US Signals Lifting Sanctions on Russia’s Rusal

U.S. Treasury Secretary Steven Mnuchin said Thursday that the Trump administration would be open to lifting sanctions against Rusal.

Speaking at the White House, Mr. Mnuchin said “productive talks” with Rusal could see the removal of one of the world’s largest aluminium producers from the U.S. sanctions list, but he declined to say how soon the sanctions could be lifted.

Mr. Munchin’s conciliatory comments come after Rusal reached out to the U.S. with proposals to secure sanctions relief ahead of the October deadline for U.S. companies to wind down business with the company.

Rusal and its controlling shareholder Oleg Deripaska have been under threat since April when the U.S. Treasury Department announced tough sanctions for what it called “malign activities” by Russia.

“The intent was to change the behaviour of the oligarch,” said Mr. Mnuchin. “We weren’t looking to put sanctions on aluminium companies and I think we’re in productive discussions with the company to resolve those issues.”

The sanctions, introduced in April, roiled aluminium markets with the costs of aluminium surging by twenty per cent and Rusal’s shares dropping by 55 per cent. At the time, European leaders worked to persuade the U.S. Treasury Department to water down the sanctions and extend the compliance deadline.

Earlier, Mr. Mnuchin stated that Rusal was an important player on the global aluminium market and the U.S. objective was “not to put Rusal out of business”.

Talking about the steps the Russian company took to placate the U.S. government and secure sanctions relief, Mr. Mnuchin added: “I’m not going to go into the exact specifics of what those proposals are and where we stand on them, but, yes, if we can find an acceptable solution, that is our objective.”

The European Union imports over 20% of its aluminium supply from Russia, which makes downstream companies naturally worried about their ability to secure the metal in future if the U.S. sanctions stay in place. Investment firm ING Bank predicts that without a Rusal deal, the LME aluminium price could hit US$3,000 per tonne.