Strategy

To keep costs below inflation, the Energy segment uses a cost-allocation priority system and has implemented cost optimisation measures such as maintaining a lean production system, reducing personnel costs, operating a consolidated procurement service, and centralising back-office functions.

As one of the lowest-cost aluminium producers globally, the Group’s Metals segment maintains and improves its cost efficiency by focusing on customer demand and securing long-term power and transportation contracts while achieving full bauxite and nepheline self-sufficiency in the medium term by launching bauxite production at the Dian-Dian mine and Friguia Alumina Refinery.

The Group is committed to maintaining the highest health and safety standards across the business to ensure the safety and welfare of our employees. This includes our responsibilities as stewards of unique, natural environments to protect the ecosystems that support our business across the world – most notably Russia’s Yenisey and Angara rivers, and Lake Baikal, which holds 20% of the world’s fresh water. Our environmental care is not limited to Russia, but stretches across our operations globally. 

Our sustainability commitments also provide support to the communities in which En+ and RUSAL are central in contributing to social and economic life, both as an employer and a corporate citizen. Our combined heat and power assets in Siberia are a major legacy challenge, burning coal to provide heat to local communities in a region where no heat alternatives currently exist. We take these responsibilities very seriously and are developing a roadmap on emissions monitoring and reduction as well as the eventual replacement of our outdated equipment and assets, reflecting our commitment to local communities, who rely on us for improving their quality of life.

The Energy segment actively participates in diversified, low capital expenditure research and development projects with potential industrial and environmental applications in the energy sector. Smart grids, solar energy, and small HPP systems are some of the key focus areas.

Smart grids are modernised power grids that use communications and technology to generate data on power production and consumption, enabling increased efficiency, reliability, and sustainability of power production and supply.

The Group has participated in several solar development projects, such as a pilot solar plant in Abakan (the Khakassia Region) and a solar panel development project with Moscow State University. Other solar energy initiatives include the design of solar roof panels, small solar power plants with an installed capacity of up to 10 kW, and producing components for solar plants.

In addition, the Energy segment is exploring initiatives relating to small HPPs, including exploring new boundary sites and constructing small HPPs with installed capacities up to 150 MW, backed by CSA agreements (a renewables CSA program).

Currently, the Group’s power generation and aluminium production facilities have
one of the lowest carbon footprints in the world. In 2019, the Metals segment’s emissions fell to 2.03 tCO2e/tAl – 11% down from a 2014 baseline. The Power segment aims to cover 95% of our aluminium energy needs with hydro and other carbon-free power by 2025. The Group continues to implement state-of-the-art environmental technology, some of which has been developed for limiting heat transmission losses for the Energy segment and introducing a closed water cycle for the Metals segment. Specifically, the Power segment aims to cover 95% of our aluminium energy needs with hydro and other carbon-free power by 2025. 

En+ allocates capital conservatively and is focused on deleveraging. In making recommendations to the General Shareholders Meeting on dividend payments, the Board will take into account current trading and economic conditions in the context of the previously announced policy.

The Metals segment will continue developing low-cost and low-risk brownfield expansion projects in aluminium (BEMO and Taishet), either in partnership or through non-recourse project financing. To further widen margins from the value-added products (VAPs) sold to end-customers and distributors (compared to the commoditised primary aluminium sold to global traders), the Metals segment seeks to increase the share of VAPs in its production and sales mix, in particular, through increasing its VAP capacity and improving the effectiveness of its Siberian smelters. In addition to increasing VAP sales, the Metals segment seeks to cooperate with strategic partners in order to develop downstream facilities, stimulate local aluminium markets, and promote new applications of aluminium products.

As the electricity needs of our Metals segment and the electricity production of our Power segment are closely matched, vertical integration between the two segments unlocks significant value for the Group. Specifically, long-term power supply contracts between the two segments secure a stable supply of electricity for the Metals segment’s aluminium smelters while providing a benefit for the Power segment through securing a base electricity demand. In addition to supply contracts, the Group plans to further increase the level of coordination between its two businesses by aligning long-term capital expenditures for core operations in Siberia.