Sanctions on Rusal Leading to Salary Shortages for Windalco Workers

Sanctions on Rusal Leading to Salary Shortages for Windalco Workers

The sanctions levied against U.C. Rusal by the United States Treasury Department last month are starting to hit home with the rank-and-file workers at the company’s several plants around the world.

According to sources who spoke with Bloomberg, Rusal has been unable to pay full compensation to certain workers outside of Russia partially due to an inability to resume the full slate of scheduled aluminium deliveries. The sources said that European plants have yet to feel such disruptions, but Rusal’s Jamaican operations have been forced to pay half salaries to some of its workforce.

“We’re hoping Mr. Trump and Mr. Putin can sit down and find some common ground on this issue,” opined the president of Union of Clerical, Administrative and Supervisory Employees (UCASE) Vincent Morrison. “Here in Jamaica, we’re caught in the middle.”

U.S. Treasury Secretary Steven Mnuchin went on record previously saying that the government’s aim was not to see Rusal shuttered, but the sanctions enacted have been responsible for significant problems for Rusal operations outside of Russia. In addition, third parties with business relationships with Rusal have suddenly found themselves in dire straits as well, sent scrambling to quickly fill a sudden gap in deliveries.

While the chaos in the market has proven significant, experts fear that such problems may well be just the tip of the iceberg if the sanctions are allowed to pass into full effect in October.

In nearby Sweden, union representatives say that operations are running smoothly, but a few difficulties have arisen with banks, leading to delays in payment to suppliers.

Farther away in Jamaica, the situation is more serious. Due to more serious problems with transferring funds, the Windalco operations have been forced to pay some workers a fraction of their salary. Though Rusal expects to make up the loss later this month and is actively working with the local union to find other solutions, the prospect of longer-term problems due to sanctions is a specter overshadowing the process.

“I think people have just forgotten that the sanctions were announced because there doesn’t seem to be urgency,” lamented Morrison. He continued by pointing out that sanctions have led to “tremendous uncertainty in Jamaica. These are vital jobs.”

In addition to short-term problems, there are signs that longer-term changes may have already occurred as well. Two of Rusal’s biggest Japanese customers are currently searching for alternative suppliers, while Novelis revealed that it is bumping up its use of recycled aluminium to make up for supply interruptions.

Compounding problems is the rise in aluminium premiums due to shortages in supply. Per Metal Bulletin, European premiums ballooned from US$350 per metric ton in the days just prior to sanctions to US$510 per metric ton. There’s little doubt that continuing supply problems will do naught but send those prices even higher.

Experts say the troubles experienced by Rusal highlight serious structural problems in the aluminium industry, and those problems must be addressed by policymakers around the world.

“They have to solve the situation somehow, because they’re looking at a lose-lose-lose situation,” warned the CEO of Hammerer Aluminium Industries Holding Gmbh Rob Van Gils.