THE SOVIET ALUMINUM INDUSTRY: SLOWING GROWTH AND INCREASING DEPENDENCE ON FOREIGN RAW MATERIALS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00313R000200020007-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 25
• Document Creation Date: December 22, 2016
• Document Release Date: December 29, 2009
• Sequence Number: 7
• Publication Date: July 1, 1984
• Content Type: REPORT

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Directorate of Secret
Intelligence
The Soviet Aluminum Industry:
Slowing Growth and
Increasing Dependence on
Foreign Raw Materials
Secret
SOV 84-10100
July 1984
Copy 5 2 1
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Intelligence
Foreign Raw Materials
The Soviet Aluminum Industry:
Slowing Growth and
Increasing Dependence on
This paper was prepared b
of the Office of Soviet Analysis, with a contribution
Comments and queries are welcome and may be
directed to the Chief. Soviet Economy Division,
SOYA,
Secret
SOV 84-10100
July 1984
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Summary
Information available
as of 31 March 1984
was used in this report.
The Soviet Aluminum Industry:
Slowing Growth and
Increasing Dependence on
Foreign Raw Materials F--]
first, accounting for 23 percent).
The USSR has rapidly expanded its capacity for aluminum production,
partly with the help of Western technology. Although most of the capacity
installed in the 1960s was of domestic origin, all plants built or under
construction since the early 1970s have used Western technology extensive-
ly. Imported automated control technology, for example, has helped the
Soviets to reduce the industry's high consumption of electric power and to
ameliorate its chronic labor shortages. Even though growth has slowed
sharply since 1975, the USSR is the world's second-largest producer of
aluminum, accounting for 19 percent of world output (the United States is
Because the Soviets treat nonferrous metals as strategic materials, Moscow
publishes little data on aluminum production.
During the 1960s and early 1970s, aluminum production in the
caused by shortages of labor and inadequate maintenance.
USSR increased at an average annual rate of 10 percent, mainly in
response to increasing demand from the defense, electrical, and construc-
tion industries but also in support of growing export commitments. Since
1975, growth has slowed to an average of 3 percent a year in the 1976-80
period and 1 percent a year in the 1981-83 period. The main causes of the
slowdown are:
? A cutback in investment mainly in response to slower growth in demand
for aluminum.
? Delays in finishing new production capacity, notably at the Sayansk
aluminum plant.
? Excessive equipment downtime at the Krasnoyarsk aluminum plant,
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Because most of the factors causing the production slowdown have
continued into the 1980s, we estimate that aluminum production will grow
at about 2 percent a year through 1990. 25X1
expansion in the supporting domestic raw material base.
The growth in capacity to produce aluminum has not been matched by
the share of raw ma-
terials obtained from domestic sources has dropped from 70 percent in 25X1
1970 to 65 percent in 1982. As a result, the Soviets have had to depend in-
creasingly on imports of bauxite and alumina; this dependence will
continue to increase for the balance of the 1980s as domestic reserves of
high-grade bauxite are being rapidly depleted. Prospecting throughout the
USSR has not revealed any large deposits that would be economical to
iii Secret
SOV 84-10100
July 1984
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develop. We project that by 1985 the USSR will import 40 to 45 percent of
its bauxite and alumina needs; by 1990 this share will rise to 45 to 50 per-
cent.
The USSR is also a world leader in aluminum exports, which have been di-
rected mainly to Eastern Europe and Japan. Moscow earns relatively little
hard currency from these exports, however, and-as indicated by our
projection of relatively slow growth in aluminum production-is unlikely to
earn much more through 1990.
Although Soviet aluminum production is small compared with steel
production, wider use of aluminum alloys could help relieve the tension
between supply and demand for some types of steel in a limited number of
products. Again, however, the relatively small increases in production
projected for the 1984-90 period would prohibit a large increase in new ap-
plications.
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Expansion of Capacity, 1959-83
The Contribution of Western Technology 2
Why the Slowdown in Production? 10
Delays in Finishing Planned Construction 11
Labor Shortages and Inadequate Maintenance of Equipment 1
2
Increasing Dependence on Foreign Raw Materials
1
2
Estimating Soviet Production 19
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 Figure 1
USSR: Estimated Production of Primary Aluminum, 1959-838
I
0 1959
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I I 1 1
61 63
I I I I I
65 67 69
' Output of secondary aluminum (recycled aluminum) is not included
in this graph; see appendix for a discussion of the methodology used to
estimate production.
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The Soviet Aluminum Industry:
Slowing Growth and
Increasing Dependence on
Foreign Raw Materials
Introduction
Aided by Western technology, the USSR has become
the world's second-largest producer of aluminum. It
accounted for 19 percent of global output in 1982,
while the United States accounted for 23 percent
(table 1). A lightweight metal that has relatively high
strength, good resistance to corrosion, and good elec-
trical conductivity, aluminum is important to many
Soviet industries and is vital to the defense industries.
We estimate the latter directly consumes about 15
percent of domestic production of aluminum. This
report discusses the Soviet aluminum industry's devel-
opment over the past 25 years, the contribution of
Western equipment and technology, the causes of the
marked slowdown in growth since 1975, the growing
dependence on foreign sources for raw materials, and
the outlook for aluminum production and use in the
1980s
Expansion of Capacity, 1959-83
Annual output of aluminum grew from an estimated
515,000 tons in 1959 to 2.8 million tons in 1983 (see
figure 1). Nearly 85 percent of this growth occurred
before 1976, however, when production grew at an
average annual rate of 10 percent a year. In 1976-80,
growth slowed markedly to 3 percent a year and
during 1981-83 to 1 percent a year.
delivery schedules
Growing export commitments and increasing domes-
tic demand-primarily in the defense, electrical and
construction industries-have driven the expansion of
the aluminum industry. The industry was created in
the 1930s, mainly to support production of military
aircraft, and expanded during the next two decades.
