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This book addresses how the progress of the Russian aluminium industry, which has developed into an important global actor, has been influenced by the interaction of global market forces and the evolution of the Russian political system. After the collapse of the Soviet Union, Russian aluminium producers needed to adapt to changing framework conditions, both with regards to the global aluminium market and in Russia. Examining the most important changes in the organization of the global aluminium trade – the reorganization and consolidation of Russian aluminium industry and its ‘oligarchization’ – Godzimirski charts the evolution of the relationship between political and economic power in Russia, and the impact that this development has had on survival and adaptation strategies of key aluminium players in the country.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction

Abstract
After the Soviet collapse, the Russian aluminium industry has had to learn to cope with global market forces and to find a new modus vivendi with the new system of governance and a new elite. This book focuses on the evolution of the post-Soviet Russian aluminium industry, with special attention to the period after 2000 and how the industry and Russia’s aluminium tycoons have gone about relating to global aluminium markets, as well as to the political framework in Russia that defines the rules of the game on the domestic front.
Jakub M. Godzimirski

Russian Aluminium and Market Forces

Frontmatter

Chapter 2. Basics of the Global Aluminium Market

Abstract
What are the key characteristics of the global aluminium market? How has the market evolved in recent decades? What is the role of Russian aluminium producers on the global market? What other actors and forces shape this market?—Those key questions are explored in this chapter, which enquires into how Russian aluminium producers have become key players on the market and how the emergence of China as the main producer of this commodity has changed the global aluminium game.
Jakub M. Godzimirski

Chapter 3. Soviet and Russian Aluminium Until 2000 in Brief

Abstract
This chapter sheds light on the history of the Soviet and Russian industry from the 1930s and until 2000, noting the role of structural economic and political factors in this process. The history of the Soviet aluminium industry is presented, as is the underlying strategic rationale for its development. The chapter then examines how the situation of the aluminium industry was affected by the end of the Soviet political project and the ensuing processes of privatizing the Russian economy. Finally, it turns to the problem of access to necessary natural resources as well the need for energy, and how these issues have contributed to the evolution of this branch of the Russian economy.
Jakub M. Godzimirski

Chapter 4. National Consolidation 2000–2007

Abstract
The domestic consolidation of aluminium assets is the main issue addressed in this chapter, which examines key market-related developments and how they influenced the decisions of private owners of Russian aluminium assets. After a period of chaotic redistribution of assets in the 1990 s, the structure of the industry changed: an aluminium duopoly was established in Russia, with Rusal controlling 75%of production and SUAL the remaining 25%. This period was also characterized by heated debate on the World Trade Organization, with oligarch Oleg Deripaska as the main opponent of Russia’s joining this international body.
Jakub M. Godzimirski

Chapter 5. Global Consolidation and Challenges 2007–2016

Abstract
In 2007, Rusal, SUAL and Glencore agreed to a merger that made the resultant company, UC Rusal, the largest producer of primary aluminium in the world. In 2008, however, economic crisis undermined demand for aluminium, and UC Rusal was confronted with a range of market-related challenges. Recognizing the need to change its global strategy, the company opted for listing on the Hong Kong Stock Exchange to attract investments. In 2015, Russia was hit by a new crisis, but the country’s export industries—including the aluminium industry—managed to cope, due not least to the devaluation of the rouble. UC Rusal faced problems caused by the lower demand for aluminium and falling prices. The company responded by embarking on a strategy of supporting the development of domestic demand for aluminium, so as to become less dependent on external factors.
Jakub M. Godzimirski

Russian Aluminium and Russian Politics

Frontmatter

Chapter 6. Intermezzo or Regional Aluminium Games

Abstract
All activity of the Russian aluminium sector takes place in a limited number of Russian regions. This chapter examines the regional dimension of the industry, with information on the key elements of the Russian federal system, the importance of various Russian regions for the activities of the aluminium industry, as well as relations between economic and political power on the regional level. The main focus of this chapter is on Krasnoyarsk krai, where many major aluminium assets are located, and on how the ‘aluminium wars’ were fought in this region.
Jakub M. Godzimirski

Chapter 7. Capture of the Russian State Under Yeltsin?

Abstract
Relationships of various kinds acted to shape the Russian aluminium industry. Relations between the new political and economic elites played a major part in the period after the collapse of the Soviet project. This chapter examines the role of horizontal and vertical relationships, with particular attention to how the privatization of state-controlled assets contributed to the total remake of the industry. With the collapse of the Soviet project and the privatization of state assets, relations between the political power and the emerging class of economic tycoons had to be redefined: this chapter offers a detailed account of that challenging process.
Jakub M. Godzimirski

Chapter 8. Return of the State Under Putin

Abstract
After the turbulent 1990s when the foundations of the new state were laid, the ascent to power of Vladimir Putin opened a new chapter in Russian history. The chapter examines the evolution of relations between the Russian state and the country’s business community by analysing the most important events that redefined this relationship. During the 1990s, the Russian state had had to find innovative ways of interacting with the country’s emerging economic elite. By contrast, the Putin period was characterized by the return of the state and a substantial redefinition of relations between the political and economic elites.
Jakub M. Godzimirski

Chapter 9. Masters of the Russian Aluminium Roulette

Abstract
What strategies have the most influential Russian aluminium actors adopted when faced with challenges to their economic interests? This chapter examines how these actors have operated in the Russian state, using their access to various kinds of networks to promote their own economic interests. Further, the chapter shows how their economic strength has been translated into political influence by mapping the position of the key aluminium actors in Russian rankings of economic and political power.
Jakub M. Godzimirski

Chapter 10. Conclusions

Abstract
The collapse of the Soviet system in 1991 created totally new conditions for Russia’s aluminium producers. The development of this important branch of the economy has been influenced by the dramatic fall in domestic demand for aluminium, forcing producers to redirect to global aluminium markets. In addition came the process of privatization of the Russian economy and aluminium assets, resulting in the ‘aluminium wars’ and various corporate strategies devised by new private owners, culminating in the creation of the Russian aluminium duopoly in 2000 and monopoly in 2007. Also the evolution of the Russian political system and relations between the state power and economic actors operating in Russia played a part. The evolution of the aluminium industry has had certain specific features, like the need to cope with the collapse of domestic demand and the lack of domestic resources, but it has also followed a pattern known from other branches of the Russian economy. That the industry had to go global in order to survive clearly demonstrates how the forces of globalization have influenced the economic situation of Russian actors. However, plans for expanding to the promising Chinese market failed to materialize, as China set about developing its own production, eventually becoming the main global aluminium actor. The future of the Russian aluminium industry will thus depend on access to resources, access to national and global markets, as well as on how the political choices made by the ruling elite will change the framework conditions for economic activity in the country.
Jakub M. Godzimirski

Backmatter

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