminum worldwide amounted to 28 thousand tons, by 1930 it had grown another 10 times - up to 270 thousand tons, which corresponds to the capacity of an average modern aluminum plant. In the middle of the 20th century, aluminum production in the world reached 1 million tons per year, and in 1973 - 10 million tons. Such dynamics continued in the following decades, and in 2014 the production volume exceeded 55 million tons. According to forecasts, in 2016 it will reach 60 million tons.

Such a rapid growth in the production of winged metal was due, on the one hand, to the development of technologies for its production, and on the other hand, to the expansion of the scope of aluminum. Industrialization, urbanization, technological progress - aluminum has become an integral part of these processes. Today, high consumption of aluminum in terms of “kilograms per capita” is recognized by economists as one of the clear indicators of a strong and developed economy. It is not surprising that the leaders in this indicator are states with high GDP, which are the flagships of technological development, such as the USA, Japan, European countries..

Offer

The aluminum market is divided into producers of primary aluminum and alloys based on it - the upstream segment, manufacturers of aluminum products - the downstream segment and producers of aluminum from secondary raw materials (aluminum processing).

The upstream segment is not only the production of primary aluminum and hundreds of different alloys, but also the entire raw material chain that precedes this process. Aluminum production requires bauxite to be mined, processed into alumina, and delivered to an aluminum smelter. The world's largest aluminum producers, as a rule, are vertically integrated holdings, including bauxite mines and alumina refineries. The advantage of vertical integration for large companies is that they become independent of price fluctuations and many other things. external factors, providing itself with raw materials in the required volume for the continuous process of aluminum production. Small producers usually purchase raw materials from external suppliers.

The largest bauxite reserves in the world are concentrated in the tropical and subtropical zones of the Earth, so the main production volumes are provided by the countries of Southeast Asia, Latin America and Africa, as well as Australia. As a rule, alumina production is also located in these regions, which allows exporting a more complex value-added product.

The largest aluminum producers in the world
year 2014

Today, the largest producer of primary aluminum in the world is Russian company RUSAL, founded in 2000. It includes enterprises for the production of aluminum, alumina and bauxite in Russia and Ukraine, as well as foreign assets that were included as a result of a series of mergers and acquisitions in the 2000s.

The oldest metal producer in the world, also included in the TOP-10, is American Alcoa. It was founded on October 1, 1888 by one of the inventors of the aluminum electrolysis technology used today throughout the world, Charles Martin Hall, and was then called the Pittsburgh Reduction Company. The name was changed to the Aluminum Company of America in 1907 and remained until 1999, when it was officially shortened to Alcoa.

Another participant in the rating is the Australian-British concern Rio Tinto, one of the world's largest diversified mining and smelting companies. In 2007, it acquired the Canadian aluminum company Alcan (Aluminum Company of Canada Limited) for a record $38 billion, which allowed it to become one of the global leaders in aluminum production. By the way, Rio Tinto has bypassed Alcoa, which also participated in the fight for Alcan.

Western Europe in the top list of manufacturers is represented by the Norwegian Hydro. The company also has more than centennial history: It was founded in 1905 initially for the implementation of hydropower projects and has since grown into a large international energy and metallurgical holding.

Over the past few years, a whole galaxy of Chinese companies - Chalco, Hongqiao, Xinfa, East Hope - has rapidly burst into the list of the largest upstream manufacturers, and their share is constantly growing. Today, the Chinese aluminum market is the largest in the world in terms of production, accounting for about half of the world's volume. At the same time, more than 90% of China's aluminum production is provided by energy from coal-fired power plants, creating a serious burden on the environment.

Companies from the Middle East such as EGA (combined Dubal and Emal), Alba, Qatar Aluminum, Sohar Aluminum and others are becoming another major market player. All of them have an important advantage: the ability to use for production cheap electricity obtained by burning associated gas from oil fields.

Finally, companies from India - Hindalco, Vedanta and others - are rapidly increasing their production volumes. India is forecast to become a major aluminum exporter to the international market as capacity growth already exceeds domestic consumption today.

