The U.S. Treasury has softened the impact of sanctions on Windalco's parent company UC Rusal by allowing customers to negotiate some new contracts, just as the global aluminum industry was bracing for further turmoil ahead of an October 23 deadline.
The sanctions against Rusal's billionaire owner Oleg Deripaska have frozen the Russian aluminum giant out of annual contract negotiations taking place this month, threatening to disrupt supply chains for parts critical to the automotive and aerospace industries.
In a set of questions and answers published late Friday, the Treasury clarified what was permitted for companies under its exemptions authorizing maintenance of pre-existing contracts with Rusal and several other companies controlled by Mr. Deripaska until October 23.
The Treasury suggested that customers could sign some new contracts with Rusal -- as long as they were consistent with their dealings with the Russian company before the sanctions were imposed in April.
This is as many aluminum consumers have quarterly or annual contracts with Rusal that are expiring.
It also said that buyers could enter into new contracts with Rusal for periods after October 23, as long as they were contingent on further action by the Treasury.
Meanwhile, Bloomberg is reporting that the move by the US Treasury is likely to alleviate many of the concerns of aluminum consumers in the U.S. and Europe -- particularly if it is followed by an extension of the October 23 deadline.
However, Bloomberg says it falls short of lifting sanctions on Rusal entirely, as the aluminum company and its parent E N Plus Group had hoped would happen after it put forward a plan to loosen Mr. Deripaska's influence on the company.
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