Stocks of Russian Aluminum Giant Rusal Fall Amid Fears of Over Sanctions

Aluminum ingots made at the Rusal Krasnoyarsk aluminum smelter in Krasnoyarsk, Russia on Jan. 28, 2019. Ilya Naymushin/Reuters

Stocks of Russian aluminum giant Rusal fell on Monday as investors continue to monitor the ongoing tension along the border with Ukraine which could trigger sanctions against Russian entities.

Rusal is one of the world’s largest manufacturers of low-carbon aluminum and accounted for roughly six percent of global aluminum supplies in 2019, estimated to be around 70 million tonnes. It is the world’s largest producer of aluminum outside of China.

But its stocks fell as much as 22 percent in Hong Kong on Monday, their lowest since September, according to Bloomberg.

They are currently trading up at 1.24 percent as of 10.17 a.m (GMT).

Sanctions were placed on Russian businessman Oleg Deripaska and his core empire in 2018 in response to what the U.S. Treasury then called Russia’s “malign activity around the globe.”

Deripaska served on the board of his holding company En+ Group plc, a 48 percent owner of Rusal, but later resigned.

At the time, Treasury Secretary Steven T. Mnuchin said the Russian government “operates for the disproportionate benefit of oligarchs and government elites.”

“The Russian government engages in a range of malign activity around the globe, including continuing to occupy Crimea and instigate violence in eastern Ukraine, supplying the Assad regime with material and weaponry as they bomb their own civilians, attempting to subvert Western democracies, and malicious cyber activities.”

The 2018 sanctions sent the price of aluminum soaring and threatened to disrupt the manufacturing processes of aluminum products across the globe.

Those sanctions on Rusal were lifted by former President Donald Trump’s administration in 2019 with officials saying they were concerned about the effect such sanctions would have on the global aluminum industry.

Deripaska remains under sanctions.

The price of Aluminum rose on Tuesday to its highest intra-day level in more than 13 years and is currently at a near-record high. The metal was up 1.2 percent at $3,319 a ton by 11:50 a.m Shanghai time, 5:50 p.m (GMT) Monday.

Meanwhile, the White House announced sanctions on Ukraine’s Contested Areas on Monday in response to Russian President Vladimir Putin’s announcement that the country will recognize the independent sovereignty of the Donetsk and Luhansk regions in Eastern Ukraine—two regions in Ukraine’s Donbas region held by Russian-backed separatist groups.

Putin also signed a decree that authorized Russian troops to be sent into the area for so-called “peacekeeping operations.”

Washington responded to Putin’s actions with a statement saying it had “anticipated” such a move from Russia and announced immediate sanctions against the two regions of Ukraine through an executive order from President Joe Biden.

“President Biden will soon issue an Executive Order that will prohibit new investment, trade, and financing by U.S. persons to, from, or in the so-called DNR and LNR regions of Ukraine,” White House press secretary Jen Psaki said in the statement.

“This E.O. will also provide authority to impose sanctions on any person determined to operate in those areas of Ukraine. ... We will also soon announce additional measures related to today’s blatant violation of Russia’s international commitments,” the statement reads.