Kazakhstan-focused miner Eurasian Resources Group plans to more than double aluminum output within three years, easing its dependence on alumina sales to Russia’s Rusal, as part of a $5 billion spending plan, company executives told Reuters.
ERG produces 1.5 million tonnes of alumina a year, selling two-thirds to Rusal and smelting the rest into aluminum at its smelter in the city of Pavlodar in northeast Kazakhstan. It produced 254,000 tonnes of aluminum last year.
But its contract with Rusal expires at the end of next year, at which point the Russian company may in theory stop buying Kazakh alumina altogether, ERG executives say.
To prepare for that, the company is spending $800 million on smelter expansion to begin next year, adding 270,000 tonnes to its capacity by 2021.
“We will be consuming more than 1 million tonnes of alumina (annually) and our dependence on Rusal will be mostly gone,” Roman Romanov, chief executive of Kazakhstan Aluminium Smelter, said.
Arman Yesenzhulov, chief executive of ERG’s alumina refinery – which is located in the same city as the smelter and is connected to it by rail – said it had no plans to cut output even after the expiration of the Rusal contract.
“Our further strategy is … to at least maintain this volume (of 1.5 million tonnes a year),” he said.
When asked if the company was looking for new long-term contracts to secure aluminum offtake, ERG said in an email it was “always open to discuss future partnerships” and was always in touch with large traders.
“At the same time, there is no immediate need to expand the markets for our products,” it said. “We sell everything we produce while output is growing.”
ERG said the main markets for its aluminum were Russia, Kazakhstan, Belarus, Uzbekistan, and countries such as Italy, Poland, Greece, Turkey and others.