Russia’s aluminium giant Rusal has signed a memorandum of understanding with the Ethiopian Investment Holdings (EIH) to build a 500,000 metric tons-per-year (t/yr) aluminium smelter to meet growing domestic demand.
This was disclosed by Sputnik Africa and confirmed by The Bavijas Club on Saturday, 15 November 2025.
The aluminium project will be implemented in phases, the first of which is expected to cost about $1bn and be completed within three to four years.
About 70% of this funding will be provided by lenders already committed to the project. The plant will have an operational lifespan of up to 50 years.
EIH says the planned smelter will help boost Ethiopia’s industrial capacity, meet growing domestic demand, and reduce foreign currency outflows.
In the meantime, a joint technical committee has begun site selection and a full feasibility study for the project covering energy, infrastructure and operational requirements.
Ethiopia, which also has a nuclear power development treaty with Russia’s Rosatom, flagged off the construction of two key projects in October.
This includes a 3.5m t/yr crude oil refinery plant and a 3m t/yr urea fertilizer plant, all aimed at supporting industrial development.
What the aluminium sector in Ethiopia look like
Despite its vast population of over 130 million, the aluminium industry in landlocked Ethiopia is small but growing.
Demand is driven by a rise in construction, packaging, and transportation, with imports playing a dominant role in meeting local needs.
Last year its aluminum market surged, reflecting increased consumption across multiple sectors. Forecasts suggest steady growth between 2025 and 2031, with annual rates rising from 13.4% in 2025 to 15.6% by 2029.
This growth is fueled by infrastructure expansion, urbanization, and industrialization.
Aluminium is widely used in roofing sheets, window frames, doors, and structural components. Ethiopia’s booming housing and infrastructure projects are the largest demand drivers.
Key aluminium end-use sectors
- Construction: Aluminum is widely used in roofing sheets, window frames, doors, and structural components. Ethiopia’s booming housing and infrastructure projects are the largest demand drivers.
- Transportation: Growing automotive and aviation sectors require lightweight aluminum parts.
- Packaging: Aluminum foil and cans are increasingly used in food and beverage industries.
- Electrical & Consumer Goods: Demand for aluminum wiring, appliances, and machinery is rising.
However, Ethiopia does not have large-scale aluminum smelting facilities. Most aluminum products are imported, primarily from Asia and the Middle East.
Domestic firms focus on downstream activities such as fabrication, recycling, and manufacturing of aluminium products rather than primary production.
Why is Rusal a good choice for Ethiopia’s smelter?
Rusal operates a fully integrated portfolio covering bauxite mining, alumina refining, and aluminium production in Russia, Europe and Africa.
It is one of the world’s largest producers of low-carbon aluminium, with more than 90% of its electricity consumption sourced from renewable hydropower.
Ethiopia’s abundant hydroelectric resources provide crucial cost advantages for aluminium smelting, which typically requires approximately 13-15 MWh of electricity per metric ton of production.
This means lower cost on electricity compared to fossil fuel-dependent facilities in other regions, potentially reducing operational costs significantly.
Additionally, the company’s expertise in sustainable aluminium production – like inert anode technology and advanced recycling – is expected to underpin the technical design of Ethiopia’s planned smelter.
In 2007, Rusal acquired 85% controlling stake in Nigeria’s 200,000 t/yr Alscon smelter plant for a total consideration of $205m.
Although it has remained moribund for over two decades now because of power and management problems, the government is currently preparing the plant for a potential restart.