Ukraine conflict: Rusal’s best decade may end as customers flee, costs soar amid Russia sanctions
- Rusal’s 2021 net profit more than quadrupled to a record US$3.22 billion, topping the previous peak in 2010 by 12 per cent
- Rusal had been riding the wave of surging aluminium prices, which jumped 41 per cent last year to an average of US$2,553 per tonne
Rusal’s decade-long earnings streak may come to an end, as Western sanctions after Russia’s invasion of Ukraine drive away global customers, leaving the aluminium producer to contend with soaring costs in financing, logistics and raw materials.
The world’s second-largest aluminium producer said its future is “highly uncertain” as it is unable to assess the consequences of worldwide sanctions and operational restrictions on Russian firms and individuals, as well as any countermeasures from Moscow.
“If the situation persists, or continues to develop significantly, including the loss of significant parts of foreign markets, which cannot be reallocated to new markets, it may affect the group’s business, financial condition, prospects and results of operations,” it said in a filing on Wednesday to Hong Kong’s bourse, where its shares had been listed since 2010.
The uncertainty tarnishes an otherwise stellar year for Rusal, where 2021 net profit more than quadrupled to a record US$3.22 billion, topping the previous peak in 2010 by 12 per cent. Rusal’s stock price jumped after the results were announced, soaring by as much as 9.8 per cent to an intraday high before giving up some of the gains to end the day 6.5 per cent higher at HK$4.89 in Hong Kong.
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Like its industry peers Chalco, Alcoa and Rio Tinto, Rusal had been riding the wave of surging aluminium prices, which jumped 41 per cent last year to an average of US$2,553 per tonne. The price of alumina, the starting material that is refined into the finished metal, rose 18 per cent last year to US$364 a tonne.
Rusal temporarily suspended production at its alumina refinery in Ukraine on March 1, citing “unavoidable logistical and transport challenges” after the Russian military invaded its neighbour. The refinery produced 21.7 per cent of Rusal’s 2021 alumina output.
