US eases fears over Aughinish jobs

US eases fears over Aughinish jobs

The US has softened its position on sanctions against Russian metals company Rusal, easing the fears over jobs at the huge Co Limerick Aughinish smelting plant, and sparking a record plunge in aluminium prices.

For the first time, the US Treasury has discussed a path for lifting the sanctions on Rusal, saying it would provide relief if Oleg Deripaska relinquished control.

It also extended the deadline for companies to wind down dealings with the Russian aluminium producer by almost five months.

Rusal petitioned to be removed from the sanctions list and the US government granted the extension while it considers the appeal, according to a statement from Treasury Secretary Steven Mnuchin.

“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.

Some 450 jobs and 200 agency positions in Limerick were under threat because Aughinish Alumina is owned by Rusal. The Limerick site is the largest alumina refinery in Europe but US sanctions have had a severe impact on its owner as the US sanctions froze its metal out of western markets.

Rusal produces about 6% of the world’s aluminium and operates mines, smelters and refineries across the world from Ireland to Guinea, Russia to Jamaica. The new stance by the US sent aluminium plunging as traders speculated that supply disruptions could ease. Prices fell up to 9.4%, the most ever.

Shares in Alcoa slid 12%. Washington’s clarification follows two weeks of chaos in global metal markets. Aluminium shot to multi-year highs as manufacturers scrambled to secure supply.

A German lobbying group said European plants may be forced to close and carmakers could face supply shortages.

The US statement also adds pressure on Mr Deripaska as he tries to save the company without surrendering control. He owns 48% of Rusal and controls it through a shareholder agreement with others including Glencore Plc and Viktor Vekselberg, who is also under sanctions.

“If there were previously doubts if Rusal will remain sanctioned if Deripaska sells out, now we have a clear answer,” Oleg Petropavlovskiy, an analyst at BCS Global Markets, said.

“Changing ownership structure would be a solution for the company. It should calm things down. It looks as if there was a lot of pressure from the US aluminium downstream industry,” said Daniel Briesemann, of Commerzbank.

- Bloomberg and Irish Examiner staff

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