building bridges: russian aluminum in a global context vladislav soloviov chief financial officer...
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BUILDING BRIDGES: RUSSIAN ALUMINUM
IN A GLOBAL CONTEXT
Vladislav SoloviovChief Financial Officer
Russia: Going Global?London, October 12-13, 2005
2
Global Trendsin Aluminium Industry
Consolidation
Restructuring
Competition for energy and raw materials
Increasing global demand
3
Industry Consolidation
others57 %
Chalco3 %
Hydro Aluminium5 %
BHPB4 %
RUSAL9 %
Alcan11 %
Alcoa11 %
SUAL25%
RUSAL75%
WORLD
RUSSIA
4
Evolution of Russian Aluminum Industry
USSR one of the world’slargest producers
Russian smeltersbecome independent
Global MOU — Russiaenters global industry
Industry consolidation —RUSAL formed
Russia is world’s2nd largest producer
Millions of Tonnes
1980
1990
1994
2000
2004
3.03
2.92
2.67
3.24
3.60
5
Shift Away from US & Europe
2004
1980
6
RUSAL Electricity Infrastructure
Smelters
Power Stations
7
RUSAL’s Investment in New Energy Sources
Krasnoyarsk Region
Hydropower: 3,000 Megawatts
Smelting Capacity: 500,000-600,000 tonnes per year
In cooperation with Government of Tajikistan
Hydropower: 4 Billion Megawatts
Boguchanskaya Hydrostation
Rogunskaya Hydrostation
8
Dynamic Growth in Global Aluminium Smelting
RUSAL + 49%
9
RUSAL Plans for Raw Material Self Sufficiency
Alumina Production(thousand tonnes)
2000 2001 2002 2003 2004 2013
1990 2085 21612982 3140
8000
10
RUSAL Investment in New Raw Materials Capacity
Largest in the world
RUSAL owns 20%
22% increase in RUSAL raw material capacity
Cooperation project with SUAL
6 million tonnes annual bauxite production by 2007
Russian domestic raw material use increases from 40% to 80%
QAL Alumina Refinery
Komi Aluminium Project
11
Global Supply and Demandof Aluminium
mill
ion
s o
f to
nn
es
2000 2001 2002 2003 2004 2005 2006 2008 2010
Global Demand Global Supply
4038363432302826242220
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*
Mining and Refining
Office
Smelting
Fabrication
**
**
*
*
*
11 COUNTRIES & 7 RUSSIAN REGIONS
RUSAL: from Siberia to the World
13
Future Outlook: Russia vs. China
5000
1000-
4000
-7500
0
75009200
9000-
200
-10000
0
10000
RUSSIA(2009)
CHINA(2009)
Production Consumption Balance
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Metals Sector Contributionto the Russian Economy
largest contributor to the federal budget
contributor to Russia’s total currency inflow
of industrial production
of exports
of Russia’s industrial fixed assets
of Russian industry’s net profit________________________________________
Source: RF Federal Agency for Industry, Report The Successes and Challenges of Russia Metals Industry, May 2005
2nd
2nd
19%
18%
11%
40%
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+ Low cost hydropower
Technology and own ongoing R&D
Scale
Low capital cost of building smelter assets
Pluses and Minuses of Operating in Russia
– Remote location
Limited locally available high quality raw materials
Limited domestic market
High perceived political risk
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Go global, become fully integrated
Three Keys to Success
Low domestic consumption
Transportation and energy costs
Fierce competition for raw materials
Explore international markets and focus on customer needs
Seek long-term partnerships or develop own energy supply
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RUSAL Today
in the World
in Russia
of global market
million tonnes of aluminium
billion in sales
billion in investments in 2006
employees
# 3
# 1
9%
2.7%
$5.4
$1+
50,000
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RUSAL Tomorrow
aluminium producer in the world
in efficiency and productivity
million tonnes of aluminium
million tonnes of alumina
billion in investments in 10 years
# 1
# 1
5
8
$ 8
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Instinct for Growth
www.rusal.com
Phone: +7 095 720 51 70
Fax: +7 095 728 49 32