Rio declares force majeure in wake of US sanctions against Russia

Imace: CC

Following recent sanctions by the United States on certain Russian oligarchs and companies, Rio Tinto is set to invoke a clause to potentially pull out of a contract as a bauxite supplier for aluminium major RUSAL’s Aughinish refinery in Limerick, Ireland.

The sanctions are being implemented by the US in ostensible protest of Russian president Vladimir Putin’s support of Syrian president Bashar al-Assad. Rusal is owned by Russian tycoon Oleg Deripaska, also the owner of several machinery, finance and energy sector businesses.

Rio released a statement via the Australian Securities Exchange (ASX) this morning announcing that it is “reviewing arrangements it has with impacted entities”.

Along with its Irish interest with Rio, Rusal, the world’s second-largest aluminium producer (after China’s Hongqiao), holds a 20 per cent interest in the Queensland Alumina refinery, as well as offtake alumina contracts for some of Rio’s smelters in Europe, particularly in France and Iceland.

The Aughinish refinery is the largest alumina refinery in Europe and employs over 450 people.

Rio Tinto said in the statement that it was “fully committed to complying with the US sanctions” and would declare “force majeure”as a result:

“As a result of the imposition of these sanctions, Rio Tinto is in the process of declaring force majeure on certain contracts and is working with its customers to minimise any disruption in supplies.”

Aluminium prices hit a six-year high on Friday to just under $3000/t on the London Metal Exchange (LME).