Since the late 1950s increasing civilian demand and
export commitments have also contributed to the
industry's growth. Although the share of aluminum
production directly consumed by defense has declined
(from roughly 35 percent in 1960 to about 15 percent
in 1982), the defense industries are still one of the
largest and most important single users of aluminum
and are granted the highest priority in quality and
Table 1
Leading Producers of
Primary Aluminum,
1960-82 a
United States
1,827
3,607
3,274
USSR
565
1,640
2,735
Canada
691
972
1,075
Japan
133
733
351
West Germany
169
309
723
a Primary aluminum is the product of smelting alumina in an
electric furnace. US primary aluminum production declined by 30
percent from 1980 to 1982, mostly because of weak markets in the
transportation and construction industries caused by declines in the
sales of new domestic automobiles and new houses. Japanese
aluminum production decreased by almost 70 percent during the
same period because high energy costs forced Japan to increasingly
rely on less expensive aluminum imports. Source (except for USSR)
is the Aluminum Association, Inc., a US-based trade group. Data
for USSR derived as explained in the appendix.
Siberia: The Center of Growth. Most growth in the
industry during the 1960s and 1970s resulted from
plans made in the 1950s to construct new capacity in
southern Siberia where there are relatively inexpen-
sive sources of hydroelectric power (see box, page 3).
Over 90 percent of capacity added since then was
constructed at four Siberian locations that began
production between 1962 and 1967-Novokuznetsk
North, Krasnoyarsk, Bratsk, and Irkutsk
table 2). These plants established southern Siberia as
the center of aluminum production and have account-
ed for about 70 percent of total production annually
since 1975 (figure 3). The plants at Bratsk
and Krasnoyarsk accounted for half of domestic
production in 1982. Each has an annual production
capacity of roughly 800,000 tons, making them the
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Figure 2
Aluminum Production Facilities
Sweden
Finland
d Alumina plant
Combined facility
S tsk
rasn
k tsk
i
The United State.P r menl has not renpg nized
the incorporation of E@~innie, Latvia, and Lhuama
into the Soviet Union ?ther boundary representation
.a not naeeaaariy-ho"tah-
vokuzretsk
largest aluminum plants in the world.' The only other
major addition of new capacity since 1965 has been at
Tursunzade in Central Asia. Although this facility
began limited production in 1975, it is still under
construction and is not expected to reach full output
of approximately 400,000 tons until the late 1980s.F_
The Contribution of Western Technology. Growth in
aluminum production since 1959 has been fueled by a
nearly constant share of industrial investment allocat-
ed to the nonferrous metals industry (table 3). Al-
though the trends are not published, the evidence
indicates that investment in the aluminum sector has
slowed in recent years. A Soviet journal has stated
that during the period 1971-75 more than a fourth of
the capital investment in nonferrous metals was allo-
cated to the aluminum industry.
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High Power Requirements
The aluminum industry directly consumed more than
4 percent of the electric power generated in the USSR
in 1982, making it one of the largest users. Nearly all
of this power is used in the electrolysis reduction
process, which requires an average of 17,000 to
18,000 kilowatthours (kWh) to produce 1 ton of
aluminum.
Aluminum plants are the major industrial consumers
of electricity generated by the Siberian hydroelectric
power plants (GES). The Bratsk plant consumes 16
billion kWh of electricity a year-nearly 70 percent
of the power generated by the Bratsk GES. When
completed, the plant at Sayansk will use almost a
third of the electric power generated by the
Sayansk GES.
Table 2
USSR: Aluminum Plants
Date of First Estimated Aluminum
Production Production in 1982 a
(tons)
aluminum combine 25X1
Zaporozh'ye alumina 1933
and aluminum
combine
Kamensk-Ural'skiy 1939 87,000
alumina and alumi-
num combine
Novokuznetsk 1943 72,000
aluminum south
Krasnotur'insk 1945
alumina and
aluminum combine
Yerevan aluminum 1950 32,000
Despite the industry's high consumption of electric Kandalaksha 1951 53,000
power and periodic shortages, availability of generat- aluminum
ing capacity does not appear to have been a major Nadvoytsy aluminum 1954 60,000
constraint in planning new production capacity. Tar- Sumgait aluminum 1955 52,000
gets for generating capacity generally have been met Volgograd aluminum . 1959 172,000
in southern Siberia, where most of the growth in Irkutsk aluminum 1962 238,000
aluminum production has occurred. Novokuznetsk 1963 163,000
aluminum north 25X1
Much of the investment since 1970 probably reflects
expenditures for the acquisition of Western equipment
and technology. All new plants built or under con-
struction since the early 1970s-the Tursunzade and
Sayansk (figure 5) aluminum plants, the Nikolayev
alumina plant (figure 6), and the prebaked anode
plant at Tursunzade-use Western technology exten-
sively (see box, page 9, for a discussion of the
prebaked anode technology). The Soviets have been
trying to upgrade technology used in automation,
electric power use, pollution control, and other pro-
Krasnoyarsk 1964 672,000
aluminum
Tursunzade 1975 240,000
aluminum
a See the appendix for a discussion of the methodology used to
estimate production.
b Projected, with probable production of 50,000 tons in 1985. When
the plant is completed, production is expected to reach 400,000
tons.
duction-related equipment.
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Figure 3
USSR: Growth and Distribution of
Capacity for Aluminum Production
by Geographic Region, 1960-858
Million metric tons
Table 3
USSR:
Five-Year Plans in the
Nonferrous Metals Industry
1966-70
1971-75
1976-80
1981-85 Plan
(estimated)
Total
(million rubles)
Share of industrial
investment (percent)
5.5
5.0
5.2
5.1
a The Nonferrous Metals Industry investment figure for 1966-70 is
from Ekonomika Tsvetnoy Metallurgii SSSR, Moscow, 1976, p.
126. The figures for 1971-75 and 1976-80 are from Tsvetnoy
Metally, September 1983, p. 5. The estimated figure for 1981-85 is
based on a Soviet statement that investment in the nonferrous
industry during 1981-85 is planned to rise by 20 percent compared
with that in 1976-80 (Ekonomika Tsvetnoy Metallurgii SSSR,
Moscow, 1983, p. 124). Although none of these sources provides an
indication of whether the figures are expressed in constant or
'current prices, the figures for 1971-75, 1976-80, and 1981-85 are
probably in constant 1973 prices. However, the 1966-70 figure
could be expressed in either 1969 or 1973 prices. In either case, the
difference would be small and would not substantially alter the
results.
