Glencore calls off Rusal share swap with En+ in light of US sanctions

11 April 2018 (Last Updated April 11th, 2018 12:57)

Swiss mining company Glencore has announced it will not proceed with its plan to swap its stake in Russian aluminium producer Rusal with global depositary receipts (GDRs) in integrated energy firm En+ Group as a result of recent US sanctions against Russian nationals and entities.

Swiss mining company Glencore has announced it will not proceed with its plan to swap its stake in Russian aluminium producer Rusal with global depositary receipts (GDRs) in integrated energy firm En+ Group as a result of recent US sanctions against Russian nationals and entities.

The decision follows the US Department of the Treasury’s Office of Foreign Assets Control’s (OFAC) designation of Russian business tycoon Oleg Deripaska and firms directly or indirectly owned or controlled by him as specially designated nationals (SDNs) last week, which included Rusal and En+ Group.

The sanctions require US nationals and entities to cease dealings with the SDNs.

"Russian oligarchs and elites who profit from this corrupt system will no longer be insulated from the consequences of their government’s destabilising activities."

US Treasury Secretary Steven Mnuchin said: “The Russian Government engages in a range of malign activity around the globe, including continuing to occupy Crimea and instigate violence in eastern Ukraine, supplying the Assad regime with material and weaponry as they bomb their own civilians, attempting to subvert Western democracies, and malicious cyber activities.

“Russian oligarchs and elites who profit from this corrupt system will no longer be insulated from the consequences of their government’s destabilising activities.”

Glencore currently has contracts with Rusal for the purchase of aluminium and alumina.

In a statement, Glencore said: “Glencore is committed to complying with all applicable sanctions in its business and is taking all necessary measures in order to mitigate any risks to Glencore’s business as result of the designation of Rusal and EN+ as SDNs, including in respect of secondary sanctions.”

Glencore CEO Ivan Glasenberg has stepped down from Rusal’s board of directors in response to the sanctions.

Glencore originally agreed to swap its 8.75% shareholding in Rusal as part of a deal with En+ Group, which was announced in October last year.