• Australia bans exports of alumina and aluminium ores – including bauxite – to Russia
  • Aluminium is used in the automobile, aerospace, construction sectors – as well as in munitions.
  • Rio has a 80:20 joint venture with Russian aluminium producer Rusal in its Queensland Alumina refinery

 

Last year, Australia exported around $13.7 billion worth of aluminium, including alumina and bauxite.

And we’ve just cut a customer. The Minister for Foreign Affairs Marise Payne announced on Sunday that we’ve imposed an immediate ban on Australian exports of alumina and aluminium ores (including bauxite) to Russia.

This is expected to limit Russia’s capacity to produce aluminium – one of the country’s critical exports.

 


Bauxite is the basic raw material that is refined into alumina, which in turn is sent to smelters for processing into aluminium.

And aluminium is widely used in the automobile, aerospace, packaging, machinery and construction sectors – as well as in munitions.

Russia relies on Australia for nearly 20% of its alumina needs.

S&P Global flagged that last year Russia imported 17,000 mt of aluminium ores and concentrates with 80% shipped from China and Turkey – according to data from the Eurasian Economic Commission – and it remains to be seen if China will pick up the slack.

But when the London Metal Exchange opened yesterday the price of aluminium jumped about 5% in response.

Source: LME

 

Who bears the brunt?

The Feds said they would work with exporters and peak bodies that will be affected by the ban “to find new and expand existing markets”.

The main affected party is Rio Tinto (ASX:RIO), a major producer of bauxite and aluminium.

Last year the company produced 54.3 million tonnes of bauxite and shipped around 37.6 million tonnes to third parties.

The company also has a 80:20 joint venture with major Russian aluminium producer Rusal in in refinery Queensland Alumina.

“Rio Tinto is in the process of terminating all commercial relationships it has with any Russian business,” the mining giant said earlier this month.

And while Rio may not have shipped bauxites to Russia directly, S&P said it may have sold them to Rusal-owned Aughinish Alumina in Limerick, Ireland, which is Europe’s largest alumina refinery.

“It is not clear whether the new ban will affect the supply of raw materials to Aughinish, or whether the shipments there from Australia had been already suspended after Rio Tinto said March 10 it was cutting relationships with Russian businesses over the country’s actions in Ukraine,” S&P said.

Then there’s engineering firm Worley (ASX:WOR) which also recently announced its exit from Russia – but that it was not material to the business.

“We are deeply saddened by the events in Ukraine and support the strong response of the international business community withdrawing from Russia,” the firm said in a statement.

“Worley has begun the safe withdrawal of its services provided in and into Russia and will not enter into new contracts.”

 

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