The feasibility study for construction of the smelter was carried out by Bechtel Corporation in conjunction with specialists from the Engineering & Construction Division of UC RUSAL. The Taishet Aluminium Smelter will encompass four reduction potrooms equipped with state-of-the-art RA-400 pots designed by RUSAL’s Engineering & Technology Centre.
The smelter will also include a cast house, an anode plant, a power house, gas scrubbers, together with a full range of infrastructure facilities.
The construction site for this project is located in the western part of the Irkutsk Region between Taishet and Talaya (small provincial towns) and is distant from any residential area. It is now envisaged that the United Company will build a railway to connect the smelter and Taishet.
Presently, both preparatory and building operations are performed on the construction site.
Construction of temporary facilities has been practically completed; a concrete mixing plant has been assembled and brought on line. The construction site is being equipped with required materials, piles, reinforced concrete frames and metal structures. Temporary and permanent roads and railway tracks are being built both on the territory of the construction site and beyond. Installation of internal and external water supply networks and sewer systems is currently ongoing. Planning of the site is actively underway, with pre-assembly and assembly activities on key facilities of the smelter already launched.
The project will cost over USD 2 bln, and after the full start-up of the smelter, it will employ approximately 3,000 people. The Company intends to commission no less than 150,000 square metres of living space (UC RUSAL).
In March 2005, the Company completed public hearings and assessment of the environmental impact of the Taishet Smelter construction. In February 2008, a favourable conclusion was obtained from the Federal State Office of Russia’s Directorate for State Environmental Review, which allows the Company to start full-scale construction.
The thirg project is modernization of Irkutsk aluminium smelter.
In 2010, RUSAL completed large-scale modernization of the Irkutsk Aluminium Smelter, which was commissioned in 1962. The production facility uses the 135−160kA Soderberg technology with vertical self-baking studs.
In 2005, the Irkutsk smelter launched a project to construct the 5th potline, which will be equipped with new-generation reduction cells and prebaked anodes. The 300 kA cells have been designed by SibVAMI.
The first two potrooms of the new potline were launched in February 2008 and the last in April 2010. The new potline has a design capacity of 166,000 tonnes. The total budget of the project is over USD 600 million.
Potline 5 helped to boost the total output of IrkAZ with its new effective capacities from both the economic and the environmental perspective. Having done so, the smelter can disconnect the least effective Potline 2.
Potline 5 of the Irkutsk Aluminium Smelter is built on a new site consisting of two potrooms with a total of 200 cells operated at 300 kAmps. The smelting process is based on an up-to-date pre-baked anode technology which has demonstrated excellent technical and environmental performance. The process is backed by new dry scrubbers capturing 99.
5% of fluoride emissions and carbon dust, and also closed-loop water system, a silicon rectifier, anode-rodding facilities and other vital infrastructure.
To meet the needs of the smelter after its output is raised following the commissioning of Potline 5, a new casthouse (Casthouse 3) has been built with a total casting capacity of 165,000 mt annually. The area is equipped with high-performance automated casting lines. The first part of Casthouse 3 was brought into service in September 2009 and now ships commodity metal to customers representing construction, aviation, cable and car manufacturing industries. The design and engineering were performed by the RUSAL’s Engineering and Construction Division. The second part of Casthouse 3 was commissioned in October 2010
The commissioning of Potline 5 also created as many as 585 new jobs, adding further RUR 143 million to the regional budget in new tax payments. In addition, new power lines and the high-voltage Shelekhovskaya substation, which were built to meet the growing demand for electricity at Potline 5, enhance the reliability of the local power grid.
In 2010, the Irkutsk Aluminium Smelter produced 394,000 tonnes of aluminium.
4.3 Problems of Russian aluminium industry
The main problem of Russian aluminium industry is a raw question. The traditional weakest component of Soviet aluminium sector was a deficit of raw materials — bauxite and alumina (Zhekhov, 2001). This problem was inherited by contemporary Russia.
The break-up of Soviet Union gave an edge to the situation. Capacities of Russian aluminium processing industry are not covered by raw material. Nowadays the aluminium industry is provided by alumina on the level of 40−50%.
