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Australian export ban puts pressure on Russian-owned Limerick alumina plant

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Australia’s move to ban alumina exports to Russia is putting even more pressure on Moscow-based aluminum giant United Co. Rusal International PJSC, pushing up prices of the so-called ‘all-round metal’.

Aluminum jumped and Rusal shares fell as Rio Tinto Group, operators of the Queensland Alumina Ltd. joint venture. with the Russian company, said it would follow all instructions from Canberra.

Rio reiterated that it was in the process of ending its trade ties with Russian companies after invading the country in Ukraine. Rusal holds a 20 percent interest in the Queensland JV.

Australian Prime Minister Scott Morrison said a ship due to dock this week to bring a cargo of alumina – the key ingredient in aluminum manufacture – to Russia would not deliver its cargo as he announced the ban on Sunday.

Australia supplies nearly 20 percent of Russia’s alumina, and its exports of aluminum ores, including bauxite, to Russia have also been banned.

Aluminum rose as much as 5.1 percent on the London Metal Exchange on Monday. Supplies of the metal – used in everything from cans to airplane parts and window frames – were running out even before the war in Europe roiled global commodity markets. This latest development threatens to add further inflationary pressures to the global economy.

Russia is a major supplier of aluminum to markets such as Turkey, China and Japan. The metal rose to $3,554 a tonne on the LME as of 1:48 p.m. in Singapore, and is up about 27 percent this year.

Rusal said in a statement that it was evaluating the impact of the ban.

Rio plans to stop supplying bauxite to Rusal’s Irish plant in Aughinish and buying alumina, people familiar with the matter said earlier this month. Shares of the company fell as much as 8.9 percent in Hong Kong on Monday following Australia’s announcement.

While aluminum has not been affected by global sanctions, Rusal – which relies on bauxite and alumina to fuel its plants – is facing disruptions to its supply chains as companies pull out of deals with Russia.

The company has also cut production at its Nikolaev aluminum refinery in Ukraine due to war-related logistical and transportation challenges.

Whether Rusal will cut aluminum production depends on the levels of its alumina inventories, Guotai Junan Futures Co. said in a statement. Covid-19 outbreaks in China are also disrupting supplies of the metal, adding upward pressure on global prices, it said.

Australia said the ban would apply to “all relevant shipments” to Russia. It is common practice for alumina producers to swap loads with other suppliers in different locations to save on freight costs. However, it is unclear whether Rusal can circumvent the ban by doing so with supplies from its Queensland plant.

“The spirit of the announced sanctions would likely indicate that Rusal should not benefit financially from alumina sales at all, but this is unclear in the current wording,” said Gavin Wendt, senior resources analyst at consultancy Mine Life Pty Email.

Rusal was founded by Russian tycoon Oleg Deripaska, who retains an interest through his stake in Rusal’s majority owner, En+ Group International PJSC.

The Australian government last week announced a new round of sanctions against oligarchs close to President Vladimir Putin, including Deripaska.

The EN+ Group announced earlier this month that it was considering a possible spin-off of Rusal’s international business to create a new company that would house its alumina, bauxite and aluminum assets around the world and would no longer have Russian ownership .

https://www.independent.ie/business/irish/australian-export-ban-puts-pressure-on-russian-owned-limerick-alumina-plant-41469548.html Australian export ban puts pressure on Russian-owned Limerick alumina plant

Fry Electronics Team

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