? In this paper the North European region includes the area north of 55
degrees north latitude (roughly north of Moscow) and west of the Urals;
the South European region includes the area south of this latitude and
west of the Urals.
b Projected.
One of the Soviets' key objectives in seeking Western
help in building the Sayansk plant is to gain advanced
automation technology so that the plant can operate
with less manpower. Negotiations with a US-West
German consortium for a smelter that had computer-
ized automated equipment supplied by Alcoa ended in
1979 when the United States embargoed computer
technology following the invasion of Afghanistan. In
1980 the Soviets contracted with a West German and
French consortium for a smaller smelter (400,000 tons
instead of 500,000 tons), technology, and help in
building the plant.'
The Soviets often import technology for new alumi-
num plants and reproduce the technology in other
plants. Potline operations, for example, were partially
automated between 1958 and 1978 by installation of
computerized equipment (the alyuminii system), cop-
ied from French equipment and produced in the
2 The cost of the smelter under negotiation with the US-West
German consortium was estimated at $600 million in 1977; that of
the West German-French consortium's smelter, about $450 million
in 1980. As part of the contract, the West German company
(Kloeckner) will buy back 10,000 tons of aluminum a year for two
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Production Processes
Aluminum is extracted from aluminum-bearing ores
in a two-step process. Raw ore-such as bauxite,
nepheline, or alunite-is processed into aluminum
oxide, or alumina. This intermediate product is then
sent to an aluminum smelter. Production of alumi-
num from alumina is based on an electrochemical
reaction in which aluminum oxide is decomposed into
metallic aluminum and gaseous oxygen in the pres-
ence of an electric current. This reaction occurs in
specially designed electrolytic cells (also called pots).
Alumina is dissolved in these cells in a bath of
molten cryolite, a material that acts as a catalyst.
The cell is a rectangular steel tank, the inner surface
of which is lined with carbon brick and serves as the
cathode. The anode, also composed of carbon, is
suspended from the top of the cell so that its lower
surface is immersed in the molten bath. When a
continuous direct current is supplied, molten alumi-
num accumulates at the bottom of the cell, where it is
periodically siphoned off. The molten bath is moni-
tored continuously and replenished when necessary to
ensure that there are no interruptions in the reaction.
operations. Vertical Soderberg (VS) cells operate well
at amperages of up to 160,000 amperes, while the
older HS cells are limited to approximately 85,000
amperes. Because the aluminum output of a cell is
directly proportional to the cell's operating amperage,
the output of a YS cell is theoretically nearly twice
that of an HS cell
The second process uses a prebaked anode composed
of pure carbon that is cast and baked into rectangular
blocks. The anode, consisting of a set of such blocks,
is suspended above the cell so that its lower portion is
immersed in the solution. Blocks are replaced period-
ically as the reaction progresses. The prebaked pro-
cess is more energy efficient than the Soderberg
method but is otherwise identical. The Soviets began
using prebaked anodes (imported from France) in the
Tursunzade aluminum plant which began operation
in 1975. In 1978, French companies completed con-
struction of a plant at Tursunzade to produce pre-
baked anodes for aluminum plants. We expect any
new Soviet aluminum plants, such as the one under
construction near Sayansk, to incorporate this tech-
nology. For the same amount of electric current,
these prebaked anodes allow higher yields of alumi-
num per cell than Soderberg anodes. The prebaked
anode process also allows a more effective collection
and recycling of toxic gases, a serious problem in
other aluminum plants.
Banks of electrolytic cells, or pots, are connected in
series and arranged end to end in two rows in long,
narrow production buildings called potrooms. Two
such potrooms form a complete electrical circuit, or
potline, at the majority of Soviet aluminum plants.
Plant sizes in the USSR vary from two potrooms to
the giant Siberian aluminum smelters that contain up
The Soviets use two aluminum production processes
that differ only in the type of anode used in the
electrolytic cell. The type of anode in use at a plant
can be identified by analysis of the plant's anode
fabrication facility. The Soderberg, or continuous
self-baking anode, is formed from a paste consisting
of coke, tar, and pitch, which is placed in a rectangu-
lar steel mold. The mold is suspended above the
electrolytic cell, and as it descends into the molten
bath, the bottom portion of the paste is baked.
Electricity is supplied to this anode by means of steel
pins embedded in the paste. As electrolysis pro-
gresses, the baked, lower portion of the anode dis-
solves and new carbon paste is added continuously to
the top of the mold.
to 24 potrooms.
Plants built before 1959 employ the Soderberg proc-
ess in which current is supplied through a series of
steel pins embedded horizontally in the anode paste
(HS cells). Beginning with the design of the smelter at
Volgograd in 1959, Soderberg anodes with steel pins
embedded vertically were employed. This change
allowed the Soviets to mechanize aluminum smelting
Aluminum electrolysis requires high-amperage, con-
tinuous direct current. Power entering the plant must
therefore be rectified, or converted from alternating
current to direct current before it can be sent to the
potlines. This is accomplished by a bank of current
rectifiers in each potline circuit. These rectifiers are
installed in a separate building at one end of each
potroom.
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USSR. This equipment,
reduced total power consumption in the electrolysis
process by 1.5 percent because it more accurately
positioned the electrodes in the pots. It also reduced
labor requirements on the potlines by roughly 25
percent (although it requires more specialized repair
personnel). Assimilation of this system was slow; for
example, installation of the first system began at the
Volgograd plant in 1959 but was not implemented
According to a Soviet technical journal, a new auto-
mated control system, elektroliz, underwent prototype
testing at the Volkov plant in 1978 and is slated to
replace the alyuminii system. This new system report-
edly includes Soviet-made M-6000, M-7000, SM-1,
and SM-2 minicomputers. The SM-1 and SM-2
minicomputers were copied from imported US Hew-
lett Packard HP-2116 and HP-3000 minicomputers.
