Russian aluminum producer Rusal reported a drop in half-year net profit on Friday as Western sanctions over the Ukraine conflict and weak domestic demand took a toll.
Rusal said in a statement that “growing geopolitical tensions” and volatility on the markets “negatively affected the activities of Russian enterprises in various sectors of the economy, which led to a decrease in aluminum demand in Russia.”
Rusal’s net profit fell 16.7 percent to $1.68 billion in the six months to June 30.
Rusal also said it had been negatively affected by Australia’s ban on alumina exports to Russia as well as the suspension of production at Mykolaiv alumina refinery in Ukraine.
Aluminum production costs in the first half of the year went up by 33.2 percent to $2,028 per tonne, up from $1,523 per tonne in the first half of 2021, the company said.
“The company is forced to rebuild its supply chains,” the statement said.
“Investment projects and modernization programs of production facilities may be delayed because of difficulties with the supply of equipment.”
Tycoon Oleg Deripaska, who owns Rusal, has spoken out against Russian President Vladimir Putin’s decision to send troops to Ukraine on February 24.
A large number of key Russian companies are facing serious problems in the supply of equipment and spare parts, the sale of which to Russia has been banned.
They are also struggling to import or export, as international logistics and financial chains have been disrupted by Western sanctions imposed by Europe and the United States.