Aughinish Alumina is in the eye of a global storm after parent company Rusal hit by sanctions
THE RUSSIAN company that owns Aughinish Alumina in Limerick has been plunged into a global economic storm, following the imposition of severe sanctions by the US last Friday.
And the hundreds of workers at the Askeaton-based plant are now facing uncertainty about the future of the company, UC Rusal, as it is engulfed in a global trade crisis.
The controlling owner of UC Rusal, Oleg Deripaska, was targeted in the sanctions list, announced by the US Treasury Department, along with six other oligarchs. The news caused shares in the company to dive to record lows.
On Monday, Rusal shed half of its value on the Hong Kong stock market, as investors jumped ship.
A Government spokesperson here said that the Department of Business, Enterprise and Innovation is “keeping the situation under review” and, together with IDA Ireland, is “working closely with the company”.
“The minister spoke with the CEO of Aughinish Alumina this morning but ultimately this is a global situation that is extremely fluid and continues to develop.”
The US action effectively bans American companies or individuals from doing business with Rusal, which is the second biggest Aluminium producer in the world, and the biggest outside China.
It is not yet known whether there have been any effect on suppliers to the plant, which, if American, would no longer be able to trade with Rusal in most circumstances.
The company issued a statement, saying that it is continuting to evaluate the impact of the sanctions. Rusal’s initial assessment is that it is “highly likely” that the sanctions would be “materially adverse to the business and prospects of the group”, it continued. It warned shareholders and potential investors to “exercise extreme caution”.
The London Metal Exchange has distanced itself from Rusal, and at least two of the company’s biggest customers are reported to be reviewing their contracts.
Swiss trader Glencore, which owns shares in Rusal and is one of its major customers, said it was evaluating its contracts. The CEO of Glencore, Ivan Glasenberg, this week stepped down from his role as a director at Rusal.
County Limerick TD Niall Collins called for action from the Government in the aftermath of the sanctions.
“The Government and the Minister for Business, Enterprise and Innovation must act quickly to ensure that the 450 jobs at the Aughinish site are protected in so far as possible. This is a very fluid situation and the protection of these 450 valuable jobs is of huge importance, along with the almost 250 contractors who also work on site.”
On Tuesday afternoon, the Rusal website went down, only coming back online the following day.
In total, the US list targeted seven Russian oligarchs and 12 companies they own or control, as well as 17 senior Russian government officials, and a state-owned Russian weapons trading company and its subsidiary, a Russian bank.
Announcing the measures, US Treasury secretary Steven Mnuchin said that the Russian government “operates for the disproportionate benefit of oligarchs and government elites” and “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.”
He continued that “Russian oligarchs and elites who profit from this corrupt system will no longer be insulated from the consequences of their government’s destabilizing activities.”
Deripaska and his assets have been hardest hit, with Rusal making headlines across the world as the biggest victim of the sanctions. The oligarch owns the controlling share, nearly 50 percent, of Rusal through his company EN+.