One goal of the 1981-85 plan is to supply technologi-
cally advanced anodes-probably from the Tursun-
zade plant-to existing plants. The Soviets hope that
installation of this equipment will reduce the indus-
try's annual consumption of electrical power by 2
billion kilowatthours (kWh) (about 4 percent of total
consumption) and significantly increase the proportion
of high-quality aluminum produced
Installation of gas purification systems for pollution
control also is scheduled at selected aluminum plants
during the 1981-85 period. Controlling pollution has
been an important objective since the mid-1970s. The
Soviets claim to have spent 100 million rubles on
environmental protection equipment for the industry
during 1976-80 (most of this was probably at the
' As an incentive to stimulate modernization, bonuses are awarded
for introducing advanced technology; production targets often are
lowered temporarily to allow for assimilation of new technology.
Despite these incentives, new technology has been assimilated
slowly in plants reflecting difficulties in adapting new equipment
into existing production lines and the plant managers' reluctance to
make changes because they fear underfulfillment of even reduced
French-built Tursunzade Plant). Decreasing the level
of pollution at all of the plants could help ease labor
turnover by reducing health hazards.4
Why the Slowdown in Production?
The dramatic slowdown in the growth of aluminum
production that began in 1976 resulted from:
? A cutback in investment mainly in response to
slower growth in domestic demand for aluminum.
? A shortfall in meeting production targets because of
delays in constructing aluminum plants
.
? Labor shortages and inadequate equipment
maintenance.
Slow assimilation of new production technology and
periodic electric power shortages exacerbated the
slowdown. Delays in rail shipments of raw and semi-
processed materials have not substantially affected
production schedules because most inum plants
have stockpiles.
Cutback in Investment. We believe that the primary
reason for the much lower growth during the last half
of the 1970s was a reduction in investment funding.
While no official investment figures for the aluminum
suggested that a large cutback in investment allo
ca-
tion compared to the period 1971-75 severely limited
plans for new alumina and aluminum production
facilities. Although investment growth in the nonfer-
rous metals industry has grown moderately since
1975, investment in the aluminum industry declined
' Excessive pollution inside aluminum plants has been a major
problem. Unvented fluoride gas given off in excess during the
electrolysis process reportedly causes severe bone deterioration in
many potroom workers after several years. Older workers are
regularly tested for fluoride levels in urine; if the level is too high,
the worker is retired. Younger workers frequently are unwilling to
accept this risk to health and find jobs elsewhere. Because of
exposure to fluoride, potroom workers work only six hours a day
and are allowed to retire at age 45. The short workday means that
more potroom workers are needed, thus exacerbating the labor
shorta
ge
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partly because of increasing costs and rising invest-
ment in other nonferrous metals.'
Increasing costs and technical difficulties in extract-
ing and processing raw materials have exacerbated
the investment cutback in the aluminum industry. A
Soviet technical journal has reported that, between
1976 and 1980, the capital investment required to
increase production by 1 ton rose 8 percent for
alumina and 3 percent for aluminum.'
The cutback in investment may have been planned
partly in response to slower growth in demand. The
sharp slowdown in planned industrial output and
investment in the 1976-80 period may have caused
slackening demand for aluminum as an intermediate
product in the machinery sector. Also, military de-
mand for aluminum-which has the highest priori-
ty-probably has slowed. We estimate that during the
1976-80 period actual production of aluminum grew
much faster than military hardware consumption,
largely because of a slowdown in the growth of
aircraft and missile production (about 30 percent of
the military's aluminum consumption). This trend
appears to have continued in the 1981-82 period
Delays in Finishing Planned Construction. Failure to
finish construction of new aluminum production ca-
pacity is another reason for the production growth
' Soviet literature indicates that the Norilsk Metallurgical Complex
probably absorbed most of the increase in investment in the
nonferrous metals industry from 1971-75 to 1976-80. Most of this
investment probably went to.build new copper, nickel, and cobalt
production facilities that will supply most of the production in-
creases for these metals during 1981-85. Further, Soviet literature
has revealed that, from 1975 to 1980, the aluminum industry's
share of total productive fixed capital stock of the nonferrous
metals industry declined sharply.
6 As the growth of primary aluminum production has fallen off, the
Soviets have begun to increase production from secondary
sources-waste and scrap. They claim that using these sources
more than doubles labor productivity and requires only 3 percent of
the fuel and 16 percent of the capital necessary for production from
the raw material. In 1981, production from secondary sources was
about 200,000 tons or 7 percent of primary production. (In 1982,
US production from secondary sources was nearly 45 percent of
Figure 7
USSR: Additions of New Capacity
for Aluminum Production, 1959-85
0 1959-65 66-70
Projected.
slowdown in the period 1976-80. Delays, as well as
lower targets for new construction, caused incremen-
tal growth of new capacity to fall for the first time
since 1959. Only 410,000 tons of new production
capacity were added in 1976-80, compared with
790,000 tons added in during 1971-75-a decline of
48 percent (figure 7).
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Nearly all of the scheduled increase in production
during 1976-80 was to have come from the startup of
new capacity at Sayansk, Tursunzade, Krasnoyarsk,
and Bratsk. While production increased at Bratsk and
Krasnoyarsk, there have been serious delays at
Sayansk and Tursunzade. Delays in building the
Sayansk aluminum plant were partly due to the US
embargo on the sale of advanced technology, which
halted negotiations between Alcoa and the USSR.
This project is now scheduled for completion in the
1981-85 Plan. According to Soviet press articles,
delays in constructing new capacity at the Tursunzade
aluminum plant were caused by poor planning and
shortages of construction materials.'
The continued sluggish growth of aluminum produc-
tion in 1981-83 also was due mainly to the inability to
Labor Shortages and Inadequate Maintenance of.
Equipment. Labor shortages and inadequate mainte-
nance of equipment contributed to the slowdown in
aluminum production growth during 1976-80. Al-
though plant production (in tons) is not available, a
1980 article in a Soviet technical journal cited the
giant Krasnoyarsk plant as operating at only 75
percent of capacity.' Because this plant accounted for
more than 25 percent of capacity during 1976-80,
underuse could have a major impact on the total
production of aluminum. F_ I
Krasnoyarsk's inadequate maintenance facilities and
shortage of skilled labor caused excessive downtime of
the electrolysis cells, resulting in consistent underful-
fillment of production targets.
