Business Irish

Saturday 24 August 2019

Sanction-hit Rusal to pay €28m if Aughinish plant forced to close

Limerick Alumina Refining Ltd (LARL) is a wholly-owned subsidiary of United Company Rusal, controlled by Russian oligarch Oleg Deripaska
Limerick Alumina Refining Ltd (LARL) is a wholly-owned subsidiary of United Company Rusal, controlled by Russian oligarch Oleg Deripaska
Dearbhail McDonald

Dearbhail McDonald

The US-sanctioned Russian parent company of Aughinish Alumina, one of the major industrial employers in the mid west, has guaranteed a €28m "worst case scenario" financial package to the Environmental Protection Agency (EPA) in the event of its closure.

The Irish Government is engaged in intense negotiations with the United States to ensure that Aughinish is kept open amid fears for 450 people directly employed there and hundreds more who are employed indirectly by the huge facility on the Shannon Estuary.

There have been doubts over the future of Aughinish since last April when sanctions were imposed on Russian billionaire Oleg Deripaska.

Mr Deripaska is the majority shareholder in EN+ Group which owns 48pc of Rusal, Aughinish's owner.

There are fears the US sanctions, which targeted 24 Russian oligarchs and politicians - and which were aimed at punishing Russia for alleged interference in the 2016 US presidential election - could see production slashed by up to 70pc at Aughinish or lead to its closure.

The strategic facility supplies some 30pc of all aluminium in Europe.

Ireland had sought a minimum 12-month extension to the sanctions to help secure a deal.

However, late last week the US Treasury's Office of Foreign Assets Control (OFAC) granted a three-week extension, until November 12, for investors to divest holdings of debt, equity and other assets in Rusal and EN+ raising hopes that Aughinish's parent may ultimately be de-listed. The absence of a financial bond to cover the cost of cleaning up the Aughinish plant was questioned four years by TDs and senators ago at a joint Oireachtas committee.

However the EPA has confirmed that in recent years a €28m financial provision package - a combination of a secured fund and a parent company guarantee - was provided to it by Rusal.

The EPA says that, taken together, the secured fund and guarantee address the liabilities to deal with the closure of the facility. "The bank account is in the name of Aughinish Alumina Ltd with a first ranking fixed charge in favour of the EPA," said a spokesperson for the EPA which confirmed that United Company Rusal PLC provided the guarantee.

"The EPA's licences require operators to ensure they have approved plans in place for the orderly closure, decommissioning and aftercare of their facilities.

"In effect the Closure Remediation and Aftercare Management Plan (CRAMP) drafted by the operator is a costed outline design as to how they will dismantle and decommission and in some cases manage aftercare of a facility."

The EPA said that "in a worst-case scenario," when an operator ceases to exist and the state has to intervene, the CRAMP, funded by the secured Financial Provision, would allow the state to undertake the closure in an orderly manner.

The EPA said the financial robustness of the parent company is assessed as part of any parental guarantee and such guarantees are not accepted unless they are deemed appropriate by the agency's independent financial advisers.

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