Report: Glencore not to renew $16 bln contract with RUSAL - All News - PRIME Business News Agency - All News Politics Economy Business Wire Financial Wire Oil Gas Chemical Industry Power Industry Metals Mining Pulp Paper Agro Commodities Transport Automobile Construction Real Estate Telecommunications Engineering Hi-Tech Consumer Goods Retail Calendar Our Features Interviews Opinions Press Releases

Report: Glencore not to renew $16 bln contract with RUSAL

MOSCOW, Mar 16 (PRIME) -- Glencore Plc is willing to walk away from a U.S. $16 billion deal to buy aluminum from Russias No. 1 producer RUSAL, in a move that would distance itself from one of its biggest rivals, Bloomberg reported on Thursday citing CEO Gary Nagle.

Under the companys policy of not doing any new business with Russia, it will not renew a deal with United Co. RUSAL International PJSC when that expires next year, according to Nagle. The trading house introduced that policy a month after Russias operation in Ukraine, but continued to honor existing contracts.

Its the right thing to do, Nagle said in an interview last week. The company has said it will only do new business with Russia if asked to by governments.

The ending of the contract would provide a rare opportunity for Glencores biggest rivals to gain greater sway in the global aluminum market, assuming they are comfortable trading Russian metal that many consumers are refusing to buy. If RUSAL cannot strike a new deal of an equivalent size, it may lead to increased deliveries of Russian aluminum into London Metal Exchange warehouses, which could add to pressure on global prices during a weak period for demand.

Nagles comments come just weeks after Bloomberg reported that one of its biggest trading rivals, Trafigura Group, is in talks about securing its own supply of metal from RUSAL. Trafigura has said it will comply with sanctions. RUSAL is not under Western sanctions.

For Glencore, ending its relationship with the Russian giant would signal a major change as RUSAL's metal has for years underpinned its status as the dominant global aluminum trader. The agreement has been vital for Glencore as unlike many other commodities, such as copper and coal, it does not have its own producing assets.

In 2020, RUSAL announced the $16 billion deal, under which it would sell about one-third of its production to Glencore. The deal would run until 2024, with an option to extend it through 2025, the Russian company said at the time.

Nagle said Glencore does not need to cut new deals with Russia to deliver for its customers or shareholders, with energy driving record trading profits of $6.4 billion last year.

Look how well we did last year with our policy, Nagle said. We had a fabulous year doing that by trading non-Russian material. So we provided a service to the world and we had a great return on our trading business.

Glencore still owns a 10.6% stake in RUSAL's parent company EN+ Group International PJSC. It has previously said there is no realistic way to exit in the current environment.

End

16.03.2023 11:46
 
 
Share |
To report an error select text and press Ctrl+Enter
 
 
Central Bank Official Rate
1W 1M 1Y
USD
EUR 82.5428 +0.1692 22 mar
USD 76.8373 -0.4049 22 mar
Stock Market Indices
1D 1W 1M 1Y
MICEX
micex 2431.23 +1.42 18:50 21 mar
Stock Quotes in RUR
1D 1W 1M 1Y
GAZP
gazp 175.70 0.00 23:50 21 mar
lkoh 4228.50 +2.85 23:50 21 mar
rosn 373.95 -0.91 18:33 21 mar
sber 204.90 +0.57 18:33 21 mar
MICEX Ruble Trading
1D 1W 1M 1Y
USDTD
EURTD 82.6200 +0.3950 14:59 21 mar
USDTD 76.6950 -0.4225 17:44 21 mar