Sanctions on Rusal May Pose Serious Problems for American Plants in Russia

Sanctions on Rusal May Pose Serious Problems for American Plants in Russia

Fallout continues from the United States government’s sanctions upon U.C. Rusal, as American firms Ball Corporation and Arconic Inc. may be forced to sell their Russian assets should a workaround not be found.

The two American companies, who control one quarter of Russia’s aluminium usage, operate four plants between them in the country, and the duo purchases over 200 thousand metric tons of the metal from Rusal every year according to sources who spoke to Bloomberg on condition of anonymity.

According to an analyst who spoke to Bloomberg, the plants may be forced to convert to imported aluminium should the United States Treasury Department decline to issue an exemption for the firms. Failing that, the American companies may be forced to sell the plants, likely at a substantial loss to both firms. Due to the sanctions, finding a ready buyer may be difficult, which is likely to incur the companies even greater losses.

Further complicating the issue is the Russian legislature, which is considering a legal response to the sactions. According to State Duma spokesman Vyacheslav Volodin, the government is mulling making criminal any obedience to the late sanctions placed upon Russian businesses and individuals by the United States government.

At present, Arconic operates an aerospace and automotive products plant in Samara, which is Russia’s sixth-largest city. The plant employs 3,000 people and drew revenue of US$500 million from Russian buyers last year. The plant was owned by Rusal until sold to Arconic’s predecessor fourteen years ago.

Bell operates a trio of aluminium can plants in Russia, a portion of which were purchased by Rexam from Rusal eleven years ago. Rexal was purchased by Ball shortly after.