Silver as an investment

Aluminum Markets Face Reprieve As Treasury De-Escalates Rusal Sanctions

Following unintended consequential chaos in the aluminum markets following Washington’s sanctions on Russian oligarchs, The Wall Street Journal reports the Trump administration on Tuesday amended its Russia sanctions program, paving the way for aluminum giant Rusal to escape from the blacklist.

In what could be argued is the first de-escalation with Russia, the U.S. Treasury is extending until June 6 the deadline for Russian billionaire Oleg Deripaska to divest from En+ and related entities.

As WSJ notes, facing delisting from the London Stock Exchange this week, Rusal’s owner, EN+ Group, sought the 11th-hour amnesty from the U.S. Treasury late last week by pledging that Deripaska – its majority shareholder and a primary target of the U.S. sanctions – would reduce his holdings and relinquish his board seat.

Of course – what this really does is force the oligarch into a firesale of his holdings, with the entire world knowing he needs to sell.

Bloomberg reports that last week, Deripaska agreed in principle to cut his stake in En+ to less than 50 percent and plans to resign from the company. The action clears a path for other investors to unwind their dealings with Deripaska and reduces disruption to the aluminum market, according to a person familiar with talks with the Treasury Department.

Treasury Secretary Steven Mnuchin said in a Bloomberg TV interview on Monday that Washington’s goal has not been to put Rusal out of business.

The U.S. said Tuesday it aims “to address difficulties blocked U.S. persons are having accessing funds needed for authorized wind-down and maintenance activities.”

This could well grant the metals market a reprieve from a supply scare that rocked markets over the last month…

Aluminum prices have whipsawed over the past several weeks as the initial sanctions in early April risked cutting off a major supplier from markets, but have started to fall back a little amid signals of de-escalation from Treasury.