Aughinish-owner Rusal: US and UK sanctions won't hurt supply

Goldman Sachs said it did not expect an immediate supply shock

The Rusal-owned Aughinish Alumina facility on the Shannon Estuary near Foynes Co Limerick 

Russian aluminium giant Rusal, which owns the huge facility at Aughinish in the Shannon Estuary, has said that new sanctions on Russian metals introduced by the US and Britain will have no impact on its ability to supply aluminium to world markets.

Washington and London last week prohibited metal-trading exchanges from accepting new aluminium, copper, and nickel produced by Russia and barred the import of the metals into the US and Britain. 

However, Rusal and Russian mining giant Norilsk Nickel, the world's largest palladium producer and a major producer of high-grade nickel, have not been directly targeted with Western sanctions over the conflict in Ukraine. The EU currently has bans in place on aluminium wire, foil, tubes and pipes manufactured in Russia.

The London Metal Exchange banned from its system Russian metal produced on or after April 13 to comply with new sanctions. The Kremlin has said it considered the sanctions illegal and a double-edged sword that would hurt the interests of those imposing them. Russia is a major producer of aluminium, copper, and nickel.

"The announced actions have no impact on Rusal's ability to supply since Rusal's global logistic delivery solutions, access to banking system, overall production and quality systems are not affected," said Rusal, the world's largest aluminium producer outside China with a global share of 5.5%. 

"The US determination does not impose any new prohibitions or requirements relating to the processing, clearing or sending of payments by any intermediary banks," the company said. 

The Aughinish operation, which employs up to 500 people at its Co Limerick base, has long been in the eye of the storm over potential Western sanctions — even before the invasion of Ukraine by Russia. 

Aughinish is only part of a huge global network and Rusal's operations employ 59,500 people in Russia, Guinea, Jamaica, and Sweden, and in many other locations. Bauxite is converted into alumina, a raw material to make aluminium used by companies in construction,  packaging, and in the making of electric cars.

On Monday, aluminium and nickel prices rallied to multi-month highs, though both contracts pared gains subsequently. "From a fundamental perspective, it is important to recognise that these exchange-focused rule adjustments will not generate a necessary supply-demand shock," Goldman Sachs analysts said in a research note. 

Russian producers can continue to sell metal to other non-US or UK markets, Goldman Sachs said, but uncertainty remains as to whether other key ex-China markets and consumers will also continue to consume the same volumes of Russian metal. 

Reuters and Irish Examiner staff