Rusal announces 2019 results

(Posted on 28/02/20)

RUSAL, a leading global aluminium producer, has announced operating results for the fourth quarter of 2019 (“4Q19”) and for the 12 months ending 31 December 2019 (“12M19”)[1].

Key highlights include:

Aluminium

• Aluminium production[2] in 4Q19 totaled 949 thousand tonnes (+0.7% quarter-on-quarter (“QoQ”)), with Siberian smelters representing 93% of total aluminium output;
• In 4Q19, aluminium sales amounted to 1,107 thousand tonnes (+1.5% QoQ). During that period, sales of value added products (VAP[3]) increased to 443 thousand tonnes (+3.1% QoQ) continuing the gradual recovery of VAP share in total sales mix to 40% in 4Q19 from 29% in 1Q19, that was then impacted by external market drivers related to the OFAC[4] Sanctions[5];
• In 4Q19, the regional sales geography remained largely unchanged compared to the previous quarter with European destination (55%) still dominating the mix. Although in 4Q19 Russia and America sales slightly increased in share to 24% and 7% respectively;
• In 4Q19, the average aluminium realised price[6] decreased by 1.2% QoQ to USD1,873/t, as a result of decrease of the London Metal Exchange (“LME”) QP[7] component (-1.2% QoQ to USD 1,730/t). While Commodity premium component declined by 6.5% QoQ to USD 74/t, this was offset by an increase of VAP upcharge component by 5.5%. As a result, overall realised premium remained flat;
• In 12M19, aluminium production totaled 3,757 thousand tonnes, unchanged YoY;
• In 12M19, aluminium sales increased by 13.8% YoY, totaling 4,176 thousand tonnes. This growth was primarily due to partial sell down of surplus inventories of primary aluminum that were accumulated by the end of 2018 as a result of OFAC Sanctions and full launch of the first potline of the Boguchansky aluminium smelter (BoAZ) in March 2019. VAP sales amounted to 1,547 thousand tonnes (-7.0% YoY). The share of VAP sales in total sales was 37%;
• In 12M19, share of Europe in Regional sales mix increased to 54% (+5pp YoY). That was due to a number of factors, including different demand dynamics in regional markets, reduction in primary aluminium market deficit in the US on smelters restarts and gradual recovery of RUSAL’s sales in the US from its 1Q19 level (that was then affected by external market drivers related to the OFAC Sanctions);
• In 12M19, the average aluminium realised price decreased by 15.0% YoY to USD1,920/t following negative dynamics demonstrated by the LME QP component (-15.3% YoY to USD 1,785/t) and average realised premium (-11.0% YoY to USD 135/t) that primarily declined as a result of lower VAP share in the total sales mix.

Alumina

• In 4Q19, total alumina production increased by 4.7% QoQ, to 2,050 thousand tonnes. The Company’s Russian operations accounted for 35% of total output;
• In 12M19, alumina output totaled 7,858 thousand tonnes (+1.1% YoY). The Friguia bauxite and alumina complex increased output by 102% YoY as a result of the gradual ramp-up of production, which has reached 77% of the nameplate capacity as of 4Q19.

Bauxite and nepheline ore

• In 4Q19, bauxite production increased by 2.0% QoQ, to 4,026 thousand tonnes. QoQ growth of output of Guinea bauxite mines (Kindia and Dian-Dian) from a low comparison base of 3Q19 (effected by seasonal factors) was partially offset by maintenance works at the Timan mine in Russia. Nepheline production increased by 5.6% QoQ, to 1,074 thousand tonnes.
• In 12M19, bauxite output totaled 16,047 thousand tonnes (+15.9% YoY). The growth is largely attributed to reaching the full capacity of Dian-Dian (+231% YoY to 2,780 thousand tonnes) and Friguia bauxite and alumina complex (+81% YoY to 1,304 thousand tonnes of bauxite). Nepheline output decreased by 1.1% YoY to 4,244 thousand tonnes.

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