Rusal and Braidy Industries plan to establish a joint project in Ashland, Kentucky to produce flat rolled aluminium products for the US automotive industry.
The design capacity of the rolling mill will amount to 500,000 tonnes of hot rolled strip and 300,000 tonnes 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 (2,640 mm). 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 latest 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 strategy to increase the share of its VAP offerings. In exchange for its USD200 million investment Rusal will earn a 40% share. Braidy Industries will keep the balance 60%. The project debt will be raised from several financial institutions. Both Rusal and Braidy Industries intend to approach financial markets for funding after signing a Letter of Intent. 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 automakers 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 transport 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.