Business World

Thursday 20 September 2018

Rusal sees possible 70pc cut in production

 

Oleg Deripaska. Photo: Andrey Rudakov/Bloomberg
Oleg Deripaska. Photo: Andrey Rudakov/Bloomberg
Donal O'Donovan

Donal O'Donovan

Rusal said output this year may be cut by as much as 70pc in a so-called "negative" or worst-case scenario if US imposed sanctions stay in place after October.

Russian business newspaper 'Kommersant' reported the figure yesterday, citing forecasts contained in the Aughinish Alumina plant owners' proposals filed to the Russian government seeking state aid.

If sanctions remain in place Rusal may cut its 2018 output by between 30pc and 70pc, a scenario that may also lead to staff cuts, and the closure of plants, the report said.

The aluminium giant, whose Aughinish plant in Limerick employs 450 staff, has asked Russia's government for benefits including cheap energy to help ride out the impact of the US move.

The White House has given Rusal clients until late October to wind down business with the company or risk falling foul of US trade rules themselves.

Meanwhile, the company itself has been lobbying hard to avert the sanctions regime, including last week announcing the resignation of its CEO and most of the board.

The Russian aluminium giant also signalled that turmoil could return to metals markets if the sanctions aren't removed by October, saying that banks will likely cut ties with the company, which would "severely impact" metal production and sales.

Some banks have already limited the processing of payments for Rusal, it said last Thursday. It also warned that the sanctions could negatively affect its ability to pay its debt.

Earlier this month, Business Minister Heather Humphreys warned that the situation for Aughinish Alumina remained "critical" during a Washington trip to meet senior White House officials including commerce secretary Wilbur Ross.

Rusal is trying to secure its survival by convincing the US Treasury to roll back its penalties under a proposal that would reduce the influcence of Russian oligarch Oleg Deripaska at the firm.

He holds the Rusal stake through his holding company En+. The survival plan would cut Mr Deripaska's shareholding to below 50pc in En+ and appoint a majority of independent directors.

Rusal is at the centre of the global supply chain and if it remains sanctioned, there's a risk of job losses and shortages at major manufacturing plants around the world.

The US sanctions rocked the aluminium industry in April as buyers scrambled for supplies and many firms cut ties with Rusal, which was producing about 17pc of world output outside of China. (Bloomberg)

Irish Independent

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