Glencore distances itself from Russian miner Rusal as diplomatic tensions bite

Glencore will not proceed with a share transaction involving Russian mining giant Rusal and its CEO Ivan Glasberg will step down from the board of Rusal in the face of escalating geopolitical tensions.

Rusal is owned by Russian aluminium tycoon Oleg Deripaska, who is known to be an ally of Vladimir Putin. Russia’s president is under escalating pressure from international diplomats in the West following an alleged chemical weapons attack by the Syrian government, another ally of Putin.

The news follows the recent attack on a former Russian spy in the UK and has had a significant knock-on effect in the financial world, with many Russian firms plunged into crisis.

Rusal has been one of the worst-hit companies in the fall out. First, the London Metal Exchange imposed a ‘temporary conditional suspension’ on Rusal metal being delivered into its warehouses, before Glasberg announced his exodus from the board.

Then came Glencore’s decision to cancel a deal to swap its 8.75% stake in Rusal for shares in London-listed En+ Group, another one of Deripaska’s companies.

The Swiss-based commodities trader said it is evaluating its other contracts with Rusal, which includes a multi-year deal to buy metal worth US$2.4 billion in 2017.

“Glencore is still evaluating the position under its contracts with Rusal, but notes that these contracts are not financially material to Glencore,” it said in the statement.

The news reverberated through the global community with Glencore’s stance reiterated by another blue-chip miner, as Rio Tinto said it would also review its ties with Rusal.