Rio Tinto is to declare force majeure on certain customer contracts following U.S. imposed sanctions on Rio partner Rusal, a Russian aluminum producer. In a statement, Rio announced “As a result of the imposition of these sanctions, Rio Tinto is in the process of declaring force majeure on certain contracts and is working with its customers to minimise any disruption in supplies.”
The mining company also stated it will fully comply with U.S. sanctions. The sanctions were imposed last week against Russian entities and individuals, which includes Rusal, to punish Moscow for its alleged interference in the 2016 U.S. election and other “malign activity.” Rio Tinto joins Glencore in declaring force majeure on a deal to buy 50,000 tonnes of aluminium from Rusal.
Rio is reviewing Rusal’s 20 percent stake in the Queensland Alumina refinery, Rusal’s supply and offtake arrangements, bauxite sales to Rusal’s refinery in Ireland and offtake contracts for alumina. Rio owns the other 80 percent of the Queensland refinery, which produces 3.95 million tonnes of alumina per year. Rio produced 3.6 million tonnes of aluminum in 2017. There is speculation that Rio may need to shut the Yarwun alumina refinery at Gladstone in central Queensland because of the Rusal link, if Rio can’t vary the terms of those sanctions as it applies to the Gladstone plant. The sanctions on Rusal, which produces 7 percent of global supply, pushed aluminum prices in London to their biggest weekly gain on record. Rio is due to release its March quarter production and sales report on Wednesday.