Sanctions on Russian aluminium may drive several companies out of business: European industry associations

On October 24, 2022, five European industry associations stated that they had urged European authorities to stave off sanctions, tariffs or boycotts against Russian aluminium. Otherwise, it might create a situation where thousands of companies would go out of business, and develop unemployment.

The Russian aluminium giant, Rusal's output is considered to be around 6% of the total world's aluminium production. However, this aluminium company has not been earmarked by western sanctions against Russia following the geopolitical crisis with Ukraine.

Conversely, the United States is considering restrictions on Russian aluminium imports. In contrast, the world's biggest metal trade hub, the London Metal Exchange (LME), is asking members if it should ban Russian metal from its system.

Although some companies have confirmed they will cease buying Russian aluminium. On the other way, US producers like Alcoa are lobbying for measures against Russian metal.

In a common declaration, the associations declared, “We have sent a letter to EU authorities and requested the urgent intervention of the European Commission and of EU member states against threats of bans, high tariffs or sanctions on Russian aluminium which represent an imminent and vital threat to the European aluminium industry."

The statement also says, "Those boycotting or calling for measures against Russian metal are either its main competitors, or they enjoy supply options that are not available to the vast majority of the European aluminium value-chain."

"For smaller aluminium users in Europe, measures against Russian metal risked potentially thousands of company closures and tens of thousands more unemployed in Europe as a direct consequence."

The European industry is already suppressed by high inflation and rapid economic growth deceleration. In contrast, high energy prices have forced the cut of more than a million tonnes of aluminium production in Europe since 2021. Following the sanction of Rusal by the United States in 2018, and when LME blocked its metal from trading, the aluminium prices zoomed 35% in a few days.

The European industry association which raised their voices are the Federation of Aluminium Consumers in Europe (FACE), the German Federal Association for Economic Development and Foreign Trade (BWA), the Italian Foundry Suppliers' Association (Amafond), the Italian National Association of Steels, Metals, Scrap, Hardware (Assofermet) and the Italian Foundry Association (Assofond).