Sun | Oct 25, 2020

UC Rusal gets reprieve as US amends Russia sanctions

Published:Wednesday | May 2, 2018 | 11:59 AM
Rusal is the biggest aluminum maker outside China. PHOTO: ANDREY RUDAKOV/BLOOMBERG NEWS

The Donald Trump administration on Tuesday amended its Russia sanctions programme, paving the way for aluminium giant United Company Rusal to escape from the blacklist and granting the metals market a reprieve from a supply scare that rocked markets over the past month.

According to the Wall Street Journal, Rusal’s owner, EN+ Group, sought the 11th-hour amnesty from the U.S. Treasury Department late last week by pledging that its majority shareholder and a primary target of the U.S. sanctions, Russian tycoon Oleg Deripaska, would reduce his holdings and relinquish his board seat.

Rusal was reportedly facing delisting from the London Stock Exchange this week.

The Journal said in its report that treasury department granted EN+ Group and several other companies an extension for compliance with the sanctions, buying Rusal’s owner time to implement the company’s proposed divestment plan.

Shares in Rusal rose sharply on the Hong Kong Stock Exchange Wednesday, although aluminium prices dipped in Asian trading hours.

The Russian aluminium giant surged more than 10% during the day and was recently up 9.7%.

The metal itself was down 0.2% at $2,254.5 a metric ton on the London Metals Exchange, while the benchmark aluminium contract in Shanghai was down 0.3%.

Rusal’s stock has rebounded in recent weeks and is up 75% from the record low it reached last month in the fallout from the U.S.’s initially proposed sanctions.

Aluminium, which experienced a surge in demand amid related anxiety about supply levels, has fallen 9% from its April high.

Prices have whipsawed over the past several weeks as the initial sanctions in early April risked cutting off a major supplier from markets.

But prices fell as the treasury department began to signal a way for Rusal to avoid sanctions.

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