Rusal to Move to 100% Hydro Power as Coca-Cola, Toyota Buy Clean

10 JULY 2017

Bloomberg
Юлия Федоринова

(Bloomberg) — United Co. Rusal, the biggest aluminum maker outside China, will power all its smelting with hydroelectricity by 2020 as corporate giants from Toyota Motor Corp. to Coca-Cola Co. demand metal produced with lower carbon emissions.

"For the clients, it is becoming more and more important that the aluminum they buy is eco-friendly," said Maxim Sokov, chief executive officer of En+ Group Ltd, the biggest owner of Rusal. The company will fully switch to hydro energy in three years, from about 95 percent now, he said by email.

Aluminum output is energy intensive, with power making up most of the industry’s costs. Given its reliance on hydroelectricity instead of the coal used by many rivals, Rusal aims to benefit from the demand for cleaner metal, as well as calls for carbon taxes on dirty production including from its billionaire President Oleg Deripaska. Including power for smelting, Rusal has among the industry’s lowest emissions, about a fifth the level of manufacturers in China, and the dirtiest producers will be forced to leave the market, according to Sokov.

Chinese companies’ margins would fall by $450 a metric ton produced under a $30 a ton carbon tax, while manufacturers in the regions of the former Soviet Union would see a drop of about $50, according to CRU Group research.

"Should a discussed carbon tax pass, Rusal will have unique competitive advantages," Sokov said.

Rusal is a member of the Aluminum Stewardship Initiative, set up by the world’s largest aluminum producers and consumers in 2012 to tackle sustainability in the industry. The initiative is completing a consultation for a performance standard, expected to be approved by the end of the year, that will introduce a "green trademark" for aluminum that’s produced using clean energy, Sokov said.