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Swiss commodity trading and mining company Glencore is to not renew a $16bn deal to purchase aluminium from Russian firm United Company Rusal International (Rusal), reported Bloomberg News citing Glencore CEO Gary Nagle.
The move would comply with Glencore’s policy not to engage in new business ties with Russian companies in the wake of Moscow’s military offensive against Ukraine.
Glencore, however, continues to honour existing contracts with the Russian firm.
Rusal, which is not under Western sanctions, signed the $16bn deal with the trading house in 2020 whereby it agreed to sell one-third of its production to Glencore.
Effective until 2024, the deal includes an option for Glencore to extend it through 2025.
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In the event of a non-renewal, Rusal may consider signing a new deal of equivalent size, the failure of which can lead to increased deliveries of Russian aluminium to London Metal Exchange warehouses.
This could result in additional pressure on global prices.
Nagle was quoted by Bloomberg News as saying: “Look how well we did last year with our policy.
“We had a fabulous year doing that by trading non-Russian material. So we provided a service to the world and we had a great return on our trading business.”
Last month, Bloomberg reported that Glencore’s rival Trafigura Group was looking to secure its own metal supply from Rusal.
Glencore currently holds a 10.6% stake in EN+ Group International, which is the parent company of Rusal.