US sanctions hit Aughinish owner’s shares
The Government has said it will take “weeks to assess” the impact on the Irish economy of Donald Trump’s trade sanctions on Russia as 650 jobs at Aughinish Alumina in Limerick remain under threat.
Some 450 jobs and 200 agency positions in Limerick are under threat because Aughinish Alumina is owned by Russian firm Rusal, whose shares fell a further 30% yesterday in Hong Kong.
The Limerick site is the largest alumina refinery in Europe but US sanctions have had a severe impact on its owner.
Rusal’s unprecedented rout continued into a second week amid uncertainty over the Russian aluminium producer’s future following US sanctions that have frozen its metal out of Western markets.
The company, controlled by Russian billionaire Oleg Deripaska, slumped almost 30% after losing more than half its value last week.
The US sanctions imposed on April 6 have sent shockwaves through the global metals market as buyers, traders and suppliers sought to cut ties to Rusal, the largest aluminum producer outside China.
International trade expert John Whelan said Aughinish Alumina was at the mercy of the Trump administration.
“The crunch issue for Aughinish Alumina is whether the Trump administration insistence that anyone connected with Rusal cannot trade. It is going to be very tough for it over the next 12 months unless the Trump administration changes its tune.
“I would be very surprised if Aughinish Alumina does not stockpile for some time, and then see what the way forward is. The question is how long it can last sailing through this detrimental period.”
Siptu said it was in daily contact with management.
The union’s Ray Mitchell said: “Local production is continuing as normal but it is a wait-and-see situation. It is very worrying but management has kept us fully informed daily.”
The Department of Business, Enterprise and Innovation said “the Government is very much aware of the risks and is closely engaging” with the refinery.
“The department is keeping the situation under careful review and IDA Ireland is in constant contact with the company. The minister has spoken with the CEO, confirming that the Government will do everything possible to assist the company.
“Ultimately, however, this is a global situation that is extremely fluid and continues to develop,” a spokeswoman said.
She said the Department of Foreign Affairs and Trade has kept in contact with Washington and Brussels over the jobs.
“It will be some time before we are in a position to fully assess the potential impact on the Irish economy of the sanctions announced by the US Department of the Treasury on April 13, which will not become fully effective for a number of weeks,” the spokeswoman added.
Rusal is likely to target sales in alternative markets across the Middle East, Turkey and China to make up for lost exports to Western markets, Morgan Stanley analyst Susan Bates said.
Rusal’s blacklisting has caused aluminum to surge as buyers hunt for other sources of the metal. Prices jumped by a record on the London Metal Exchange last week and are trading near a six-year high.
Additional reporting Bloomberg