Geographical factor plays an important role also. More than 80% of bauxite mines and its mining volumes as well as alumina processing is concentrating in European part. In the same time 80% of production capacities of primary metal is focusing in Siberia close to the sources of cheap energy (hydro-electric power stations).
In Russia there are 48 bauxite fields and perspectives of their increasing are poor. The most attractive are situated in Sverdlovskaya oblast (Kal'inskoe, Krasnaya Shapochka, Novo-Kal'inskoe, Cheremukhovskoe). Two-thirds of all bauxite reserves are concentrating in the last two mentioned above. Nowadays mining is developing in Chelyabinskaya oblast.
The world economic crisis of 2008 is also on of the serious problems for Russian aluminium industry. This metal market is recognized to be one of the most suffered because of big reduction of prices and demand (especially in construction and automobile industries).
Oil prices reducing in the middle of 2008 together with dollar increasing influenced the reduction of aluminium prices. In August 2008 the price was less than 2800 USD/t in LME. Stock reserves of aluminium increased in the end of August and archived 1165,250 thousand tonnes (it is four year maximum). Situation in the industry has worsen in 2009.
Aluminium low prices badly influence on the producers, because they are not able to cover production costs (especially energe capacities).
The other problem of aluminium industry is energy-intensiveness. Aluminium producers are interested in reducing energy costs, but perspectives of this process are long-term.
5. The perspectives of Russian aluminium industry development on the world market
The economic recession severely impacted the world aluminium market as metal prices fell drastically amid weakened demand from construction, aviation and car industry. The phenomenon resulted in erosion of profits for manufacturers leading to the shutdown of several smelters along with suspension of investments, across the globe (Global Industry Analysts, 2011).
The global financial crisis not only affected the supply of aluminum, players in aluminium industry were also forced to shift production to locations that offered lower operational costs. In coming years, smelters from Russia, Europe and the US are expected to face tremendous competition due to mass production and cheap supply from aluminum producers in China and the Middle East. The aluminium industry is also experiencing increasing aluminum production in GCC countries including Saudi Arabia, Bahrain and the UAE. The Middle East region benefits from advantages such as rich bauxite reserves as well as economical energy that are expected to help the country in developing upstream activities. Besides this, the GCC region is in close proximity to the European countries, which enables smelter operators to reduce costs (Global Industry Analysts, 2011).
Asia-Pacific, driven by ever increasing Chinese consumption represents the largest and fastest growing market for aluminium, this is the main tendency of world aluminium market. In Russia, the pace of recovery in the aluminium market is expected to be gradual, it could be seen on the dynamics of operating and financial data of United Company RUSAL.
Currently demand is picking up, albeit at a slower pace with major portion of the demand stemming from automobile, and aerospace sectors. Among the product categories, rolled extruded products represents the largest segment. Bars, rods, angles, & shapes comprise the fastest growing segment within the product category (Global Industry Analysts, 2011).
Over the past two decades, aluminium has gained market share in car production challenging the dominance of steel and iron. Aluminium use in vehicles is increasing rapidly due to benefits such as lightweight, corrosion-free and high-density features. Aluminium is also gaining importance in the packaging industry due to strong, lightweight and recyclable nature. Recycled aluminum is expected to register higher growth rate than prime metal driven by higher recycling rates and increase in existing metal base. As a consequence, competition in scrap markets is likely to remain intense (Global Industry Analysts, 2011).
The global aluminium industry has been witnessing a dramatic shift in the recent past due to consolidation among market players. In 21st century a big merger occurred in Russian market. The result of this process is operating of biggest Russian and world player — United Company RUSAL.
March 2011 has brought a new hopes for the world aluminum market. Prices for this metal have directed upwards reached the level of 2600 USD/t which has been last time registered in September 2008. Events in countries of Middle East and North Africa (MENA) as well as in Japan have unexpectedly interrupted the promising increasing of prices in the aluminium market. However this market has endured geopolitical riots better than some other basic metals markets, it has fallen by 7% (the other metal markets have fallen by 10%).
