US to lift Rusal sanctions in January

The US Treasury Department said today it will lift sanctions against Russian aluminium producer Rusal on 18 January.

The Treasury intends to terminate the sanctions imposed on Rusal, its parent company En+ and Russian power producer EuroSibEnergy in 30 days, the Office of Foreign Assets Control (OFAC) told Congress today. The decision follows the companies' agreement to conduct corporate governance changes that will significantly reduce the control of these sanctioned entities by Oleg Deripaska, a Russian businessman placed on the US sanctions list on 6 April.

Treasury targeted Deripaska under a US law passed last year that mandated sanctions against business magnates deemed to be in Russian president Vladimir Putin's circle, to protest Moscow's alleged interference in the 2016 US election.

The OFAC decision at that time had strongly affected markets in Europe and globally — Rusal accounts for around 7pc of global aluminium production. The US subsequently delayed the implementation of sanctions on Deripaska's companies to allow them to reduce his ownership below the 50pc threshold that would have triggered sanctions on the companies he controls.

Deripaska's stake in En+ will fall to 44.95pc from 70pc under the terms of its agreement with OFAC. Russian VTB bank or another bank approved by OFAC will take ownership of a bloc of shares Deripaska pledged as collateral for unrelated obligations.

Deripaska is also expected to reduce his stake further through a transaction involving Swiss commodities trading firm Glencore, which will swap shares in Rusal for a direct ownership stake in En+. And Deripaska's voting rights in En+ will be limited to 35pc.

At least half of the board members of En+ will have to be US or UK nationals, and its current chairman, Matthias Warnig, will have to step down.

Deripaska remains on the US sanctions list, so any dividends he receives from his companies and proceeds from sales of his stake will have to be placed in escrow accounts, OFAC said.

Rusal's aluminium output rose by 0.6pc last year to 3.7mn t, while its alumina production increased by 3.3pc to 7.8mn t over the same period. Production has been largely unaffected this year, despite sanctions. But Rusal's sales of primary aluminium P1020 and products were severely affected since buyers delayed purchasing decisions until after the sanctions issue had been resolved.