Persistent labor shortages,
have been a major problem throughout the
industry. Generally, the work force is 10 to 15 percent
short of prescribed manning levels because of compe-
tition for labor from higher paying industries, the
' Izvestiya, 30 October 1983, p. 2.
' Construction of new facilities may have a low priority because of
an unexpected slowdown in annual increases in demand for alumi-
num resulting from the slowdown in industrial growth since 1976.
"'Attaining Planned Capacities at Nonferrous Metal Enterprises,"
health risks associated with excessive pollution, and
the location of a large amount of production capacity
in Siberia where the harsh living conditions inhibit an
influx of labor.1?
costs as well as reduced aluminum production.
Other Causes. Supplies of electricity have been taut
throughout most of the Soviet Union since 1975.
Limited supplies, in turn, have resulted in periodic
power shortages that have caused cutbacks in produc-
tion at aluminum plants in the western USSR, includ-
ing those at Nadvoitsy and Kandalaksha. In Siberia
heavy reliance on hydroelectric power has made alu-
minum plants susceptible to seasonal power shortages
due to lack of rainfall." Insufficient rainfall, together
with coal shortages at thermal power plants, has led to
temporary cutbacks in electric power generation and
reductions in aluminum production. One plant has
had to take the extraordinary step of periodically
shutting down several electrolysis pots because of
interruptions in power. Shutdowns entail high restart
Increasing Dependence on Foreign Raw Materials 25X1
Since the mid-1960s, domestic output of raw materi-
als and alumina has failed to keep pace with the
growth in aluminum production capacity. The Soviets
have been unable to meet increasing requirements for
domestic raw materials because of the rapidly deplet-
ing reserves of high-quality bauxite and the unexpect-
ed cost and technical difficulty of exploiting nonbaux-
ite ores.'Z In 1982, domestic high-grade bauxite met
roughly 23 percent of requirements for making alumi-
num (figure 8)~
10 Soviet aluminum plants, particularly the giant Siberian plants,
require a large labor force. For example, in 1978 at the Bratsk plant
there were 10,000 to 12,000 workers-including wage workers (75
percent), administrative personnel (20 percent), and support service
personnel such as electricians, repairmen, and janitors (5 percent).
As an incentive, the Bratsk plant pays workers 1.4 times standard
wages plus 10 percent extra for each year of employment at the
plant for the first five years. Labor requirements are much higher
at Soviet plants than they are at US plants because of their lower
level of automation and absence of incentives for enterprise manag-
" Water shortages that began in 1981 cause ydroelectric power
shortages through 1983.
'Z The USSR is like most industrialized countries in that it does not
have sufficient reserves of high-quality bauxite to support its
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Figure 8
USSR: Sources of Raw Materials
for Making Aluminum, 19828
Imported high-grade bauxite-25.0
Imported alumina-10.0
Domestic low-grade bauxite-20.0-
Domestic high-grade bauxite-23.0
The only large source of bauxite is the Severouralsk
mine in the northern Urals. During 1976-80 it sup-
plied nearly all the domestic high-grade bauxite. Its
reserves appear to be nearing exhaustion, however,
after almost 50 years of continuous exploitation, and
its operation has become more difficult and costly.
During 1982, its bauxite production dropped dramati-
cally. A sustained reduction in the amount of bauxite
mined will force the Soviets to rapidly increase im-
ports of bauxite.
Soviet journals have revealed that, despite years of
intense prospecting throughout the USSR, no large
deposits of high-grade bauxite that are economic to
develop have been discovered (see box, page 14). The
Soviets have found several small deposits, but their
complex geological structure makes them unsuitable
for industrial use. Consequently, Moscow has relied
increasingly on foreign sources of bauxite and alumi-
na (figure 9).13
" The USSR has had a long-term bauxite supply agreement with
Guinea-its largest supplier-since the early 1970s. Under this
arrangement, the Soviets receive about 2 million tons of bauxite a
year. The Soviets pay for part of the bauxite through compensating
trade; the remainder is shipped as repayment for Soviet investment
in Guinean bauxite production facilities. In 1983 the USSR signed
a bauxite supply agreement with Jamaica whereby the Soviets will
receive I million tons of bauxite a year for three years, starting in
1984. Part of the bauxite will be paid for in hard currency and part
by compensating trade. Hungary is the USSR's largest supplier of
alumina. Imports of alumina are included in a Soviet-Hungarian
Figure 9
USSR: Imports as a Share of Total
Raw Materials Used in Producing
Aluminum, 1960-908
Percent
50
Includes bauxite and alumina, expressed in terms of aluminum content.
b Projected.
In 1960 domestic raw materials were used for about
85 percent of aluminum production; in 1970 this share
had fallen to about 70 percent, and in 1980 to about
65 percent. Furthermore, the share of aluminum
produced from domestic raw materials will continue
to decline as aluminum production capacity continues
to increase.
As its dependence on imports has increased, the
USSR has stockpiled imported bauxite at three alu-
mina plants located in the European USSR-Nikola-
yev, Zaporozhye, and Kirovabad. The largest of these,
trade agreement designed to take advantage of relatively cheap
Soviet electric power. Under this agreement, first signed in 1961
and recently extended to 1990, 1 ton of aluminum is exported to
Hungary for every 2 tons of alumina imported from Hungary. In
March 1984, the USSR and Greece signed an agreement that the
Soviets would supply technology and equipment to build a 700,000-
ton alumina plant in Greece. The Soviets will recoup most of their
investment by purchasing 380,000 tons of alumina per year for 10
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High-Grade Bauxite-Search for Substitutes
Recognizing the inadequacy of high-quality bauxite
deposits and the desire for self-sufficiency in raw
materials, the Soviets planned for extensive use of
low-quality aluminum ores-low-grade bauxite,
nepheline, and alunite. The USSR has successfully
exploited its low-grade bauxite (generally less than
40 percent alumina). Most of these low-quality ores
contain large amounts of silica, which increases the
cost of processing. Further, many deposits can only be
exploited at greatly increased cost because of their
remote locations. Despite these costs, the Soviets
have continued to increase production of aluminum
from low-grade bauxite. In 1982, alumina produced
from low-grade bauxite supplied approximately 20
percent of the aluminum industry's requirements.C
Around 1950, the Soviets successfully produced alu-
mina from nepheline at two small plants at Pikalevo
and Volkhov in the western USSR. Soviet planners
determined that, by using the byproducts of the
nepheline process to produce cement, soda, and pot-
ash, large-scale production of alumina from nephe-
line would be 20 to 30 percent cheaper than using
domestic bauxite. Plans made in the 1950s called for
50 percent of alumina production in the 1970s to be
processed from nepheline. In 1956, construction of a
large alumina plant at Achinsk in southern Siberia
was planned to exploit local nepheline syenite ores
(25 percent alumina content). Construction actually
began in 1964 but was not completed until 1972.
