Aluminum production has come under threat as Australian Prime Minister Scott Morrison announced the nation’s ban on exports of alumina, an ingredient of aluminum. The ban, which came in response to Russia’s involvement in the poisoning of opposition figure Alexei Navalny, is likely to have far reaching implications—particularly on production of the light metal and aluminum mining.
Alumina, also known as aluminum oxide, is a key ingredient in the production of aluminum, which itself is an extremely versatile and essential metal. Found in everything from car parts and airplane wings, to batteries and medicines, aluminum is the world’s second most used metal after steel. Alumina is produced from bauxite ore, which is stripped over—usually through the Bayer process.
In response to Russia’s involvement in the poisoning of Russian opposition figure Alexei Navalny, Australia has now moved to ban the export of all alumina to the country. Prime Minister Scott Morrison announced the ban recently, saying that he is taking action to ensure that a “rogue state that is a threat to our interests and our values isn’t out there reaping the benefits of this activity.”
The move has thrown into jeopardy the production of aluminum, as many of the country’s key companies rely on the key ingredient. Rusal, the world’s largest aluminum producer, is particularly reliant on alumina from Australia. In 2018, the Russian firm imported 2.5 million metric tons of alumina from the country, making up about 56 percent of its total supply.
The ban has the potential to leave Rusal in a difficult situation, with the company now having to source its alumina from other suppliers. However, this could prove challenging given that other countries, such as India, do not have access to the same quality of alumina that is available from Australia. Moreover, even if Rusal can source a suitable alternative, the costs associated with finding a new supply will undoubtedly add pressure on their margins.
While the alumina ban has the potential to have a significant impact on aluminum production, it could also affect the aluminum mining industry. Bauxite is one of the key raw materials needed for the production of alumina and, as such, the ban could hamper production. Australia is the world’s top producer of bauxite, accounting for 27 percent of global supply. Rusal currently sources a significant portion of its bauxite supply from Australian producers, and the ban could force them to look to other countries. This in turn could put pressure on prices, as the market adjusts to new demand trends, and could damage the profitability of bauxite mining operations in the nation.
Overall, the impact of the Australian alumina ban on aluminum production and mining is likely to be significant. Rusal is particularly vulnerable, as the company could struggle to find an alternative line of supply, while the long-term implications on the wider aluminum industry remain to be seen. It is clear, however, that the ban is likely to have far-reaching impacts for all involved.
