Citing U.S. Sanctions, Rio Tinto Invokes Force Majeure Clause in Certain Agreements with Rusal

Queensland Alumina Limited

The sanctions exacted upon Russian aluminium giant Rusal by the United States Treasury Department earlier this month are causing ripples in the global aluminium trade that are disrupting the business of non-Russian firms, including the recent declaration of force majeure by Rio Tinto Group at several arrangements and a partnership the Anglo-American miner has with the firm.

Per Rio Tinto, the company is in the process of making the declaration regarding several relationships it has with Rusal, including its 20-percent ownership of Alumina Limited in Queensland, Australia. Also included in consideration are Rusal’s associated offtake agreements associated with the partnership, as well as offtake contracts for alumina that feed Rio Tinto smelters in France and Iceland, among other locales. Bauxite sales to Rusal’s refinery in Iceland are under consideration as well, according to the firm.

Once the force majeure clause is declared, Rio Tinto is permitted to claim an act beyond either party’s control is responsible for Rio’s inability to comply with the contract’s terms. The company pledged that it would both comply with sanctions placed upon Rusal by the United States government while working to insure that potential disruptions to supplies would be held to a minimum.

Earlier this month the U.S. Treasury Department levied substantial sanctions upon Russian businesses, individuals, and financial institutions the government alleges have ties to Russian President Vladimir Putin. The U.S. government alleges Putin and associates they’ve named as being instrumental in destabilizing governments around the world, including charges that they were involved in an alleged attempt at influencing the outcome of the U.S. presidential election in 2016.

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