The U.S. Extends Deadline for Sanctions on Russian Aluminum Company

On Monday, the U.S. government granted major customers of Russia's largest aluminum producer more time to comply with sanctions related to the company. As a result, aluminum prices plummeted sharply, while shares of the company, United Rusal, increased. According to Reuters, following the announcement from the U.S. Treasury Department, aluminum prices in the London metals market fell by more than 8%. This extension allows Rusal, whose customers and traders are avoiding purchasing its products due to sanctions, more time to sell its aluminum reserves. Shares of Rusal, the world's largest aluminum producer, rose by 13% in the Moscow stock market after this news, despite having fallen by about 8% in the Hong Kong stock market just hours earlier. Rusal and its main shareholder, wealthy Russian oligarch Oleg Deripaska, were sanctioned earlier due to what the U.S. government describes as 'harmful actions' by Russians. The U.S. Treasury has stated that some sanctions may be lifted if Mr. Deripaska's control over the company ends. U.S. Treasury Secretary Steven Mnuchin said, 'Rusal has felt the impact of U.S. sanctions due to its connection with Oleg Deripaska. However, the goal of U.S. sanctions is not to target the hardworking individuals who work for this company and its subsidiaries.' The Treasury has extended the deadline for American companies and citizens to conduct transactions with this Russian company from June 5 to October 23. It has also announced that non-American companies trading with Rusal or its subsidiaries will not be sanctioned. Oleg Deripaska is one of seven Russian oligarchs targeted as part of broader U.S. actions to punish 'harmful actions' by Russians in America. Rusal declined to comment on the recent decision by the U.S. Treasury. The Russian government and Oleg Deripaska also did not respond to Reuters' inquiries on this matter. European leaders have attempted to pressure the Trump administration to ease sanctions against Russia, including recent actions against aluminum producers in Russia. The presidents of France and Russia are scheduled to visit the U.S. this week. Following the news of a potential delay in the implementation of these sanctions, sources from the French government stated that initial reactions have been positive. The extension of the deadline for the start of sanctions allows Rusal to sell its stored products. Even if these sanctions are ultimately not lifted, buyers will now have more time to find other producers. Last week, due to global market fears of facing an aluminum shortage impacted by U.S. sanctions, aluminum prices reached their highest level since mid-2011, and this month, they are still 16% above the usual price of this product. Workers at Rusal's aluminum plants in several Russian cities are also worried about losing their jobs.