RUSAL, a Russian aluminium producer and key supplier in the commodities space, is teaming with Braidy Industries, a US base holding company which owns both Veloxint, an MIT-incubated lightweighting solutions company, and NanoAl, a Northwestern University incubated materials research and technology company, to establish a joint project in Ashland, Kentucky, USA to produce flat rolled aluminium products for the US automotive industry.
This is RUSAL’s first investment in the US since Washington lifted sanctions against the it in January. The company, the world’s largest aluminium producer outside of China, had already resumed supply services to the US.
The design capacity of the rolling mill will amount to 500 thousand tons of hot rolled band and 300 thousand tons of fully finished cold rolled products on an annual basis. It will be the widest US-based cold rolling mill with a width of 104 inches. The output from the mill will aid towards rebalancing the anticipated deficit of the auto body sheet in the US market.
The mill will operate with state-of-the art equipment provided by industry leaders. This will ensure market leadership whilst providing a sustainable competitive advantage in the long term.
RUSAL will supply aluminium (both in slab alloys and as a primary metal) for the new rolling mill from its new Taishet aluminium smelter that is currently under construction in Siberia. Delivering value added products (“VAP”) to the new Kentucky mill is consistent with RUSAL’s commitment to increase the share of its VAP offerings as part of the Company’s total production and sales.
In exchange for its investment RUSAL will earn a 40 per cent share. Braidy Industries will keep the balance 60 per cent. The project debt will be raised from several financial institutions.
RUSAL and Braidy Industries have entered into an exclusive Letter of Intent which details the commercial conditions for the joint venture alongside providing details for any future negotiations going forward. The binding documentation for the Project is expected to be signed during the second quarter of 2019 after the final decision about the implementation of the Project is made.
The demand for flat rolled products in North America has demonstrated the robust growth over the past five years and this will continue above average rates all over the world, especially in the automotive sector. The key driver of this demand growth is the Corporate Average Fuel Economy regulations (CAFE) that cause an increase and immediate switch from the original equipment manufacturers (OEMs) to aluminium-based components. The chosen location of the mill that will be in close proximity to a large number of automotive supply manufacturers will ensure efficient transportation of the finished products.
The joint project with Braidy Industries is an excellent opportunity for RUSAL to expand the Company’s diverse expertise in one of the key areas of aluminium downstream products. It will also reinforce the Company’s presence on the strategic market.
