One of the world’s 10 largest aluminum producers, Russia’s Siberian Aluminum Group (SAG), plans to open an aluminum factory in Ukraine, a company spokesman said on Feb. 9.
According to Maksim Ryamchukov, spokesman for SAG in Moscow, the planned factory will be Ukraine’s largest aluminum plant. Ryamchukov’s comments came a day after SAG president Oleg Deripaska told the Russian business daily Kommersant that his company was planning to expand into Ukraine.
Ryamchukov said SAG had held talks with its biggest Ukrainian customers – including the Dnipropetrovsk-based Yuzhmash missile factory and Zapoprizhya’s Motor-Sich aircraft engine manufacturer – before deciding to build the new plant. According to him, an expected rise in aluminum consumption in Ukraine is the main factor behind SAG’s decision to move into Ukraine.
‘Ukraine has fantastic potential for aluminum consumption,’ he said.
He said Ukraine’s annual aluminum consumption now is about one kilogram per capita, compared to about three kilograms per capita in Russia. The figure in the United States is closer to 35 kilograms per capita, he said.
According to SA’s forecasts, demand in Ukraine will rise to six kilograms per capita in the next few years, with the rise fueled by increased demand for aluminum in Ukraine’s automobile, canning and aerospace industries.
Although SAG is yet to finalize both the size of the factory and the total investment required, Ryamchukov said the plant would be more modern and have a larger capacity than Ukraine’s only existing aluminum smelter in Zaporizhya. The Zaporizhya plant produced 112,000 tons of aluminum last year.
The plant will likely be located in a region of high unemployment, probably the Donbas, Zhytomyr or Sumy, Ryamchukov said.
As well as benefiting economically depressed regions of Ukraine, the new plant will allow SAG to slash the cost of supplying aluminum to its Ukrainian customers.
At present, the company buys alumina, the raw material used to produce aluminum, from Ukraine’s Mykolayiv Alumina Plant (MAP). It then transports the alumina to a plant it owns – the Sayansk Aluminum smelter in southern-central Siberia.
Part of the aluminum produced by this plant is then shipped all the way back to consumers in Ukraine. Constructing an aluminum plant in Ukraine would therefor allow SAG to cut its transport costs drastically.
SAG is also battling for control of MAP. The Russian firm claims to control some 36 percent of the plant’s shares, including the 26.4 percent stake owned by TK MAP, a company that represents MAP employees’ shareholdings.
Ryamchukov said SA has also bought a 5 percent stake in MAP from another shareholder and acquired another 5 percent on the stock market.
SAG hopes to gain control of another 30 percent of MAP through a tender to be held later this year, Ryamchukov said.
According to the Ukrainian government’s privatization plan, the State Property Fund is to raise Hr 190 million from the sale of the stake in MAP.
With its own aluminum plant and a majority stake in MAP, SAG would own an almost complete aluminum production chain in Ukraine.
Founded in 1997, Siberian Aluminum has grown into a metals trading giant in just over two years. The company’s turnover amounted to $1.2 billion last year, with the profits reaching $200 million, twice the amount the company posted in 1998.
With the Sayansk aluminum plant at its core, the company now has an extensive empire of holdings throughout Russia. With an annual capacity of some 380,000 tons, Sayansk is Russia’s third largest aluminum maker. According to Russian metals experts, SAG accounted for about 12 percent of Russia’s, and 1.5 percent of the total world aluminum output last year.
