How US Moves Against Russian Aluminum Giant Starts Crippling European Companies – By Sputnik

Pure aluminium ingots are seen stored at the foundry shop of the Rusal Krasnoyarsk aluminium smelter in the Siberian city of Krasnoyarsk, Russia November 9, 2017

The logo of German carmaker Volkswagen (VW) is pictured at the company's head quarters on November 22, 2016 in Wolfsburg, northern Germany.

The same perspective looms for the Australian-British multinational Rio Tinto, which depends on RUSAL due to its cheap processing. Rio Tinto, which announced that it would abide by the sanctions, supplies bauxite for a metal plant in Ireland. This may entail laying off 450 staffers of the Irish enterprise. According to the newspaper Irish Times, it’s unknown how the sanctions will influence the plant or whether the storage of bauxite is enough for the plant to keep working despite the sanctions. According to Bloomberg, Rio Tinto has warned it would have to put several plants on hold before new suppliers were found, which could take some time.Europe’s largest alumina refinery plant Aughinish Alumina, bought by RUSAL in 2007, stated that its inventory of bauxite will last till June, although the decision by Rio Tinto doesn’t instill confidence into the major players.

Apart from Glencore and Rio Tinto, RUSAL’s top five consumers include the US Arconic plant in Samara (Russia), Japan’s Toyota and Switzerland’s Mechem SA. According to RUSAL’s report, these five companies comprised a 40 percent share of the company’s sales over nine months of 2017.

The producers have to adjust now to higher aluminum prices, which hit record numbers over the past six years following the punitive measures against RUSAL.

READ MORE: Metal Prices Go Bananas Over Latest Batch of US Sanctions

On April 6 the US imposed economic sanctions on 38 Russian businessmen and senior government officials in response to an alleged poisoning attack on the country’s former spy Sergei Skripal and his daughter in the UK. Oleg Deripaska’s company RUSAL has suffered the most from the recent sanctions.

RUSAL is Russia’s biggest aluminum producer and one of the world’s biggest suppliers of the metal, as well as alumina. Its production is traded on the world’s most prominent commodities markets. The company owns mines, refineries and smelters not only in Russia, but also all over the world, for example in Ireland and Jamaica. Although aluminum is dubbed the “flying metal,” aviation is not its major consumer. Aluminum alloys are widely used in construction and automobile manufacturing. Another major sector is food production, where it’s used to produce packaging.