Aluminum giant Rusal share price halved after United States sanctions

Apr 10, 2018, 18:59
Aluminum giant Rusal share price halved after United States sanctions

Worldwide trading houses have stopped buying aluminum from Rusal because of the sanctions, according to executives at five companies that regularly buy from the company, who spoke on condition of anonymity due to the sensitivity of the discussions. This reportedly cost its largest shareholder Vladimir Potanin around $1.3 billion, even though he was not among the 26 people and 15 companies blacklisted on April 6 by the US authorities in response to the diplomatic fallout of the Sergei Skripal poisoning.

The US actions target Russian oligarchs whose companies have wide-ranging involvement in global capital markets.

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Aluminium giant Rusal (0486.HK), which Deripaska also controls, saw half its value wiped out in overnight trading in Hong Kong.

The sanctions are created to stop Mr Deripaska and associated companies from doing business in U.S. dollars and cut him off from any dealings with United States citizens.

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It said Deripaska was sanctioned "for having acted or purported to act for or on behalf of, directly or indirectly, a senior official of the Government of the Russian Federation". "We have a whole list of possible measures that are being studied", Tass cited Zakharova as saying. The latest sanctions affected companies such as Sberbank, whose shares fell 17% in Moscow.

The company which supplies seven percent of the world's aluminum supply, is now at risk of defaulting on part of its debt, the AFP reported. The state-controlled bank is seen as a barometer for the wider Russian economy. Polymetal, a Russian miner listed in London, was the biggest FTSE 250 faller, down 18%. As Bloomberg points out, the move also raises questions for Glencore and its billionaire chief Ivan Glasenberg, the commodity giant who is one of Rusal's top shareholders, owning an 8.75 percent stake and also the biggest buyer of its metal, having bought $2.4 billion of metal from it a year ago. "This is an outrageous business from the point of view of illegality, from the point of view of flouting all the norms, and of course careful analysis is needed here", said spokesman Dmitry Peskov. It was mentioned that the USA sanctions are highly likely to will have a negative impact on the business of the company and its development.

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EN+, which only listed in London in November having raised $1 billion from City investors despite fears over the potential of further sanctions being imposed on Russian Federation, said it would focus on maintaining its operations and ensuring it "abides by all applicable laws and regulations".