According to BNP Paribas experts, «The reasons of such dynamics is completely not difficult to distinguish. MENA region produces just aluminium in large quantities among all basic metals. In 2010 this region (including Iran) produced 8% (3,3 million tonnes) of total volume world aluminium production, and in 2011 this figure predictably will quickly grow and will exceed 4 million tonnes. On the contrary, Japan produces a smallest quantity of primary aluminium when the demand for this metal in the country is the same as in other states. Though probable splash of consumption together with infrastructure restoration can be shown later than some observers expect, Japanese nuclear catastrophe consequences could include increase of expenses for the electric power» (Gavrilova, 2011).
Geopolitical instability in the Middle East and North Africa has pushed the prices for oil upwards, and doubts concerning the further destiny of the nuclear sector, caused by events in Japan, have strengthened expectations concerning demand for other energy sources and the rise of prices connected with it. The aluminium production is the most energy-dependent industry among other basic metals (in 2010 this figure archived 36% of costs in aluminium sector), it finally will push the growth of costs for this metal production and finally will support the prices for aluminium.
According to experts of Barclays Capital, «Similar pressure of costs will provide the growing support to the market and the potential of reduction of prices will be limited» (Gavrilova, 2011). The Royal Bank of Scotland (RBS) supports this idea. The main competitor of aluminium is a copper. Copper prices are currently higher (its maximum level) while aluminium prices are lower than in July 2008. That’s why RBS specialists advise to invest in aluminium.
The additional support to aluminium is rendered by dynamics of its stocks on LME that have stopped the growth. Besides, one of optimum factors in the aluminium market are high rates of increase of demand, the level of prices (the prices are still 20% lower than in pre-crisis period, they are not influencing the activity of buyers).
RBS specialists consider that the difficult period for the world aluminium market has ended, because massive overcharge of supply started to reduce. In 2009 the volume of overcharged exceeded 10%, in 2010 this figure archived 2%. The dynamics of aluminium consumption depends on economic growth. RBS forecasts say that in 2013 the aluminium price will increase up to 3200 USD/t.
6. Conclusions
Aluminium has some outstanding properties, which explains why it is used so widely. In terms of application in various industries, it is second only to iron. Aluminium is forgeable and malleable. Its oxide film makes it resistant to corrosion and this means that the life of aluminium goods is very long. In addition, it has a high electrical conductivity, is non-toxic and is easily reprocessed.
Mentioned properties go some way to explaining Aluminium’s importance in the world economy. Aluminium is required to produce automobiles, high-speed railway cars and ships. Various types of aluminium products are used in modern construction. Aluminium has almost replaced cuprum as a material for high-voltage power lines.
That’s why demand and prices in aluminium market are steady growing. This is quite new metal and its development will continue in long-term perspective.
The main up-to-date tendencies of world aluminium market are:
increasing consumption of aluminium;
strengthening the role of China on the world market, this country and its company Chalco are main Russian competitors;
starting improving operating figures of aluminium market after world economic and financial crisis 2008, etc.
The perspectives of Russian aluminium producers on the world market could be positively described.
The world biggest aluminium company is United Company RUSAL which was founded on the base of merger RUSAL, SUAL and assets of Glencore.
RUSAL has over 40 assets in 21 countries across 5 continents, 16 aluminium smelters, 13 alumina refineries, incl. 20% strategic stake in Queensland Alumina, 8 bauxite mining complexes, 3 foil mills. It has more than 25% share stake in Norilsk Nickel, the largest nickel and palladium producer in the world.
R ussian geographical and geopolitical position let Russian aluminium companies to use this benefit, especially the access to global markets through advanced transportation network. R ussia is in the middle of the Trans-Asian Railway Network. E
uropean part of the country is connected with the Far East and China through a highly developed rail network and sea routes. A number of major ports in the Baltic Sea, the Black Sea, and the Far East are available to serve industries and trade. T he key ports are located in St. Petersburg (Baltic Sea), Vanino (Far East) and Novorossiysk (Krasnodarsky Krai) as well close proximity to China secures the fastest delivery to the world largest consumer of metals.
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Annex
Location of aluminium smelters
