LONDON, Sept 14 (Reuters) - Russia has stepped up imports of the aluminium feedstock alumina from India in recent months to supply its vast Siberian plants, a move that diversifies the sanctions-hit country's supply, helps reduce dependence on China and cuts costs.

After invading Ukraine, the world's second biggest producer of aluminium lost two crucial sources of alumina, used to make aluminium metal, as a refinery in Ukraine suspended production and Australia banned supplies to Russia.

While Russia and China are on friendly terms, aluminium production in China is rising, leaving less price flexibility for Russia to buy alumina.

Russia's Rusal, the world's largest aluminium producer outside China, needs to fill the gap left by suspended supplies to sustain domestic production while aiming to protect its margins against a weaker aluminium price backdrop.

The company's own alumina assets in Russia, Ireland, Jamaica and Guinea supply 70% of its needs, or 5.5 million metric tons.

"After deliveries from Ukraine and Australia were lost, Rusal replaced it with increased alumina imports from China and other refineries in Asia, but it came at a considerable cost," Ami Shivkar at WoodMac said.

Russia became the largest buyer of alumina from China last year. Rusal's cost of purchasing alumina jumped by $1.1 billion to $1.8 billion in 2022 as it had to pay more for the raw material and for delivery.

Rusal has since diversified by securing alumina supplies from India and Kazakhstan.

"We can already say that the company's total alumina costs will decrease in 2023 compared to 2022," Rusal told Reuters.

Russia was the second largest buyer of Indian alumina in the first half of this year, Indian customs data show, with India exporting 189,379 metric tons to Russia. There were no exports in the same period of 2022.

"Russia encountered difficulties in securing alumina from developed nations and forced it to switch to India," an Indian industry official, who declined to be named, told Reuters.

India's state-run National Aluminium Co is the primary supplier of alumina to Russia, the official said.

Nalco did not respond Reuters' request for comment.

Russia is expected to buy more than 350,000 tonnes of alumina from India in 2023, the official said. The estimate is broadly in line with Rusal's own calculations, it told Reuters.

China remains the largest third-party supplier of alumina to Russia with shipments of 485,160 tons in January-June, but it has less alumina to offer this year due to rising domestic aluminium production.

Aluminium of Kazakhstan, which produces 1.3 million tons of alumina a year, plans to reduce supplies to Russia by 5% in 2023 as it also needs more product for itself, its owner Eurasian Resources Group told Reuters.

The company did not say how much alumina it sends to Russia, however CRU consultancy estimates Kazakh deliveries to Russia at around 40,000-70,000 tons per month.

Rusal needs to buy about 2.5 million tons of alumina a year from outside its own system.

Its Aughinish refinery in Ireland which produces 1.6 million tonnes a year, sends only 40% of its production to Russia. The remainder goes to Europe.

Jamaica supplied 190,070 tons of alumina to Russia in the first half of 2023, the Jamaica Bauxite Institute told Reuters.

Russian alumina purchases have been too small to affect the global market, estimated at 60 million tonnes outside China and dominated by Australia.

However, the need to import alumina means Rusal will rely on the price and the supply-demand balance of the global alumina market for at least five years.

"Despite the fact that we were able to restructure our raw material supply chains in time, we still feel significant dependence on imported alumina," Rusal said.

"To mitigate the risks ..., we have decided to consider a project to build a plant in Russia."

Rusal said in June it would build a $4.8 billion plant to make alumina in a Russian Baltic Sea port. The first phase of production with annual capacity of up to 2.4 million tons will be commissioned by the end of 2028.

(Reporting by Polina Devitt in London, Rajendra Jadhav in Mumbai and Siyi Liu in Beijing; additional reporting by Mariya Gordeyeva in Almaty and Fransiska Nangoy in Jakarta; Editing by Pratima Desai and David Evans)