Rusal agrees to acquire 26% stake in an Indian alumina refinery

On March 14, 2025, the Russian aluminium giant stated that it had agreed to acquire a 26 per cent stake in an Indian alumina refinery owner for $243.75 million, with the option to gradually increase its holding to 50 per cent, as reported by Reuters.

Image credit: Gulf Times

This strategic move aims to reduce Rusal's dependence on third-party raw materials.

As one of the world's leading primary aluminium producers outside China and also the world's largest low-carbon aluminium producer, Rusal has not been directly subjected to Western sanctions over the Ukraine conflict. However, the company lost around 40 per cent of its alumina supply after Australia imposed an export ban on Russia, and it was forced to shut down its alumina refinery in Ukraine.

RUSAL produces more than three million tonnes of low-carbon aluminium under the ALLOW brand, which is independently certified.

To offset declining alumina volumes, Rusal increased its raw material purchases from China and India while also acquiring a 30 per cent stake in a Chinese producer in October 2023, helping to narrow the supply gap.

As of November 2024, Rusal continued to source over a third of its required alumina from global markets at exchange prices, a practice the company acknowledged as exerting significant pressure on production margins.

Additionally, Rusal announced that, through a wholly-owned subsidiary, it had agreed to acquire up to 50 per cent of Pioneer Aluminium Industries Limited’s share capital in three phases.

Image credit: Pioneer Aluminium Industries website

Pioneer Aluminium Industries Limited was established in India in 2007 as a joint venture initiated by the promoters of the Penna Group under a Memorandum of Understanding (MoU) with the Government of Andhra Pradesh. The company was founded to develop an integrated alumina refinery, aluminium smelter, and associated aluminium-related products. Since 2021, Pioneer Aluminium has been jointly owned by the Penna Group (68 per cent), Rescom Group through its investment arm KCap Holdings (26 per cent), and other stakeholders.

Strategically positioned in the Anakappalli district of Andhra Pradesh, the refinery benefits from its proximity to key ports: Visakhapatnam (75 km), Gangavaram (60 km), and Kakinada (140 km). This advantageous location enhances its access to Middle Eastern and Southeast Asian smelters, ensuring competitive pricing.

Designed by Worley Parsons, the refinery currently operates at approximately 25 per cent of its total capacity due to various operational challenges. The facility has a current production capacity of 1.5 MTPA, with plans for expansion to 2 MTPA. As part of this expansion, additional port infrastructure is envisioned to support alumina exports, along with enhanced rail connectivity for transporting bauxite, coal, alumina, and caustic soda. Notably, Rusal has the option to increase its stake to 50 per cent or more, contingent upon the plant’s expansion.