vested
Glencore and Rusal ask LME to lift suspension on Rusal's aluminumby Pratima Desai, Clara Denina, Dasha Afanasieva
LONDON (Reuters) - Glencore and United Company Rusal have asked the London Metal Exchange to temporarily lift its suspension on Rusal’s aluminum, after an extension of the deadline for companies to wind down contracts with the Russian firm under U.S. sanctions, sources said.
The LME suspended Rusal’s aluminum from April 17 after the U.S. Treasury Department imposed sanctions on the Hong Kong-listed company and other Russian firms and oligarchs.
The Treasury has extended its deadline for U.S. consumers to wind down business with Rusal to Oct. 23 from June 5 previously and said it would consider lifting sanctions if Rusal’s major shareholder, Russian tycoon Oleg Deripaska, ceded control of the company. [nL1N1S018U]
The extension detailed in General Licence 14 (GL-14), issued late April, effectively means
aluminum [b]produced and sold by Rusal until Oct. 23 is free of U.S. sanctions,[/b] so long as the deal to buy was
signed before they were imposed on April 6.This is the case with Swiss-based mining giant Glencore, which has a seven-year deal to buy 14.5 million tonnes of aluminum from Rusal between 2012 to 2018.
“Glencore is a big player in the aluminum market, they want to be able to put Rusal’s metal on LME warrant until October,” one source said.
After the extension was announced the LME sent out a notice saying it would analyze the implications. [nL8N1S2335]
Sources say making sure that Rusal’s aluminum delivered to LME approved warehouses was produced and sold before April 6 is a simple process as the owner just needs to supply a certificate of analysis and confirmation.
But proving that metal is compliant with GL-14 would be a difficult, time-consuming and expensive process involving things such as checking the original contract and making sure the amounts involved are what was agreed.
A direct connection between the contract and the specific metal would also need to be proved and there needs to be a way to confirm the original agreement wasn’t changed after the sanctions were imposed.
Source: Reuters
https://www.reuters.com/article/us-glen ... SKBN1IC1I4