Russian aluminum producer UC Rusal announced on March 15, a decision to temporarily suspend aluminum smelting operations at the Alscon aluminum smelter in Nigeria. The plant is owned 85% by Rusal and 15% by the Nigerian government.
Rusal is dealing with both a legal challenge to the legitimacy of its ownership interest in Alscon and an unreliable gas supply to the smelter, which has limited production. The smelter produced about 22,000 mt of aluminum in 2012, well below its rated capacity of 96,000 mt/y.
Rusal said the suspension of operations at Alscon was a temporary measure and was necessary to avoid shutting down the plant completely. “Smelting operations will resume as soon as the legal uncertainty has been resolved and the continuous power supply has been secured,” the company said.
Also, “The on-going situation around the illegal attempts to challenge Rusal’s rights of ownership to the plant and the recent decision of the Supreme Court of Nigeria to cancel the sale of Alscon shares to Rusal impede long-term investment in the smelter. In particular, legal issues relating to ownership render it impossible to sign long-term contracts; hinder development; obstruct implementation of structural, production and material improvements; and impede performance of obligations.”
Rusal is the world’s largest aluminum producer. In 2012, the company produced 4.2 million mt of primary aluminum from 15 smelters. Of these, 13 are located in Russia. Apart from Alscon, Rusal’s other foreign smelter is the Kubol smelter in Sweden.
On March 4, Rusal announced that, in response to low aluminum prices, it is reducing its company-wide primary aluminum production by 300,000 mt during 2013. The decision was taken “to maintain the company’s competitive position in the global aluminum market given the current overcapacity, high power tariffs, and metal prices downturn.”
In particular, the soft global aluminum market exacerbated Alscon’s losses and was a factor in the decision to suspend operations, Rusal said.
Despite the continuing uncertainty around the plant, Alscon will continue to generate electricity. During the suspension period, the company will focus its main efforts on securing continuous gas delivery, obtaining judicial determination that Rusal is the rightful owner of Alscon, and preparing to restart operations. The company is committed to minimizing any negative consequences of the suspension for the personnel and local communities of Ikot Abasi, Nigeria, where the smelter is located.