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        1.Does RUSAL have any plan to expand business in China amidst economic globalization? In your opinions, what advantage does RUSAL has?全球一体化的背景下,俄铝是否有计划“走进中国”?您觉得俄铝具备的竞争优势是什么?The Asian market and China in particular has always been an impo...

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    Alu.cn Interview with RUSAL

  • China Aluminium Network
  • Post Time: 2017/7/5
  • Click Amount: 283

    1.Does RUSAL have any plan to expand business in China amidst economic globalization? In your opinions, what advantage does RUSAL has?
    全球一体化的背景下,俄铝是否有计划“走进中国”?您觉得俄铝具备的竞争优势是什么?

    The Asian market and China in particular has always been an important strategic location for RUSAL. This is why we chose to conduct the company’s listing on the Hong Kong Stock Exchange in 2010. We are actively developing our business in the region, both directly and in partnership with the largest Chinese companies.
    Today we consider China’s financial and capital market as an important platform for our cooperation. Panda Bond market, Stock Connect and the upcoming Bond Connect programs are part of Beijing’s initiatives to open up China’s capital markets. RUSAL is very grateful to be the first company along the Belt and Road to issue Panda bonds in China in March this year. We hope we can lay a solid foundation for overseas companies, particularly companies in OBOR economic belt, to tap China’s capital markets. While we understand the current Stock Connect program only covers Chinese companies listed in HK Exchange, but if China can expand Stock Connect coverage to foreign companies, more companies along OBOR can consider IPO in HK market, in which mainland investors can invest in leading industry leaders such as RUSAL and OBOR projects. As to other forms of cooperation, we are systematically strengthening the Company's profile inside China through cooperation projects with Chinese partners focused on production of high-end products for Chinese and Asian markets. In 2016 RUSAL set up a 50/50 Joint Venture with Hebei Joy Sense Cable Co., Ltd. The project is in good progress. RUSAL supplied the first batch of Aluminium-Zirconium wire rod to Hebei Joy Sense Cable for trial production, testing and certification. In the first stage, our JV will start production of Al-Zr heat-resistant wires. Our long term goal is to occupy a reasonable market share of innovative cables made of aluminium alloys in China and then enter South East Asian markets.
    We also intend to invite Chinese partners to participate in our development projects in Russia, namely in Technological (Aluminium) Valley projects focused on downstream production.

    2.RUSAL faces both opportunities and challenges as a company in One Belt One Road, what plan RUSAL has to grab the opportunity?
    作为“一带一路”沿线企业,俄铝受到的挑战与机遇并存,在这个大背景下,俄铝将采取什么积极措施来迎接机遇呢?

    China’s integration project is targeting a full-scale transformation of the logistics and industry in China and neighboring countries. Russia and China can jointly develop energy-intensive projects in Siberia by employing carbon-free and renewable energy generated by hydropower plants. This will help China to decrease environmental impact from heavy industries and meet Paris climate pledges. For example, producing aluminium from hydro power generates 3 to 5 times less CO2 emissions than from coal-based electricity.
    The Technological (Aluminium) Valley projects are also very important and a very perspective opportunity for cooperation. RUSAL has already announced Technological Valley projects in Krasnoyarsk, in Republic of Khakassia, and in Volgograd Region.
    So the concept of this project is to create hubs of downstream aluminium production nearby aluminium smelters. These projects consider both downstream applications and end-user products for multiple industries: aviation, ship building, other transport, cable and electrical industry, construction, additive technologies and more.
    Together with the Aluminium Association of Russia we are working hard on these projects. The investors should benefit from significant operational cost savings, as they will be able to source aluminium in liquid form and have access to established infrastructures, and from transport connections, as the One Belt One Road will bring transport infrastructure development.
    For example, Krasnoyarsk is conveniently located on the Trans-Siberian railway and thus provides with opportunities to supply both Russian domestic market and also export markets of Europe and Asia.
    We do see interest in the Valley projects from Asian investors, including China. We believe that localization of production in Russia could be a good chance for Chinese companies to develop their business activities not only at the Russian market, but for export outside our domestic market too. Now we see a very good potential for export of finished goods from Russia and a lot of international companies have got a profit from such opportunities.

    3.Do you have any plan of new investment or action in China market compared with 2016?
    与去年相比,今年的俄铝中国市场有哪些新的投入和改变?

    Our Panda bond programme for up to RMB 10 bn is available until January 2018. To date we have utilized RMB 1.0 bn.  The debut placement was made in March this year with tenor 2+1 at 5.5% coupon rate. We have conducted extensive road shows to meet with Chinese financial investors, this was a very unique experience helping us to establish our name in this market. However, since March mainland China financial markets were quite turbulent and we have been watching fairly substantial interest rate growth. Our strategy is to further improve our capital structure with the right commercial terms, we keep on monitoring the developments on the Chinese domestic market with the objective to make another placement subject to market conditions.

