Australia Bans Alumina Export to Russia
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Australia has announced a ban on the export of alumina and aluminum ores, including bauxite, to Russia
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According to the Australian government, Russia imports nearly 20% of its alumina from Australia
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The LME aluminum prices rose 5% on March 21, 2022, amid concerns over aluminum supply in the global market
Australia Bans Alumina Export to Russia
On March 20, 2022, the Australian government imposed a ban on the export of alumina and aluminum ores, including bauxite, to Russia. Ths ban comes amid a barrage of sanctions imposed by western countries on Russia due to its invasion of Ukraine. Australia is the largest producer of bauxite, a metal used in the production of aluminum. Aluminum is used in the automobile, aerospace, construction, packaging, electrical, machinery equipment, and consumer goods industries. and is also a critical resource for the armaments industry. Russia imports nearly 20% of its alumina from Australia.
Impact of the Ban
Russia is one of the major producers of aluminum. Since Australia banned the export of raw material essential for the manufacture of aluminum, prices at the London Metal Exchange (LME) jumped 5% in the early hours of trading on March 21, 2022, as fears of aluminum supply disruption resurfaced. The move by Australia is expected to limit the aluminum producing capacity of Russia in the coming period. The aluminum industry has been reeling under a supply-demand deficit owing to the disruption of global production since the outbreak of the COVID-19 pandemic. This supply deficit led to a surge in commodity price in the past year. The sanctions by the western countries on Russia are expected to fuel the surge in aluminum prices in the global market.
The sanctions affect Queensland Alumina Ltd (QAL), a joint venture between Rio Tinto (an Anglo-Australian metals and mining company) and Russia's Rusal International. Rio Tinto is the majority owner of this joint venture. The Australian government announced that it will work closely with entities and exporters affected by the sanctions to help attenuate the effects of the export ban. The government said that it will help explore new markets and expand the existing markets.
Sanctions on Russia and Aid to Ukraine
The export ban by Australia will be an addition to the 476 sanctions already imposed by the country on Russia's 443 individuals and 33 entities. The entities consist mostly of Russia's banks. The Australian government also announced that it will provide 70,000 tonnes of thermal coal to Ukraine. The assistance from Australia is intended to keep Ukraine's coal-fired power plants running and supply electricity to the country's power grid. The Australian government will meet the cost of the coal and its delivery to the destination port.
The sanctions imposed by the Australian government strengthened its support for Ukraine and set further punitive measures against Russia in response to its invasion of Ukraine.
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