Great Power Cooperation? Russia Interferes in Aluminum Shortage

April 18, 2018 (EIRNS)—Economists’ talk of yet another U.S. economic “recovery” from the threat of recession has been based on U.S.-China trade improvements and the prospect of a return toward zero interest rates; U.S. manufacturing, in particular, has been steadily sliding after two Trump years of relative rebound.

Russia’s latest interference—in the U.S. aluminum shortage—is opportune. It appears that the $200 million investment by Russian aluminum/alumina giant RUSAL in the new Ashland, Kentucky plant of Braidy Industries, giving it 40% ownership, is in addition to supplying aluminum of very high quality from a RUSAL plant under construction in Siberia. The Braidy plant, in turn, is exclusively to supply aluminum sheet to the auto industry, which needs it under conditions of developing shortage.

The RUSAL/Braidy deal comes after the so-called Midwest Aluminum Price in the United States had risen from $0.80/lb. to $1.00/lb. since the steel/aluminum tariffs were imposed in early 2017. Primary aluminum production had actually gone down to 750,000 tonnes annual rate from 850,000 tonnes in 2015-16; it was once nearly 5 million tonnes in the early-mid 1980s. A drop in auto production, larger than the recent gradual drop in auto sales, is connected to this.

Last October, at a campaign rally at Eastern Kentucky University, President Trump said: “Thanks to our job creation and economic (policies), Braidy Industries recently broke ground on a billion-dollar aluminum mill that will create up to 1,500 jobs right next to Ashland, Kentucky. You know where we’re talking about?” The rallygoers did. But Braidy, with some aid from the state, has struggled to build the $1.6 billion project. In February Braidy sought an $800 million loan from the Department of Energy. It has been trying to capitalize the mill with a stock share raise, but has repeatedly announced and then postponed it.

The Trump Administration removed sanctions on RUSAL in January, despite a resolution opposing this having passed the House and nearly passing the Senate. The investment initiative for Ashland evidently came from RUSAL, very recently, and the investment will be documented only later this quarter. Though RUSAL supplies some aluminum to the United States otherwise, this supply is definitely new, coming from a newly-built RUSAL plant. Braidy Industries CEO Matt Bouchard said “The bottom line is that without RUSAL we could not build an environmentally-conscious mill of this scale. Low cost, high quality and low carbon is the future of aluminum.”

Interesting, with the two Presidents unable to meet without a wild McCarthyite outcry.