United States moves ahead on dismantling sanctions on aluminium giant Rusal

The US treasury department notified Congress on December 19 of its intent to lift sanctions on the energy company EN+, the aluminium producer Rusal and the energy company EuroSibEnergo. The latter two are partly owned by EN+. The companies were added to the US sanctions list last April due to direct or indirect ownership by Russian businessman Oleg Deripaska, who is connected to the Kremlin. The sanctions on Deripaska will not be lifted.

According to the US treasury, the targeted companies have made sufficient efforts to rearrange their ownership structures to warrant delisting. Deripaska already holds practically no direct stake in Rusal and his stake in EN+ declines from 70 % to 45 %. The stake is to be transferred to VTB, a Russian state-owned bank, and to Deripaska’s charitable organisation. Deripaska’s stake in EN+ will be further diluted by a swap of Rusal shares for EN+ shares by the mining and commodities multinational Glencore.

The US House of Representatives, now controlled by the Democrats, has until January 17 to block the sanction-lifting. However, scrapping the decision would also require Senate approval, a body with a Republican majority. Democratic politicians have provided most of criticism of the decision to selectively lift sanctions as Deripaska would still be left in control of a large stake in the companies and the connection of these firms to the Kremlin would hardly be reduced. Democrats have demanded postponing the deadline from January 17 but have yet to announce whether they will try to reverse the decision.

There have been pressures to lift the sanctions, because Rusal accounts for over 5 % of primary aluminium production globally. The April sanctions initially caused world prices for aluminium to spike by 20 %, although they have come down since. This may be due to the partial postponement of the sanctions.

The US treasury department also added more Russian individuals and Russian firms to the sanctions list on December 19. The newcomers are accused of a range of transgressions, including interfering with US elections, poisoning the Skripals and others in the UK and assisting Deripaska.