The number of downstream producers in the world is in the thousands. Their products are a huge range of goods, ranging from aluminum semi-finished products to finished aluminum products.

Among the largest downstream manufacturers are American Novelis and Aleris, British Rexam, European Constellium and SAPA and many other companies producing aluminum cans, facade materials, parts of the fuselage and car bodies, packaging materials, pipes, panels, profiles and other types of a huge list of aluminum products.

Recently, there has been a tendency among upstream companies to develop their own downstream directions, which allows them to receive additional profit. For example, Alcoa has announced that it has embarked on a business model transformation and will no longer be a pure commodity company. Norwegian Hydro, while remaining one of the leaders in the production of primary metal, is also one of the leading European producers of downstream products. largest manufacturer aluminum in the world RUSAL also has a downstream segment - production of all types aluminum foil for the needs of the food, construction and electrical industries.

Demand

Aluminum production in the world is increasing from year to year following the continuously growing demand for this metal.

On average, the global demand for aluminum is increasing by 5-7% annually. Thus, the global consumption of primary aluminum in 2014 compared to 2013 increased by 7% to 54.8 million tons. And by the end of 2015, global demand should grow by another 6% - up to 58 million tons.

Production and consumption of aluminum in the world

At the same time, aluminum consumption is growing against the backdrop of global urbanization and industrialization. And if in countries with developed economies a high level of economic development has already been achieved, then developing countries are just very actively catching up.

The global aluminum market today can be roughly divided into two parts: China and all other countries. Over the past decade, China has shown phenomenal economic growth rates, including becoming the world's largest producer and consumer of aluminum.

China today accounts for half of the world's production and consumption of aluminum, no other country can come close to China in this indicator. At the same time, China covers all its needs for primary metal exclusively with its own production, therefore, most often it is considered separately from the world. At the same time, China is actively increasing the export of aluminum semi-finished products, competing in the global market with Western companies.

The second and third places in terms of aluminum consumption are occupied by the markets of Europe and the USA, where demand is historically very high due to high level industrial development of the economies of these countries. Another big market- Japan is not only a country with a developed economy, but also the birthplace of a huge number of technical innovations in the field of electronics and instrumentation. At the same time, the Land of the Rising Sun imports all the primary metal it needs, having absolutely no aluminum production of its own. The reason is the lack of powerful and cheap sources of electricity on its territory.

Also, the actively developing countries of Southeast Asia show a constant good increase in consumption.

The largest amount of aluminum goes to the needs of the transport and construction sectors of the economy - in 2014 they accounted for 27 and 25%, respectively. Aluminum alloys are used to make parts of the fuselage of aircraft, parts of car and train bodies, parts of fuel systems, air conditioning systems, parts of engines, parts of seats and interiors, yachts and ships, space shuttles and solid rocket fuel. In our age, lightness, speed and reliability are in fashion, and only aluminum can guarantee all this.

Consumption by industry (thousand tons)

In construction, this metal has also gained a very strong position: not a single skyscraper, not a single metal-frame building, and even an ordinary residential building can do without it. Window and door panels, roofing, building frames, facade and load-bearing structures, elements of external decor, siding, stairs, air conditioning and heating systems - all this today is made using aluminum and alloys based on it.

The next largest sectors of use are packaging and energy - 16 and 13%. Aluminum is indispensable in the production of power lines and telephone wires, radars, capacitors, and so on. In the field of packaging, the main positions are occupied by food foil and an aluminum can for drinks. More than 200 billion cans for drinks are produced annually in the world, and humanity has not yet come up with anything more convenient and of higher quality than aluminum foil packaging.

Trade

Aluminum is an exchange commodity. But, despite the common misconception, the physical trading of this metal in the vast majority of cases does not take place on the stock exchange. More than 90% of aluminum sales with physical delivery occur under direct contracts between producers and buyers of the metal.

But first things first.

So, aluminum is a commodity. Such products have standardized consumer properties– the consumer does not care which company produced them. They are interchangeable, easily transported and stored, and can be divided into batches. That is why upstream products are traded on commodity exchanges, and not semi-finished or finished products.

