Russia's Rusal resumes aluminum supplies to U.S. market

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[April 01, 2019]  By Anastasia Lyrchikova

KRASNOYARSK, Russia (Reuters) - Russian aluminum giant Rusal has resumed supplies to the U.S. market and aims to win back customers it lost due to sanctions by about September when the industry seals supply contracts for 2020, its chief executive said.

 Chief Executive of Russian aluminium giant Rusal Evgenii Nikitin gives an interview in Krasnoyarsk, Russia March 29, 2019. Picture taken March 29, 2019. REUTERS/Anastasia Lyrchikova/File Photo

Last autumn, Rusal, the world's largest aluminum producer outside China, missed the traditional window for contracting sales for this year as it was still negotiating with the U.S. Treasury Department to be removed from a sanctions list.

"We fulfilled all our obligations even during the period of sanctions, we did not allow ourselves a single failure. Therefore, some of our former partners are already coming back, new partners are coming," CEO Evgenii Nikitin said.

"We hope that we will be able to bring back our clients toward September, the contracting period for 2020," he added in an interview with Reuters.

Rusal's nine months of talks with Washington ended successfully in late 2018. In January, Washington excluded Rusal from the sanctions list but kept founder Oleg Deripaska, who had to give up his control of the firm as part of the deal.

During sanctions, Rusal lost some of its customers, including Novelis Corp, the world's biggest producer of rolled aluminum products.

The company is partially resuming deliveries to them but admits that it will have a chance to regain all its clients only when contracts for 2020 are signed.

"We expect to restore lost positions in all the traditional markets for the company, including Asia and America, with which difficulties arose last year. To date, we have already resumed deliveries to the American market," Nikitin said.

"Volumes for 2019 for most customers, including Novelis, are already contracted, but if there is a need for an increase, our partners will contact us. The same applies to customers in Japan."

Asked if a new contract with Glencore was coming after the expiry of their long-term contract in late 2018, Nikitin said: "Glencore is one of our big customers. We are in negotiating positions with all clients."

NEW SMELTERS

Rusal planned to keep its 2019 production and investments stable at 3.8 million tonnes and $900 million, respectively, Nikitin said.

Last week, the company launched new production at its Boguchansk aluminum smelter in Siberia, doubling its annual capacity to 298,000 tonnes a year. The company is currently considering a further increase in Boguchansk's capacity, Nikitin said.

Rusal is also constructing the Taishet aluminum smelter, which it expects to launch in late 2020 and is discussing attracting financing for it from Russian and foreign banks.

Rusal is confident both Taishet and Boguchansk will find demand for their product. It expects global demand for aluminum to grow by 3.7 percent to 68 million tonnes in 2019 and maintain the same pace of growth in 2020.

Nikitin also said that there were no issues with Russia's alumina supplies from the Mykolaiv (Nikolayev) plant in Ukraine.

He, however, said he did not know whether negotiations to sell the plant to Glencore, which were halted due to U.S. sanctions, would resume.

Rusal also plans to keep its 20 percent stake in Australia's QAL and is in talks with Kazakh firm ERG on a new alumina supply contract, Nikitin said, adding that in general, Rusal does not consider selling any of its assets in the near future.

Nikitin has been with Rusal for more than 25 years and was offered the CEO job in May by the board, a month after the U.S. sanctions against Rusal.

(Reporting by Anastasia Lyrchikova; writing by Polina Devitt; editing by Tom Balmforth and Emelia Sithole-Matarise)

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