Alexey Alipchenko, Trimet Group, Russia. The aluminum alloys industry in Russia: the situation today and post WTO entry.

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1 Alexey Alipchenko, Trimet Group, Russia The aluminum alloys industry in Russia: the situation today and post WTO entry.

2 TRIMET ALUMINIUM AG 2

3 Aluminum Recycling in post- Soviet countries in in MT ,000 21,500 20, Russia Ukraine Кazakhstan Belorussia Baltic Countries TRIMET ALUMINIUM AG 3

4 Structure of Aluminum alloys consumption in Russian Federation in others 2% steel industry 33% Automotive industry 39% gas industry 3% food industry 6% engineering industry 12% building industry 4% electrical industry 1% Data according to Federal State Statistic Committee of Russia (ROSSTAT) TRIMET ALUMINIUM AG 4

5 Structure of Aluminum alloys consumption in Russian Federation in others 2% Recycling industry s share of Alu alloy s consumption in Russia in 2011: steel industry 33% gas industry food industry 3% 6% building industry 4% electrical industry 1% engineering industry 12% Automotive industry 39% - Die casting alloys mt - Extrusion items mt - De- oxidizers (ingots/pyramids) mt - De- oxidizers (wire rod) mt - Powder items mt Total about mt TRIMET ALUMINIUM AG 5

6 Aluminum Recycling in CIS Кazakhstan Belorussia Ukraine Russia TRIMET ALUMINIUM AG 6

7 Structure of recycled aluminum alloys production in Russia in 2011 Base Alloy (AK5M2) MT (8%) mt (9%) Die-casting Alloys (AK12M2/DIN 226/ADC12 or similar) mt (16%) mt (17%) mt (50%) De-oxidisers Rolling and extrusion alloys Alu powder and other purpose TRIMET ALUMINIUM AG 7

8 Definitions TRIMET ALUMINIUM AG 8

9 TRIMET ALUMINIUM AG 9

10 Retrospective comparative data of export volumes ex- Russia. in MT TRIMET ALUMINIUM AG 10

11 Comparative data of export vs. domestic consumption in Russia Export mt vs. Domestic mt export domestic TRIMET ALUMINIUM AG 11

12 Russia s downstream segment where is investment needed? Russia others 2% steel industry 33% Automotive industry 39% gas industry 3% food industry 6% engineering industry 12% building industry 4% electrical industry 1% building industry 4% steel industry 3% electrical industry 2% food industry 2% others 2% Western world engineering industry 12% Automotive industry 75% TRIMET ALUMINIUM AG 12

13 OEM & SKD in Russia. Good perspectives for secondary producers TRIMET ALUMINIUM AG 13

14 Localization of car production. In connection with the development in Russia of assembling productions of foreign brands- there is a growing demand in the local parts and details. According to CEO of Bosch Russia Ltd. volume of sales of Bosch group products has increased as per results of 2011 for 50% and exceeded one billion EURO. Today in Russia 12 motor& power-train plants. Their number to be increased by foreign brands. Volkswagen group is candidate number one TRIMET ALUMINIUM AG 14

15 What in 2012? TRIMET ALUMINIUM AG 15

16 The aluminum alloys industry in Russia: the situation today and post WTO entry. Officially Russia joined WTO on 22 August Russia s today non- ferrous scrap export tax 50%. Export tax to be reduced. There is a transitional period is for 5 years, starts The changes will include: first year - 50% tax second year - 40% tax third year - 30% tax fourth year 20% tax fifth year 10% tax, but not less than 76 Euro per MT This final rate for all subsequent years TRIMET ALUMINIUM AG 16

17 The aluminum alloys industry in Russia: the situation today and post WTO entry. Cu Copper scrap within 5 years will come to 10%, but not less than 84 Euro per MT Pb Lead scrap within 5 years will come to 10%, but not less than 35 Euro per MT Zn Zinc scrap within 5 years will come to 10%, but not less than 60 Euro per MT TRIMET ALUMINIUM AG 17

18 The aluminum alloys industry in Russia: the situation today and post WTO entry. Possible consequences and scenario counter possible threats %(76 Euro/mt Min.) is a level at which level from which the export of scrap is quite possible. - Competition for scrap between export and local smelters will arise and will lead to price grow. - In five year period domestic consumption will not grow over 50% of Russia s production and domestic consumption will not be able to dictate prices for scrap. As a result shortage of scrap for local production. Is necessary: - For State: to monitor compliance with the terms of localization automakers and where possible - to encourage the acceleration of the process of localization. - For Producers: to encourage the consumption of existing die- casters, by improving the quality of service and products (alloys). to seek an alliance with the automakers to create a reliable supply- chain for future motor-plants in Russia TRIMET ALUMINIUM AG 18

19 Thank you very much for your attention! Vrubelya 8-178, Moscow, Russian Federation Tel.: TRIMET ALUMINIUM AG 19