Moscow mulls Aughinish owner buyout amid crisis

By Ilya Arkhipov and Andrey Biryukov

Russia’s government could take over Aughinish-owner Rusal temporarily to save the metals giant from the impact of US sanctions, a senior official said as the Kremlin struck a sceptical tone about Washington’s decision to ease some limits on the company.

The Co Limerick smelter has been caught up in the sanctions spat, putting some 450 jobs and 200 agency positions under threat. The Limerick site in the Shannon estuary is Europe’s largest alumina refinery.

“That’s not being ruled out, but there haven’t been any concrete discussions about it,” Industry Minister Denis Manturov said in response to a question about the possibility of a temporary takeover by the state or a government-owned bank of the stake owned by sanctioned billionaire Oleg Deripaska.

Mr Manturov’s comments came after the US Treasury announced it was giving US and other companies another five months to wind down contracts with Rusal and would consider the Russian company’s appeal to be removed from the sanctions list.

Rusal could get a reprieve if Mr Deripaska, the main target of the sanctions, relinquishes control, according to the US Treasury.

The news sent a wave of relief through metals markets thrown into turmoil by the original April 6 decision to ban all US entities from transactions with Mr Deripaska, Rusal and other companies in his empire.

Aluminum prices fell from recent highs and Rusal shares jumped in Hong Kong. But Kremlin reaction was more muted. “I’d be very cautious because these statements are of an absolutely hypothetical nature,” spokesman Dmitry Peskov said on a conference call.

Russia’s government and business elite were shocked when Mr Deripaska and Rusal were hit with the sanctions and have struggled to come up with ways to protect Rusal, which employs more than 60,000 people and is a major exporter.

Russia’s parliament also is readying a package of retaliatory measures against US companies and trade, though the Kremlin last week put the brakes on that plan to give time for more analysis.

“The signals coming from Washington now are very contradictory, so it’s hard to make any kind of conclusions,” Mr Peskov said.

Asked about the possibility of an easing of tensions in the wake of the sanctions shift, he said, “for the moment, the reality and the actual steps coming from Washington point to the opposite”.

Mr Deripaska, who built Rusal from a collection of Soviet-era smelters and plants privatised in the 1990s into a global giant, has shown no willingness to give up his control over the company.

He’s sought to find suppliers and customers unaffected by the US sanctions, but so far even Chinese companies have been reluctant to violate them.

The Kremlin has denounced the US sanctions as unfair economic warfare and giving in to US pressure to take Rusal out of his hands would be painful politically.

But just how far Moscow is ready to go to protect Mr Deripaska’s wealth remains unclear.

The US seems to be “forcing the Russian state to buy him out of Rusal,” joked Andrey Movchan, director of the economic policy programme at the Carnegie Moscow Centre.

“Given the situation, it’s unlikely that he’ll remain the owner of Rusal,” he said. Government officials have said their priority in helping those hit by sanctions is the continued functioning of the companies and their workers, not their billionaire owners.

“It wouldn’t be a defeat for the Kremlin if Deripaska gives up control,” since the government’s focus is on ensure the company continues to operate, said Andrey Margolin, an economist at the Presidential Academy of National Economy and Public Administration in Moscow.

“Even if the government does nationalise it, that would be only temporary,” as it could be resold later, he said.

Still, the five-month extension the US granted for winding down transactions with Rusal could give the company time to reorient its operations away from partners affected by sanctions, potentially allowing Mr Deripaska to retain control.

Bloomberg. Additional reporting Irish Examiner


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