When commodity exchanges were first created, they served as a place for concluding physical contracts for the supply of such exchange goods, but with the increase in trading volumes and the development of financial instruments, the role of exchanges has changed.

Today, futures contracts for raw materials are traded on them - financial instruments, which almost never entail a real physical delivery (however, such a possibility is not excluded). As a result of the auction, a price is set that serves as a reference point for producers and consumers around the world. At the same time, the exchange itself does not buy or sell anything, it only provides a trading platform for professional market players - brokers.

There are several commodity exchanges in the world that trade metals, which are located in regions with the largest demand for them. In China, this is the Shanghai Futures Exchange (SHFE), in North America– Chicago Mercantile Exchange (CME). However, the world's largest exchange for trading metals in general and aluminum in particular is the London Metal Exchange (LME), founded back in 1877.

The LME began selling aluminum in 1978. More than a century ago, when the exchange was first created, merchants met in a small coffee shop near the Royal Exchange and entered into transactions by voice, gathering in a circle. Today, about 3.7 billion tons of various metals are traded annually on the LME, worth about $14.5 trillion. This is three times the GDP of Japan.

In June 2012, the Hong Kong Stock Exchange (HKEX) became the new owner of LME, which acquired it for 1.4 billion pounds.

Aluminum is the world's largest commodity in terms of trading volume of any metal. It accounts for almost a third of the contracts concluded at the LME. The exchange trades over 100 aluminum grades from leading manufacturers, it works with more than 700 different specialized warehouses for metals in 14 countries of the world. This is necessary so that the buyer can always physically purchase the purchased metal, since, despite the fact that the lion's share of contracts - futures transactions, no one forbids a real industrial buyer to buy aluminum on the exchange for production needs. This function of the exchange is called the "market of last resort". In practice, this means that the buyer can always buy, and the seller can always sell metal under an exchange contract at an established exchange price and receive or deliver the goods to one of the exchange warehouses.

The main trading body is the Exchange Committee, which daily announces the official price of the day for aluminum, setting it on the basis of the total result of the past auction. Trading takes place in accordance with standard exchange contracts. Each such contract defines the volume of goods (for aluminum it is at least 25 tons), delivery terms (it can be any warehouse of the London Stock Exchange), deadline (immediate delivery, three months, six months, etc.) and quality requirements (metal must be certified by the exchange).

United Company "Rusal" until 2018 will reduce the production of 275 thousand tons of primary aluminum. This is part of a board-approved program to replace inefficient facilities with state-of-the-art facilities at competitive costs, the company said. By the end of this year, the aluminum holding will reduce production by 150 thousand tons of aluminum at the Nadvoitsky (NAZ), Bogoslovsky (BAZ), Volkhov (VAZ) and Novokuznetsk (NkAZ) plants, which is about 4% of production.

The remaining part will be reduced in stages: by 2015, the electrolysis production of NAZ and VAZ will be closed, by 2018 - the 3rd and 4th buildings of NkAZ. The decommissioned capacities will be replaced by highly efficient production facilities in Siberia, in particular, at the Boguchansky aluminum smelter under construction, Rusal promises. The planned reduction in aluminum production this year has been repeatedly announced by the company's management, as well as its main beneficiary Oleg.

The measures are related to high electricity tariffs and low world metal prices.

Revenue of UC Rusal in January-June 2012 decreased by 9.7%, to $5.7 billion, adjusted EBITDA — by 60.4%, to $564 million, EBITDA margin — from 22.5% to 9.9 % follows from the company's preliminary IFRS report for the second quarter and the first half of the year.

Only taking into account Rusal's effective stake in MMC Norilsk Nickel (25%), the company managed to make a profit of $255 million (74.4% less than in the first half of 2011).

The timing of the withdrawal of capacities is associated with the end of long-term contracts for the supply of electricity, Rusal explained to Gazeta.Ru. At the same time, the second stage of reductions at the Volkhov and Nadvoitsky plants may be canceled in the event of an extension of contracts at a low price, the company notes.

