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Ethiopia has moved significantly closer to strengthening its industrial sector following the signing of a landmark USD 1 billion agreement with Russian aluminium giant RUSAL to establish a major aluminium smelting facility in the country.
Under a newly signed Memorandum of Understanding (MoU) with Ethiopian Investment Holdings (EIH), RUSAL plans to build a large-scale aluminium plant capable of producing 500,000 tonnes annually—a development poised to become one of East Africa’s most important industrial assets.
The initial phase of the project is valued at approximately USD 1 billion. Around 70% of this financing is expected to come from international lenders, many of whom have already expressed strong interest in backing the venture. Once construction begins, the plant is anticipated to require three to four years to complete. Designed with a lifespan of nearly 50 years, the facility is expected to provide Ethiopia with stable industrial output and expanded export capacity for decades.
This initiative aligns with Ethiopia’s long-term strategy to cut down on heavy foreign-currency expenditures tied to aluminium imports. By producing aluminium domestically, the country aims not only to meet local demand but also to become a competitive exporter within the region and globally.
Preparations are already underway, including selecting a suitable site and conducting a comprehensive feasibility study to ensure the project progresses according to schedule.
Although Africa possesses enormous bauxite reserves—particularly in Guinea—the continent still produces relatively little aluminium, as most bauxite is shipped abroad for processing. Current smelting capacity is concentrated in only a handful of countries: South Africa’s Hillside smelter produces around 720,000 tonnes per year, Mozambique’s Mozal generates roughly 580,000 tonnes, while Egypt’s Egyptalum and Ghana’s VALCO contribute more modest amounts.
The planned Ethiopian smelter, if completed as envisioned, could shift the balance. It would become East Africa’s first major aluminium refining centre, significantly boosting the continent’s total output and contributing to broader industrial diversification. Moreover, the facility would position Africa more firmly within the global aluminium sector, which the International Aluminium Institute projects will expand by 40% by 2030. This growth could stimulate numerous downstream manufacturing industries and support wider regional development.
Reaching full operational capacity would allow the plant to influence the aluminium supply chain throughout East Africa while deepening Russia’s long-term economic engagement in a strategically important African market.
The agreement also reflects Russia’s broader ambitions on the continent. As Western financial involvement and political engagement have diminished, Moscow has intensified efforts to build strategic partnerships across Africa—especially in high-value sectors such as mining, energy, and industrial processing. Examples include Russian involvement in Guinea’s bauxite and gold industries, cooperation with Egypt on nuclear power development, and emerging interest in rare-earth minerals across southern Africa.
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This new investment in Ethiopia underscores how Russia, much like China, is taking advantage of declining Western investment flows and evolving geopolitical dynamics to secure long-term industrial projects. For many African governments seeking alternatives to traditional Western financing, Moscow presents itself as a flexible partner—offering capital, technology, and political alignment without the governance conditions often attached to Western loans.
Overall, Ethiopia’s aluminium smelter project marks a turning point both for the country’s industrial ambitions and for the shifting geopolitical landscape shaping Africa’s economic future.