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RUSAL’S GROWTH STRATEGY: FROM RUSSIAN TO GLOBAL ALUMINIUM BUSINESS Pavel Ulianov, Managing Director Corporate Strategy and Development 10th CRU World Aluminium.

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Presentation on theme: "RUSAL’S GROWTH STRATEGY: FROM RUSSIAN TO GLOBAL ALUMINIUM BUSINESS Pavel Ulianov, Managing Director Corporate Strategy and Development 10th CRU World Aluminium."— Presentation transcript:

1 RUSAL’S GROWTH STRATEGY: FROM RUSSIAN TO GLOBAL ALUMINIUM BUSINESS Pavel Ulianov, Managing Director Corporate Strategy and Development 10th CRU World Aluminium Conference June 13, 2005

2 2 A global leader, from Russia  Formed in 2000: just five years ago!  Top 3 producer of aluminium and alloys globally  9.9% of global aluminium production  2.7 million tonnes of aluminium produced in 2004  Over US$5.4 billion in annual sales in 2004  Today, 63% of products sold directly to end-users (in 2000, 80% via middlemen traders)  Production development and expansion investments exceeded US$534 million in 2004  Over 50,000 employees

3 3 * Nikolayev Refinery RUSAL Bratsk RUSAL Achinsk RUSAL Krasnoyarsk RUSAL Novokuznetsk CBK RUSAL Sayanogorsk RUSAL Sayanal RUSAL Armenal RUSAL Rostar RUSAL Dmitrov RUSAL Mosmek RUSAL Construction Profiles RUSAL China (Beijing) RUSAL America Corp. (New York) RUSAL Germany (Dusseldorf) Moscow Headquarters ACG (Friguia) * * * Mining and Refining Office Smelting Fabrication * RUSAL Rostar-Vsevolozsk * * RUSAL Japan (Tokyo) RUSAL Singapore RUSAL Boksitogorsk * RUSAL Australia BCGI (Guyana) Queensland Alumina Ltd. We operate in 7 Russian regions and 11 other countries, plus we sell to customers throughout the world From Siberia to the World

4 4 Competing in global markets Advantages  Dynamic company with strong management, focused on growth  Access to Siberian hydro power plants (low-cost energy supplied at average price)  Enormous productivity gains run counter to rising industry costs  A loyal and expanding client base  Strong technological R&D base (ETC and VAMI) Challenges  Dependence on purchased alumina to supplement internal production  Remoteness of smelters from customers and raw materials  Soderberg technology limits performance of some smelters  Improving environmental performance

5 5 Building and sustaining truly global competitiveness 1. Technological edge  Proprietary aluminium smelting technology RA-300 (300 kA)  R&D centre currently testing more advanced cell with 400 kA (RA-400)  Few competitors have such technological capability: Alcan, Alcoa, Norsk Hydro, China 2. Productivity surge  Reduced workforce from 73,000 in 2000 to approximately 47,000 today has dramatically increased labour efficiency and narrowed the gap with competitors  From 77 tonnes per employee in 2000 to 137 tonnes per employee in 2004

6 6 Building and sustaining truly global competitiveness 3. Adding value  Value added product sales (alloys, billets etc) grown from around 15% in 2000 to roughly 40% today  Ambitious but realistic target to raise this share to 50% by 2013  Agreement with Alcoa allows RUSAL to focus on key businesses 4. Customer focus  Sales to global traders dropped from 80% to just 15% of total volume  Since 2000 new sales offices established in US, Germany, Japan and Singapore  Smelter distance not a barrier to improved customer service

7 7 Dynamic growth in aluminium smelting Production grown by 49% (from 1.8 to 2.7 million tonnes) Of which Creep/efficiency: ~200 kt M&A: ~700 kt Bratsk:~150 kt Krasnoyarsk~240 kt Novokuznetsk~310 kt

8 8 Dynamic growth in alumina refining  Increased by 2.6 million tonnes or 217% to 3.8 million tonnes  From 7th to 5th position in global league table  Self sufficiency grown from 35% to over 70% Of which Creep/efficiency: 200 kt M&A: 2,400 kt Nikolaev 460 kt Achinsk 350 kt Friguia 770 kt Boxitogorsk 50 kt 20% of QAL 770 kt

9 9 Achieving our vision To become the world’s largest and most profitable aluminium producer by 2013, RUSAL will:  Grow aluminium production to 5 million tonnes per year  Grow alumina production to 8 million tonnes per year  Raise alloy production to 50% of overall out-put  Position RUSAL as one of the world’s lowest-cost capex-per-tonne producers  Double current labour productivity  Enhance our employer of choice status (quality work environment and competitive salary)

10 10 A clear strategy for delivery: alumina Development plan for alumina capacity to 2013

11 11 Attaining growth through 80% alumina self-sufficiency 4.8mt of alumina capacity added by 2013 Territories for growth

12 12 A clear strategy for delivery: aluminium Development plan for aluminium capacity to 2013

13 13 Attaining aluminium growth  Greenfield projects should account for 81% of the growth  Khakassky shown as the only brownfield – 13% of growth  All smelters should add 4% to capacity through creep  Current plan assumes only 9% of growth outside Russian Federation 2.3 mt of aluminium capacity added by 2013

14 14 Power projects to bolster growth  Security of power supply and pricing is an issue for the industry  Rusal’s power advantage lies in Russia and former republics  Rusal is involved in power projects for 44% of its greenfield smelter capacity Smelter fuel sources

15 15 Leveraging opportunities in Russia: Komi Project Highlights  Komi region start-up planned by 2008  Bauxite reserves JORC 190 mt. Annual volume 1,400 kt  RUSAL equity share 700kt  RUSAL acquired 50% in the project from its current promoter, SUAL  SUAL and RUSAL will jointly manage the construction and the new assets under a shareholder agreement  SUAL will also sell 500 to 700 kt of alumina to RUSAL Rationale  Reduces alumina transport cost for RUSAL  Reduces dependence on the spot alumina market for RUSAL  IFC/EBRD involvement – provides international recognition  Government support – positive for both companies

16 16 Investing in World Class assets  largest alumina refinery in the world  producing 3.85 million tonnes p.a.  a joint venture between RUSAL (20%), Comalco (38.6%) and Alcan (41.4%)  largest ever Russian investment into Australia On 1 April 2005, RUSAL acquired 20% shareholding in Queensland Alumina Limited (QAL)

17 17 QAL: a bridge to the future Increases RUSAL’s alumina supply:  RUSAL’s equity alumina production increases from 3.3 Mt to approximately 4.1Mt (+24%)  RUSAL’s share of QAL production (770Kt) currently meets 15% of RUSAL’s Siberian smelter needs QAL has significant expansion potential to over 5Mt p.a.  QAL owners will continue to evaluate expansion options for the refinery

18 18 Priority issues for next 10 years  Efficient greenfield construction lower capex, capital control, deliver on time and to budget  Development of improved (operationally and capex wise) technologies, for example RA 400  Raise capacity creep increase current efficiency at current smelters  Active value adding M&A activity with prudent assumptions  Continue to monitor and control costs (especially in alumina)  Improve internal processes and risk management procedures to enable controlled and orderly growth

19 19 Instinct for Growth Phone: Fax:


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