Rio Tinto has taken full control of an alumina refinery in Queensland that it shares with United Co. Rusal International PJSC, thus denying the Russian aluminium giant access to a vital raw material source.
“As a result of the Australian government’s sanction measures, Rio Tinto has taken on 100 per cent of the capacity and governance of Queensland Alumina until further notice,” Rio said in an emailed statement.
According to a source familiar with the situation, Queensland Alumina's (QAL) management had urged Rio to step in and take full control of the business after receiving legal advice that the operational structure could not comply with Australia's sanctions. When sanctions are lifted, control will revert to the old joint-venture operational structure, according to the source.
While the Australian sanctions are in place, the action by Rio, which owns the remaining 80 percent, validates Rusal's absence from the plant's administration and production. It wasn't obvious whether Rusal would be allowed to switch its alumina with supply from another nation previously.
“Our focus remains on ensuring the continued safe operation of QAL, as a significant employer and contributor to the local Gladstone and Queensland economies,” Rio said in its statement.
The Russia-Ukraine crisis has already created disruption in Rusal’s supply of alumina, the main ingredient in aluminium, raising worries about whether it can maintain production levels at a time when global supplies are already tight.
Last month, Australia had put an immediate halt on alumina exports to Russia, putting the company under immense pressure. As per reports, Rusal has been unable to access its portion of output from Queensland Alumina, which it holds a 20% stake in. Oleg Deripaska a Russian billionaire and the president of Rusal was hit by sanction by Australia. Deripaska owns a significant portion of Rusal’s largest shareholder, En+ Group.
Rio had previously stated that it would follow all of Canberra's orders and that it was in the process of ending its commercial ties with Russian companies. Rio has already tried to terminate agreements with Rusal's Aughinish alumina refinery in Ireland, but due to QAL's equity stake, this was more difficult in Australia.
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