Amidst the whirlwind of geopolitical tensions, the aluminium industry finds itself at an intriguing crossroads, with the relationship between Novelis and Russian aluminium behemoth, UC Rusal, taking center stage.
For years, Novelis and UC Rusal have maintained a symbiotic business association. However, with the onset of Russia’s invasion of Ukraine, Novelis’s CEO, Steve Fisher, announced a strategic shift in this relationship. Historical contracts would be upheld, but the conflict meant a halt to any fresh agreements. While the doors are not permanently shut, any future engagement heavily relies on the evolving political landscape.
Rusal’s Current Position:
Interestingly, no sanctions are currently imposed on UC Rusal. Yet, the company’s image has suffered a blow, with numerous buyers distancing themselves, attributing their hesitation to Russia’s military undertakings in Ukraine.
Significance of the Aluminium “Mating Season”:
The aluminium industry is abuzz as the “mating season” approaches—a pivotal time in September when stakeholders negotiate deals that shape the year ahead. Rusal’s performance during this period is under keen observation, as any misstep could significantly affect their fiscal health.
Rusal’s Contribution to the Global Aluminium Market:
With a staggering production of 70 million metric tons, Rusal contributes to approximately 6% of the global primary aluminium supply. While Steve Fisher refrained from revealing the exact volume of aluminium Novelis procures from Rusal, he underscored its relative insignificance.
Novelis’s Aluminium Sources:
The heart of Novelis’s aluminium supply beats in Canada, with Canadian smelters being their primary contributors. This strategic sourcing underlines Novelis’s commitment to quality and consistency.
The Novelis-UC Rusal episode unravels the intricate tapestry of geopolitics and global trade. It serves as a testament to the fact that in today’s interconnected world, business decisions are seldom made in isolation; they echo the sentiments and complexities of global events.