FxWirePro: Aluminum price drops as US Treasury delays Rusal sanction

The U.S. Treasury building Washington D.C

The U.S. Treasury building Washington D.C

Aughinish and its hundreds of employees have been caught up in an economic storm since the USA imposed sanctions on Rusal, with Deripaska seen as having close ties to Russian president Vladimir Putin.

As reported earlier sanctions relief can be provided for Rusal if its co-owner Oleg Deripaska makes divestment and relinquishes control over the company.

Last week, aluminum prices surged to their highest in seven years on the back of the United States sanctions on Russian companies.

"The U.S. government is not targeting the hardworking people who depend on Rusal and its subsidiaries", said Treasury Secretary Steven Mnuchin.

Prices of aluminum have soared by more than 30 percent since the U.S. sanctions announcement.

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On Monday, the Department of the Treasury's Office of Foreign Assets Control (OFAC) issued a licence allowing USA and non-US parties up to October 23 to engage in particular transactions relevant to winding down or maintaining business with UC Rusal and its subsidiaries.

The news that the company could be saved has caused shares in the company to surge - after Rusal had previously shed half of its value on the stock market, as investors jumped ship following the blacklisting by America. He owns 48 percent of Rusal and controls it through a shareholder agreement with others including British mining firm Glencore and another Russian oligarch, Viktor Vekselberg, who is also under sanctions. Rusal had provided 7 percent of the world's alumina, the raw material for aluminum production.

The Treasury also said it will not impose secondary sanctions on companies outside the United States that do business with Rusal and its subsidiaries. Aluminium rallied to its highest since mid-2011 last week on fears that the global market could face shortages because of the sanctions on Rusal, a company that a year ago accounted for more than 6 percent of global aluminium output. Other metals prices and crude oil also retreated somewhat.

Besides being close to the Kremlin, Deripaska was also once an associate of Trump's ex-campaign chairman Paul Manafort, a top target of U.S. Special Prosecutor Robert Mueller in his investigation of ties between Russian Federation and the Trump campaign. The metal hit a three-year high on April 19 on fears that sanctions might be extended to major producer Nornickel, a company linked with both Rusal and Deripaska.

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