Cheap electricity for the Bogoslovsky plant is unlikely to be found. The planned deal for the sale by Viktor Vekselberg's IES holding of the Bogoslovskaya CHPP to Rusalu, supported at the end of last year by the government, which was then headed, did not take place: they could not agree on a price. As a result, the cost of aluminum production at the Bogoslovsky plant in the first half of the year amounted to $2300-2400 per 1 ton (with the price of aluminum being about $1900 per 1 ton), the aluminum company complains. Despite the closure of aluminum production, BAZ will continue to produce alumina in the same volumes.

The planned measures to reduce production are to be approved, and others government bodies are added to the aluminum company.

The decision to cut production was made at the company's board of directors on Friday, despite the fact that one of the company's shareholders - SUAL Partners - voted against.

“The decision to close a number of the company's aluminum production facilities is unprepared and ill-conceived, and its implementation in its current form will lead to negative social and economic consequences,” the company's press release explains. As stated official representative SUAL Partners, a program to reduce aluminum production at several of the company's Russian plants at once, "did not go through a preliminary discussion either with shareholders or with regulators and representatives of federal and regional authorities, alternative options were not studied, in particular, modernization of production facilities subject to closure, were not taken into full social impact decision". “The management of the company, on the one hand, leads with regional authorities discussion of programs for the modernization of aluminum production, providing for their preservation, and at the same time submits for consideration by the council a program for the closure of these enterprises,” Storch complained. The aluminum holding expressed bewilderment at the position of Sual. “Representatives of Sual Partners on the Board of Directors have repeatedly raised the issue of the need to close a number of inefficient aluminum production facilities at the company’s plants for six months, insisting that Rusal’s management develop and approve a capacity reduction program,” Rusal assures. In addition, it was the actions of IES, owned by Viktor Vekselberg, that led to the fact that the aluminum production of BAZ is now unprofitable, according to the aluminum holding: IES violated the agreement reached at a meeting with the Prime Minister - to transfer the Bogoslovskaya CHPP at a reasonable price, overestimating the value of the asset by times and thus not giving the company a chance for a competitive cost of aluminum production.

This is not the first shareholder conflict metallurgical company. Due to disagreement with the management policy on a number of issues, the co-owner of SUAL Partners left the post of head of the board of directors of the aluminum holding in March. Another Rusal shareholder, the ONEXIM fund, which manages the entrepreneur's assets, declined to comment.

Experts note that the closure of large production facilities in single-industry towns threatens to increase social risks. According to the company's website, several thousand people work at the factories that fall under the reduction of the main production.

Rusal promises to negotiate individually with each employee and prevent layoffs. “Employees will be offered to fill existing vacancies at factories, move to other companies of the company with compensation, and also move to new regions,” Gazeta.ru was told. Ru" in the aluminum holding. But on September 2, in Krasnoturinsk, where the Bogoslovsky plant is located, the aluminum production of which employs about a thousand people, two rallies are planned at once. One of them was organized by the trade union committee of the Bogoslovsky aluminum plant, the other by the committee "For Saving BAZ".

“The threat of a reduction in aluminum production can be regarded as a win-win combination of Rusal’s management, aimed at using administrative resources to force electricity suppliers to reduce prices, or, using the problem of single-industry towns, to receive direct state subsidies to support unprofitable production,” the leading analyst believes. Minchenko Consulting.

Unprofitable aluminum production this year began to close around the world. The closure of factories in Europe and Australia this year has already led to a reduction in primary aluminum production by 2.146 million tons.

When saving low prices more large-scale measures should be expected from other manufacturers, which should affect the dynamics of the cost of the metal, UBS believes. “But for this, Chinese metallurgists must cut production. So far, the PRC authorities, on the contrary, are declaring their readiness to partially subsidize the supply of electricity to aluminum smelters, ”says the Uralsib analyst. Now aluminum costs $1,915 per 1 ton, a slight increase in recent years was due not to fundamental factors, but to the strengthening of the dollar against the euro, experts say.