    4.Which is the key investment area of RUSAL? What is your investment plan for later half of this year?
    俄铝将会在哪一方面重点投资?下半年有什么投资计划吗?

    In the coming months we are expecting that our previous investments in casting facilities will yield tangible results. The company is committed to reaching its goal of increasing the share of value-added products up to 70% by 2021 (currently VAP products occupy 44% share of our total sales mix). With this object in mind we have invested in particular into new casthouse projects at our Krasnoyarsk and Khakas smelters, with new products expected to be shipped to customers in 2017.
    At the Krasnoyarsk aluminum smelter, the new casting line with a capacity to produce 120 thousand tonnes of homogenized billets per annum will be introduced in 2017. The new facility will focus on the production of a new size billets range, which will be larger in diameter. This is a very important project as we see a very healthy growth pattern for billets led by the building sector and the automotive extrusions market, as hard alloy billets are gaining a wider acceptance for structural and body-in-white automotive applications. Along with the expansion at Krasnoyarsk, we are completing the construction of the Properzi horizontal casting line at the Khakas smelter. The line will allow the production of 120 thousand annual tonnes of alloys formed into 10 kg bars demanded by the automotive market (specifically for wheels production).
    Overall, between 2017 and 2019, RUSAL is planning to invest approx. US$150 million in the projects to increase the share of VAP in total output

    We are also considering investments into new smelting projects - BEMO and Taishet. Earlier in May the Board of the company approved additional financing for top-priority works at Taishet smelter construction site in order to resume its construction.  We are currently in talks with the lenders and also RusHydro to agree on financing terms for the project.

    5.What’s your opinions about growth potential of China market?
    您认为中国市场的增长潜力如何?


    Leaders of China have officially announced they are aiming to expand the country’s economy by around 6.5 percent in 2017. I think China will achieve the target.
    The major challenge for China today is overcapacity and environmental performance of aluminium industry. If Chinese government adheres to declared environmental policy (including 2+ 26 plan) and supply side reform then aluminium industry will be able to improve its performance and sustainability.  For future development China needs to take advantage of One Belt, One Road policy and build production facilities outside China – best location for aluminium smelters are countries with abundant hydro-power resources, for example, Russia. Alumina refineries could be built near bauxite deposits as bauxite processing generates significant amount of red mud.

    6.Water and energy constrains sustainable development of many countries, increased demand of water resources brought by economic growth brings higher pressure to water resources supply. Does RUSAL has any good plan/advice for sustainable hydropower?
    水与能源已经成为很多国家可持续发展的制约因素,随着社会经济的不断发展,对水资源的需求也逐步增加,给水资源供给带来了更大的压力。俄铝针对水电能源的可持续发展有什么好的规划吗?

    RUSAL’s access to renewable and environmentally hydropower of Siberia is a key advantage of our company. We sources over 90% of our smelters’ electricity needs from these hydro power plants. Using renewable and environmentally friendly hydro energy allows RUSAL to demonstrate one of the best CO2 footprint in the industry. And we believe that HPPs are the best solution for developing energy intensive industries with lower environmental impact. Today, according to World Bank, hydropower reduces annual global emissions by some 2.8 billion tons of CO2 per annum. Russia has immense renewable energy potential. We are the 5th market in the world by installed (hydro) power capacity and generation. Russian rivers have the potential to generate over 850 billion kWh of carbon-free electricity a year.

    At the same time aluminium industry requires great amount of water for other operations. And we understand that unsustainable use of fresh water can undermine quality of life and economy of the surrounding societies. Company’s environmental goals include creation of closed-loop water supply systems at its production facilities, in order to reduce water consumption and the amount of effluent discharged. We have invested in onsite water recycling facilities and production efficiency improvement and our steps have yield tangible results. In 2016, the overall water consumption was cut by 35% and water waste by 68% compared to 2012.

    7.Aluminum price slightly fluctuated at a low level and hesitates to drop significantly in the 1st half of 2017, can you share with us your opinion about aluminum price trend in the 2nd half of 2017?
    铝市行情上半年是一种低位震荡,下跌意愿不强,您能不能就当前市场行情,分析一下下半年的铝价趋势?


    The aluminium price has rebounded in 1H2017 from its multi-year low at the beginning of 2016. Looking at industry and market fundamentals one can assess that aluminium market is currently in a good shape. Global demand for aluminium continues to grow led by the transportation sector, followed by construction, packaging and electrical sectors. All regions are witnessing an increase in demand driven by spending for cars and durable goods and increased investment in fixed assets.

    Our forecasts for the aluminium market in 2017 are following. Global aluminum demand to grow by 5.5% to 63 mln tonnes. Global aluminum supply will grow by 4.7% to 61.9 mln tonnes vs 3.7% growth in 2016 and will be affected by a tight supply ex-China due to absence of new capacities and in China due to the new antipollution plan and illegal capacity closures. The global aluminum market deficit to widen to approximate 1.0 mln tonnes in 2017 vs 0.5 mln tonnes in 2016.

    Source: www.alu.com.cn
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