
According to sources, companies including Rio Tinto can resume existing supply deals with Rusal’s Aughinish alumina refinery in Ireland as the U.S. has extended the deadline for US and non-US citizens to wind up business with Rusal to late October. The development happened a day after the US Treasury moved to ease restrictions that threatened the supply of metal in Europe. The move is expected to ease fears of alumina supply crunch which is the key raw material to make aluminium.
The Aughinish alumina refinery, near Limerick, is a significant part of Europe’s aluminium supply chain, feeding smelters that produce aluminium and supply to companies like BMW, Volkswagen and Airbus.
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Rio, which is the largest bauxite supplier to Aughinish and buyer of its alumina, declared force majeure on its contracts with Rusal earlier in April after Rusal was barred from doing business in US dollars. The company can now resume trading with the plant under contracts signed before the sanctions were announced.
The US Treasury also said Rusal’s oligarch owner Oleg Deripaska needed to withdraw control of the company. However, Deripaska plans to keep control of Rusal in the face of harsh U.S. sanctions, according to people familiar with the matter.
After the sanctions were announced on April 6 there was scramble by traders and smelters to secure supplies of aluminium, which jumped up to 30 per cent, and alumina, which spiked 80 per cent. Rio and Rusal however, have not made any official comment on the supply issue.
The Aughinish alumina refinery refines bauxite imported from mines in Guinea, and ships to aluminium smelters across Europe. Analysts say that while the easing of sanctions will calm fears of a supply crunch, western companies cannot enter into new agreements with Rusal or its subsidiaries.
“Any extension of Rusal alumina supply under the extended licenses will be extremely appreciated by a market in panic amidst consecutive supply outages”, said Oliver Nugent at ING in the Netherlands. “Come the 23 October deadline alumina markets would likely be better placed to weather Rusal sanctions”.
Global metals market suddenly faced an unexpected supply crisis due to the supply disruption that took place in Brazil’s Alunorte and now in Aughinish alumina.
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