Shake-up for aluminium giants as US lifts curbs on Putin-ally Deripaska

Commodities trader Glencore has shaken up its holdings in aluminium specialists Rusal and En+ Group after the US partially lifted sanctions on Russian billionaire Oleg Deripaska.

Mining

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16:05 05/11/24

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The US Treasury Department lifted curbs on three companies connected to the oligarch – Rusal, En+ and JSC EuroSibEnergy – on Sunday after Deripaska ceded control.

Under the deal, Deripaska will reduce his direct and indirect share ownership of the companies to below 50%, while all three companies have agreed to what the US Treasury called “unprecedented transparency” through “extensive, ongoing auditing, certification and reporting requirements”. Rusal chairman Jean-Pierre Thomas has resigned and London-listed En+ has appointed seven independent directors, all with the intention of loosening Deripaska’s grip on the companies.

Personal sanctions on Deripaska, including on all his property, remain in place.

As a consequence of the curbs being lifted and the terms agreed, it was announced that Glencore would transfer an 8.75% stake in Rusal to controlling shareholder En+ for 10.55% of enlarged share capital of En+.

Billionaire Deripaska is a key ally of Russian leader Vladimir Putin. The sanctions were imposed in April 2018, as the US looked to punish Russia for what it termed “malign activities”, including accusations it had meddled in the 2016 US Presidential election and was behind international cyber-attacks.

The sanctions effectively cut off Rusal – the world’s second largest aluminium producer – from the global market. Its shares, which are listed in Hong Kong, slumped 70% after the curbs were imposed, and the price of aluminium spiked.

But they soared on Monday, improving 9%, although they remain well below their pre-sanction levels. Shares in En+ also slumped when the sanctions were first announced. By 11.30am GMT they were ahead 5%, while Glencore was flat at 297.5p.

Aluminium prices lost as much as 1.4% on Monday on the London Metal Exchange.

Lifting the sanctions, the Trump administration argued that they were impacting the global aluminium industry. But the Democrats and even some Republicans had wanted the sanctions to remain in place, at least until a special investigation in Russia’s alleged interference in the elections had finished.