Australian-British mining firm Rio Tinto is set to suspend a number of contracts with aluminium producer Rusal as a result of recent US Government sanctions imposed on various Russian individuals and companies.
The development 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) on 6 April, which included Rusal.
Rio Tinto subsequently reviewed its arrangements with Rusal following the US Government’s announcement, including Rusal’s 20% interest in Queensland Alumina in Australia.
Rusal is also involved in various supply and offtake arrangements related to Queensland Alumina, as well as bauxite offtake deals for its refinery in Ireland.
In addition, the Russian firm possesses offtake contracts for alumina used at Rio Tinto’s smelters, primarily in France and Iceland.
Rio Tinto now intends to work with its customers to minimise any disruption in supplies as a result of an imminent declaration of force majeure on the deals.
The company noted that it intends to comply with the US sanctions.
The alumina refinery is located in the city of Gladstone, Queensland, and has a production rate of 3.8 million tonnes (Mt) per year.
Rio Tinto currently owns an 80% interest in the refinery, which originally commenced production in 1967.
Additionally, Swiss multinational mining company Glencore announced last week that it will not proceed with an earlier plan to exchange its stake in Rusal with global depositary receipts (GDRs) representing ordinary shares in integrated energy firm En+ Group.
The decision was made in the wake of the recently announced US sanctions.