The Trump administration has signalled it could ease sanctions against Russian aluminium producer Rusal that have sent global metal prices skyrocketing, sparking a relief sell-off on Monday that saw aluminium fall as much as 10 per cent.
The US treasury said if Kremlin-linked billionaire Oleg Deripaska sold his stake in the company, the world's second largest aluminium producer by output, it could cut or lift the sanctions.
It also extended the time limit for US and non-US citizens to wind up business with the company by almost five months to October 23rd.
Since the sanctions against Rusal were introduced on April 6th, global aluminium prices have risen by as much as a third, prompting foreign leaders, led by French president Emmanuel Macron, to seek a reversal from Donald Trump. Rusal makes 6 per cent of the world's supply of the metal.
Ireland is also impacted as Rusal's giant Aughinish Alumina plant in Limerick currently supplies as much as 30 per cent of the European alumina market. Any slowdown in operations would be unwelcome for the plant's 450-strong workforce.
Steven Mnuchin, the US treasury secretary, said the "impact on our partners and allies" was a factor in the decision, and made clear that the sanctions were aimed at Mr Deripaska, a Russian national considered close to President Vladimir Putin. Other oligarchs were also hit by the April sanctions.
“Rusal has felt the impact of US sanctions because of its entanglement with Oleg Deripaska, but the US government is not targeting the hardworking people who depend on Rusal and its subsidiaries,” Mr Mnuchin said.
Late trading
The announcement had an immediate impact on the London Metal Exchange, where the price of aluminium fell more than 10 per cent to $2,237 a tonne after trading as high as $2,534 in the morning. In late trading it was down 8.5 per cent at $2,278 a tonne.
A Paris-led group of EU countries had been planning to ask the US to consider the fallout from the sanctions, which threaten to hit the auto, aerospace and other industries, and affect aluminium producers that depend on Rusal as a source of alumina, the raw material used to make the metal.
Alumina prices have risen as much as 80 per cent since the sanctions were introduced.
The new US treasury announcement marks the first time Washington has set out a road map on how Rusal can break free from the sanctions. – Copyright The Financial Times Limited 2018