Delays were attributed to the region's severe climatic
conditions and to technical problems in developing
large-scale processing of nepheline ores. Many of
these problems were not fully solved. By the early
1970s, Soviet planners had concluded that processing
nepheline on a large scale was more technically
difficult and costly than they had originally thought,
so they curtailed extensive plans for this process's
development and increased bauxite imports instead.
In 1982, alumina produced from nepheline supplied
about 18 percent of the aluminum industry's require-
The Soviets' experience in producing alumina from
alunite, an abundant nonbauxite ore with only 18
percent alumina content, also did not full their
earlier expectations. They had calculated that the
cost of producing alumina from alunite would be 40
percent lower than if imported bauxite were used. In
1964, six years behind schedule, the Soviets began
production of alumina at Kirovabad from alunite
mined at the nearly Zaglik deposits. Severe mainte-
nance problems and shortages of processsing chemi-
cals, resulting in the plant's inefficient, uneconomic
operation, have prevented output from reaching the
planned 250,000 tons a year. In 1982, production of
alumina from alunite supplied about 4 percent of the
total requirement for alumina.
Despite the costs associated with low-grade bauxite,
nepheline, and alunite, the Soviets have continued to
increase production from these ores. The USSR is the
only country to make extensive use of these low-
quality ores. Other countries, including the United
States, have decided that they are too costly to
process on a large scale
Nikolayev, is designed to handle foreign bauxite,
which is brought in by ship, unloaded, and stored in a
large open area
Uses of Aluminum
Aluminum's characteristics make it an ideal material
to use in transportation systems, consumer goods, and
electrotechnical products. A substitute for some types
of steel, aluminum alloys will probably be used more 25X1
to make up for persistent shortages of steel."
" We are unable to determine the relative costs of production of 25X1
aluminum or steel. Soviet literature, however, has indicated that
substitution of aluminum for steel is often advantageous when
weight reduction and corrosion resistance are important. Relying on
imports of raw materials rather than on domestic production from
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Raw Materials Logistics
Aluminum-bearing ores are processed at 10 alumina
plants in the USSR and shipped by rail to the 15
aluminum plants. Each alumina plant can process
only one grade or blend of ores at a time because each
requires different processing temperatures and times.
Thus, each plant usually is limited to a specific
source for. its supply. Plants generally are near ore
deposits to minimize the cost of transporting large
quantities of ore. For instance, bauxite from the
Severouralsk mine in the northern Urals is processed
at the nearby Krasnoturinsk and Kamensk-Ural'skiy
alumina plants.
The primary criterion for locating aluminum plants
has been the availability of inexpensive hydroelectric
power because of the enormous amount required for
production. Plants can process alumina, a homoge-
neous material, from any source. Most aluminum
plants, however, are not near alumina plants, so large
quantities of alumina must be transported long dis-
tances. About 70 percent (1 million tons a year) of the
alumina produced in the Urals at Krasnoturinsk and
Kamensk-Ural'skiy is shipped 2,400 to 3,000 kilome-
ters by rail to Siberian aluminum plants for process-
ing. Some alumina produced at Nikolayev supplies
Siberian plants and must be transported over 4,500
km by rail.
The Siberian plants require huge amounts of alumi-
na. The annual requirement at Bratsk, for example,
is about 1.6 million tons; daily, two or three trains,
each with 50 to 60 hopper carloads of alumina,
supply this plant. To compensate for occasional
delays in shipping, aluminum plants maintain about
a 15-day supply of alumina. Despite the quantities of
alumina shipped over long distances, shipping charges
add only about 5 percent to the cost of producing
aluminum; in contrast, electric power constitutes
. about 40 percent of the total cost.
Exports-25
manufacturing most major weapon systems including
aircraft, missiles, ships, and land armaments. Aircraft
production consumes about 25 percent of the alumi-
num delivered to military industry. Several different
aluminum alloys are used to make structural airframe
components to meet weight, strength, and other de-
sign requirements. For example, a Defense Intelli-
gence Agency assessment of the applications and
properties of alloys used in the structural airframe of
a MIG-21 (Fishbed), a general purpose fighter air-
craft produced for the Soviet Air Forces from 1959 to
1979 and now produced for export, indicates that
aluminum accounts for more than 50 percent (3 to 4
tons) of the empty weight of the aircraft. Missile
production consumes about 6 percent of aluminum
delivered to the military. Nearly all airframe bodies
of surface-to-air missiles are made from aluminum
alloys. 25X1
Civilian. In the USSR the electrical industry con-
sumes some 17 percent of aluminum production (it
takes about 8 percent in the United States)." In the
Defense. Soviet use of aluminum in production of
defense durables and other military-related activities
currently takes about 15 percent of domestic produc-
tion (the US defense sector takes about 9 percent of
domestic production) (figure 10). Aluminum is used in
"These estimates include only civilian consumption. Defense con-
sumption of aluminum for construction and electrical use is includ-
Figure 10
United States and USSR: End Uses
of Aluminum, 1980
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Table 4
USSR: Unwrought Aluminum Exports, 1970-82 a
Total
369
406
455
518
529
502
538
572
621
570
566
566
600
Of which:
Eastern Europe
282
316
357
388
394
379
403
403
426
429
452
428
410
Japan
25
21
38
47
42
43
69
92
111
74
62
65
82
France
1
14
14
12
9
12
14
24
30
21
11
5
40
Other OECD
34
27
40
41
49
45
41
38
38
27
23
25
28
a This table includes only unwrought aluminum. Data for wrought
aluminum (mostly rolled products) are not available after 1975;
Soviet wrought aluminum exports amounted to 101,500 tons in
1975, most of which probably went to CEMA countries. Data for
1970 to 1975 for total aluminum exports are taken from official
Soviet trade statistics; data after 1975 were taken from UN trading
partner statistics and may be slightly understated because some
countries do not report data to the United Nations; East European
trade data from 1970 to 1975 were taken from official Soviet trade
statistics; data after 1975 were taken from East European trade
total production substantially.
