Glencore Limited Purchases from Rusal, Records Show

Glencore Limited Purchases from Rusal, Records Show

Commodities conglomerate Glencore purchased only a fraction of the 6.9 million metric tons of aluminium available under its contract with Russian giant Rusal from 2020-2022, regulatory records reveal. The deal, poised for a possible extension to 2025, has recently come under the spotlight due to Moscow’s Ukraine incursion, urging Glencore to reconsider its commitments to Russian aluminium.

Although Glencore previously announced it wouldn’t embark on fresh agreements for Russian materials, the company is bound to honor pre-existing ones. Terminating the contract prematurely could potentially redirect considerable Rusal supply to competitors, including major trader Trafigura. Rusal’s disclosure indicates Glencore’s acquisitions worth US$2.87 billion between 2020 and 2022. Reuters, using the London Metal Exchange average yearly price, estimated this to be approximately 1.1 million metric tons, though exact figures might vary due to regional premiums.

Speculation persists concerning the contract’s future, particularly if Glencore will capitalize on an option extending its term to end-2025. Glencore’s purchase rights, per contract, entitle it to 6.9 million metric tons, yet acquisitions through 2022 have been noticeably limited.

Numerous entities have abstained from Russian goods following the Ukraine conflict, though no sanctions have been enforced on Rusal or Russian aluminium. Glencore, deeply entwined with Rusal since a 2007 merger, also holds a 10.55% interest in EN+ Group, Rusal’s parent company. Escaping this stake seems improbable, and experts speculate that Glencore hopes for the war in Ukraine to end, restoring normalcy in business operations.

CEO Gary Nagle hinted that the contract, based on volume and terms, could potentially conclude in late 2024. However, the agreement permits Rusal to shift up to 10% of yearly tonnage to 2025, which might push the contract’s end to 2025.