‘Storm yet to pass’ over Aughinish Alumina

‘Storm yet to pass’ over Aughinish Alumina
Aughinish Alumina.

By Pádraig Hoare

The storm “has yet to pass” over the Aughinish Alumina plant in Limerick because of its ties to Russian owner Rusal, but US import tariffs on aluminium pose no threat to its operations, according to a global aluminium expert.

Some 450 jobs and more than 200 agency roles have been under a cloud at Aughinish Alumina in Askeaton as US sanctions imposed on the plant’s owner played havoc with metal markets over the past few weeks.

The Trump administration has accused Rusal’s majority owner, billionaire Oleg Deripaska has been accused of having too close ties to the Kremlin. The US imposed crippling sanctions on his business interests and halved Rusal’s value in the process.

Shares in Rusal plummeted as sanctions reverberated across the entire aluminium industry as it scrambled to restore supply chains.

Global mining firm Rio Tinto has plants in France and Iceland that use the Irish alumina, and Liberty House Group’s Scottish smelter also depends on the site.

Fears have eased in recent weeks as the White House toned down its rhetoric, and allowed Mr Deripaska and investors more time to divest holdings in targets of sanctions. Shares have somewhat recovered in Rusal.

Enterprise Minister Heather Humphreys raised issues with US counterparts this week, including on Aughinish Alumina and EU trade tariffs, which the Trump administration has said it may impose on aluminium from June 1.

She said: “The EU has argued strongly that an exemption from the proposed steel and aluminium tariffs should apply on a permanent basis to the EU as a whole.

We are disappointed that the EU had not already been granted a permanent exemption, notwithstanding that a temporary exemption was extended to June 1 to allow for further dialogue. Global overcapacity, which is driving problems for the US industry, is also a cause of concern for the EU, which is eager to work jointly with the US to find solutions.

Eoin Dinsmore, the head of aluminium primary and products at global consulting firm CRU, said US tariffs on aluminium would have no impact on Aughinish Alumina. The only threat to Aughinish remains over Rusal’s future, he said.

“The uncertainty surrounding Aughinish Alumina is 100% tied to the US sanctions against Oleg Deripaska and Rusal. The extended wind-down clause which runs to October 23 allows for existing contracted business to continue.

“The US has signalled that sanctions against Rusal will be lifted if Mr Deripaska reduces his stake in the company EN+, which has control of Rusal — which Mr Deripaska has already suggested.

“But the storm is yet to pass and the timeline for lifting the sanctions is very uncertain. Indeed, operations may be impacted between now and when the sanctions against Rusal are lifted,” said Mr Dinsmore.

He said while US import tariffs are unpopular with aluminium firms in Europe, these tariffs do not include alumina. The products are related but different entities.

“A 10% import duty on aluminium products in the US poses no risk to Aughinish Alumina. Indeed, it is the opposite, a US import tariff will encourage higher primary aluminium production in the US. Higher US primary aluminium production boosts alumina demand in the Atlantic and should be positive for alumina prices,” said Mr Dinsmore.

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