1960s the Soviets began substituting aluminum for
copper in power cables and wire. By 1970 about two-
thirds of electric power cables were made with alumi-
num; the Soviets plan to eventually produce all power
cables from aluminum. Aluminum plants at Bratsk
and Irkutsk account for 70 to 80 percent of production
of aluminum wire rods. The Sayansk plant will have a
large facility for making wire rods that will increase
makes handling materials difficult.
Roughly 10 percent of aluminum production in the
USSR goes to the construction industry (about 17
percent in the United States). Aluminum is used to
make various building products, including window
frames, doorframes, and building panels. Aluminum
building panels, lightweight and easy to handle, are
used extensively in Siberia where the harsh climate
Although obtaining allocations of aluminum for new
products is often difficult and periodic shortages occur
in industries that have low priority (transportation and
consumer industries), production of aluminum ap-
pears to be sufficient to meet most of the domestic
books, where available (Poland, East Germany, Bulgaria, and
Romania imports for 1975 to 1982 were estimated); Soviet imports
of aluminum are negligible.
b From 1978 to 1980, exports of unwrought aluminum declined,
from about 621,000 tons in 1978 to about 566,000 tons in 1980.
Nearly all of the fall in exports during this period was to OECD
countries (particularly Japan and France) probably because of
changing world market conditions. Similarly, an upturn in world
demand interrupted and reversed the slide in 1981-82.
demand. Moreover, the USSR has consistently ex-
ported at least 20 percent of its domestic production."
Trade. The USSR is the world's second leading
exporter of unwrought aluminum." It exported rough-
ly 600,000 tons in 1982-nearly a fourth of domestic
production. Of this, nearly 70 percent went to Eastern
Europe-mainly East Germany, Czechoslovakia, Yu-
goslavia, and Hungary (table 4). The USSR is not a
significant force in the non-Communist aluminum
market; in 1982 such exports amounted to only about
165,000 tons, with almost 50 percent going to Japan.
16 Despite an export surplus, the USSR would not be able to
increase the production of aluminum fast enough to meet a sudden,
large increase in total demand. There is little slack at most alumina
and aluminum plants, and construction of new production capacity
requires long leadtimes, even at locations where adequate transpor-
tation and electric power are available. A large increase in military
demand, however, could probably be met by reallocating aluminum
to defense industries from nondefense consumers, reducing alumi-
num exports, and drawing down national stockpiles of aluminum.
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Although the USSR imports more than one-third of
the raw materials needed to make aluminum and only
exports about 25 percent of aluminum production,
there is probably a net economic gain in its trade
balance because of the large price difference between
raw materials and aluminum." Sales of aluminum
have been a relatively small but stable source of hard
currency earnings for Moscow for several years. In
1983, exports of aluminum probably earned $250-300
million, supplying about 1 percent of total hard
currency earnings for the year.
Outlook
The expansion of Soviet aluminum production is
scheduled to proceed even more slowly during the
1981-85 period than in the previous five-year period.
Production in 1985 is planned to be 15 to 20 percent
or 400,000 to 500,000 tons greater than in 1980,
reaching an estimated 3.11-3.25 million tons (table 5).
Some of this growth may come from modernization of
plants and a rising share of capacity use at the
Krasnoyarsk aluminum plant, but most will have to
come from construction of new production capacity."
If new plants operate at the same level as most
existing plants (90 percent of capacity), at least anoth-
er 450,000 to 550,000 tons of new production capacity
will have to be brought onstream during the period to
meet the 1985 goal. The Soviets have announced
plans for new production capacity at Bratsk, Krasno-
yarsk, Tursunzade, and Irkutsk; they also intend to
begin production at the Sayansk plant by 1985. On
the basis of our analysis
we estimate that the Soviets
will increase production capacity by only 190,000
tons, far less than required to meet the planned output
targets. As a result, the average annual rate of growth
"The February 1984 spot-market price for aluminum, for example,
was $1,650 per ton while the spot price for bauxite was about $30
per ton (from 4 to 8 tons of bauxite are required to produce I ton of
aluminum, depending on the grade of bauxite). A precise calcula-
tion of the net balance of trade is not possible, however, because
some of the imported bauxite and exported aluminum is paid for
through compensation agreements rather than hard currency. Also,
most Soviet exports of aluminum are to Eastern Europe and are not
paid for with hard currency. Finally, other factors also have to be
considered such as the net cost of imported equipment used to
produce aluminum.
" According to Soviet literatur
many aluminum plants are scheduled for equipment modernization
during the 1980s. All evidence indicates that, to date, none of the
Table 5
USSR:
Projected Production of
Primary Aluminum, 1984-90 a
Production
(thousand metric tons)
Increase
(percent)
1984
1985
2,895 b
2
1986
1989
3,145
2
1990
3,250
3
a Output of secondary aluminum (scrap, recycled aluminum) is not
included in this table; see the appendix for a discussion of the
methodology used to estimate production.
b Soviet literature states that aluminum production in 1985 is
planned to grow by 15 to 20 percent over the 1980 level, reaching
an estimated 3,110,000 to 3,250,000 metric tons.
of aluminum production will fall to about 1 percent a
year in 1981-85 compared with the 3-percent-a-year
average achieved during 1976-80.20
We project that Soviet aluminum production will
grow at a rate of about 2 percent a year during 1986-
90, reaching 3,250,000 tons by 1990.
