Smelts aluminum at Siberian dam complexes where captive hydroelectric power undercuts every grid-connected competitor on cost.
What this company is and how it runs — written from structure, not news.
RUSAL smelts aluminum at dam complexes on the Angara and Yenisei rivers in Siberia, where dedicated hydroelectric stations supply power at $0.02–0.03 per kilowatt-hour — roughly half what any grid-connected competitor pays — and that gap is wide enough that no coal or gas alternative can close it on economics alone. Because the smelters draw power continuously at a fixed rate, they must run at near-full capacity at all times; idling a potline wastes the fixed cost of both the dam and the smelting equipment simultaneously, so the whole system only makes sense when it runs flat out. The aluminum produced then has to meet London Metal Exchange good delivery standards before it can be sold at global commodity prices, meaning the entire chain — Guinean bauxite, Siberian potlines, hydroelectric dam — only converts into revenue once that certification is in place. The same geography that makes the cost structure unbeatable also makes it brittle: if Western sanctions were to revoke LME good delivery status for ingots from those specific smelters, the cheap power would still flow but there would be no exchange through which to sell what it produces.
How does this company make money?
The company sells aluminum ingots at the London Metal Exchange spot price plus a regional premium of $80 to $120 per ton on top of that. It also earns tolling fees by processing bauxite that belongs to other companies through its alumina refineries. Finally, when the Siberian hydroelectric stations generate more electricity than the smelters need, the company sells that surplus power to regional Russian grid operators.
What makes this company hard to replace?
Automotive and aerospace buyers cannot simply swap to a different aluminum supplier — qualifying a new supplier under AS9100 and ISO/TS 16949 standards takes 18 to 24 months of testing and paperwork. Transferring London Metal Exchange good delivery status from one refinery to another takes 6 to 12 months on its own. And the alumina supply contracts with Guinean mines include take-or-pay clauses that run through 2030, meaning buyers are financially committed to existing volumes whether they use them or not.
What limits this company?
Output is capped by how much electricity the Sayano-Shushenskaya and Bratsk dams can generate. Adding more smelting capacity beyond that ceiling would mean buying power from the wider Russian grid at above $0.05 per kilowatt-hour, which destroys the cost advantage the whole business is built on. Building more dam capacity would take billions of dollars and a decade or more of environmental and regulatory approvals on the Angara and Yenisei rivers — so meaningful growth in the near term is simply not possible.
What does this company depend on?
The company cannot operate without five things: bauxite mining access in Guinea through its partnership with Compagnie des Bauxites de Guinée; Russian Federation export licenses to ship aluminum abroad; power purchase agreements with the Sayano-Shushenskaya and Bratsk hydroelectric stations; Trans-Siberian Railway freight capacity to move alumina to the Siberian smelters; and London Metal Exchange good delivery certification that allows the finished ingots to trade on global markets.
Who depends on this company?
European car makers including BMW and Audi rely on this company's aluminum for lightweight body panels — if supply stopped, their production lines would face shortages. Asian packaging companies that make beverage cans would find their aluminum coil supply squeezed. Russian defense contractors building military aircraft depend on the high-purity aluminum alloys this company produces, and those specific grade requirements would be hard to replace quickly.
How does this company scale?
Adding smelting capacity is relatively straightforward — more Hall-Héroult potlines use the same proven technology and can be built using identical equipment. What cannot scale is the cheap power behind them: the Sayano-Shushenskaya and Bratsk dams have fixed generating limits, and those specific river sites on the Angara and Yenisei took decades to develop and cannot be duplicated elsewhere. So the business can grow its physical smelting footprint only as far as the hydroelectric stations will allow.
What external forces can significantly affect this company?
US and EU sanctions already restrict the company's access to Western commodity exchanges and cut off certain sources of financing. In Guinea, Chinese Belt and Road infrastructure projects are building alternative bauxite supply routes that could bypass the company's existing partnerships there. And in Siberia, Arctic warming is changing water levels in the rivers that feed the hydroelectric dams, which threatens the reliability of the power generation the entire cost structure depends on.
Where is this company structurally vulnerable?
If the US or EU imposed sanctions that directly targeted the Sayano-Shushenskaya or Bratsk hydroelectric infrastructure — or stripped the company's aluminum ingots of London Metal Exchange good delivery status — both halves of the business would fail at once. The smelters would lose their power-cost foundation, and the metal they produced could no longer be sold on global commodity exchanges.
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As of FY2024 (year ended December 31, 2024). Newer annual figures aren't yet on file.
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