18 Apr Rio Tinto to complete sales of European aluminium smelters despite Rusal sanctions
Rio Tinto (ASX:RIO) hopes to finalise the sale of two aluminium smelters in Europe regardless of the recent sanctions imposed on Russian aluminium raw material supplier Rusal by the US.
The Anglo-Australian mining giant announced a US$500 million deal to sell its Dunkerque smelter in France to British businessman Sanjeev Gupta and received a $345 million binding offer from Norsk Hydro for its Isal smelter in Iceland a month later.
However, both smelters are dependent on alumina, a refined white powder used in the production of aluminium, that is largely supplied by Rusal.
Rusal accounts for around 17% of global aluminium production outside of China, but under the sanctions the company has been effectively barred from the US financial system, making it extremely difficult for the miner to sign deals with Western suppliers.
Nonetheless, in Rio’s production update the firm said it expected both deals to close before the end of June “subject to satisfactory consultations with key stakeholders and completion of other conditions.”
In its quarterly report, the miner said its aluminium production guidance of 3.5 to 3.7 million tonnes for 2018 might have to be adjusted as a result of the US sanctions.
In the fallout of the news, aluminium prices reached seven-year highs of $2,435 on the London Metal Exchange (LME). The LME has suspended deliveries from any of Rusal’s brands to LME-approved warehouses.