20 The Soviets have not disclosed specific targets for aluminum
produced from scrap; however, they plan to increase the production
of all nonferrous metals from secondary sources by 20 to 25 percent
during 1981-85. Production of aluminum from secondary sources
probably will increase at a slower rate than these figures suggest
because, as Soviet publications note, aluminum scrap collection is
disorganized and most aluminum is not recycled. Further, second-,
ary processing facilities, which do not have proper equipment,
roduce low- quality aluminum of limited use. 1 ::1
two to four years is required
for construction of new capacity at existing aluminum plants, and
up to 10 years-from the start of construction to initial produc-
tion-are required for new plants. For example, in 1965 the Soviets
announced plans to build the Tursunzade plant in Tadzhikistan.
Although construction started in 1966, production did not begin
until 1975~~
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Despite the slow rate of growth that we project, there
probably will not be domestic shortages of aluminum.
A large increase in domestic consumption, however,
probably would force a substantial reduction in ex-
ports. For example, if total domestic consumption
were to grow at the same average annual rate as
planned total industrial output in 1981-85-4.7 per-
cent-the Soviets could meet this demand by reduc-
ing aluminum exports about 10 percent each year
from the previous year. Because of long-term trade
agreements with Eastern Europe, such a decrease
would probably eliminate aluminum exports to the
West by 1990, while forcing a small reduction in
those to Eastern Europe. As a second example, if
military consumption alone increased as much as 10
percent a year from 1984 to 1990, even allowing for a
2-percent annual increase in civilian consumption,
aluminum exports would have to decline at a rate of
about 1 to 2 percent a year .12
There is considerable potential for growth of alumi-
num use for civilian purposes, particularly in trans-
portation, container and packaging, and consumer
durables.21 Soviet industries generally use a higher
percentage of steel products than Western countries
do. Although Soviet aluminum production is small
compared with steel production, wider use of alumi-
num could help offset shortages of some types of steel
for a limited number of products. For example,
increased use of aluminum cans would cut losses from
food spoilage." The small increases in aluminum
production projected for 1984-90, however, will not be
sufficient to encourage new applications.
" These scenarios assume no change in stocks.
2' Accurate Soviet aluminum consumption stat -are no avail-
able for these industries. However, use of aluminum in these
industries is at an early stage compared to that in industrialized
Western countries. In the United States, the transportation, con-
tainers and packaging, and consumer durables industries accounted
for about 3,000,000 tons of end-use shipments of aluminum
products in 1982, more than total Soviet aluminum production in
that year. For example, production of beverage cans in the United
States required the lar est share uminum sheet and reached 53
billion cans in 1982
'? Aluminum container production is different from steel container
production. To produce more aluminum containers, the Soviets
would have to import or produce the necessary equipment. Losses
from food spoilage are a major problem in the USSR and have
amounted to 20 to 30 percent of total farm food production in the
Shortages of labor will continue to be a major prob-
lem in the aluminum industry. Although planners
have emphasized that increased automation would
reduce the need for large numbers of laborers, the
USSR has been unable either to produce the neces-
sary equipment or to rapidly assimilate and spread
foreign technology. Moreover, introduction of auto-
mated equipment may not be the hoped-for panacea
because there are few trained technical personnel at
aluminum and alumina plants. If the introduction of
more advanced equipment were accelerated, require-
ments for specialized technicians would probably in-
crease faster than their supply.
Taut supplies of power probably will continue to limit
expansion of the aluminum industry and interrupt
production at plants in the western USSR. Seasonal
droughts in Siberia, even though they probably will
continue to cause periodic shortages of electric power,
will not constrain future expansion of the aluminum
industry there.
Meanwhile, depletion of reserves of high-grade baux-
ite will continue and will cause mining to become
increasingly expensive. The Soviets, therefore, will be
forced to import increasing amounts of bauxite and
In 1982 the Soviets imported about 10 percent of their
alumina needs. Unless there is a major expansion in
alumina production capacity, they will be forced to
increase imports to meet increased aluminum nrnrinn
tion plans.
project that Soviet dependence on foreign markets for
raw materials will increase from 35 percent in 1980,
to 40 to 45 percent in 1985, and to 45 to 50 percent in
1990.
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Appendix
Estimating Soviet Production
Our estimate of Soviet aluminum production is de-
rived by adding the estimated production of each of
the 15 aluminum plants in the USSR. We estimate
production by assuming that new capacity operates at
50 percent of estimated maximum capacity during the
Table 6
USSR:
Estimated Production of
Primary Aluminum, 1959-83 a
first year of operation and 90 percent afterward.25 The year Production Increase
one exception is at the Krasnoyarsk plant. As noted (thousand (percent)
lant was reported as operating at metric tons)
p
s
1980 thi
i
n
e
r
,
li
ear
reduced capacity. Using this method, the production
time series in table 6 was derived by adding the
production from annual additions of new capacity
based on correlating Soviet announcements of new
additions to capacity with overhead photography.
The calculation of maximum production capacity at
each plant is based on information derived from
technical specifications of aluminum
An alternative method provides another helpful cross-
check of our methodology. According to Soviet litera-
ture, in 1937 the USSR produced 37,700 tons of
aluminum." This is the only figure on aluminum
production ever known to be published in the USSR.
"The 50-percent figure is used to account for low production
associated with equipment startup. The 90-percent figure was
derived by taking the ratio of reported production data and our
estimate of production capacity for plants where data are available.
Itog~eniya Vtorogo Pyatiletnogo Plana Razvitiya Narod-
nogo Khozyaystvo Soyuza SSR, Moscow, 1939, p. 24.F
1959
515
1960
565
10
1961
630
12
1962
730
16
1963
810
11
1966
1,135
15
1967
1,285
13
1968
1,370
1
1976
2,400
2
1977
2,455
2
1978
2,525
3
1979
2,630
4
1980
2,705
3
1981
2,720
1
1982
2,735
1
1983
2,795
2
a output of secondary aluminum (recycled aluminum) is not
included in this table.
19 Secret
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Secret
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