By Pratima Desai and Eric Onstad
LONDON (Reuters) -Europe’s aluminium industry group has considered actively lobbying for European Union sanctions on Russian aluminium but would oppose specifically targeting the country’s largest producer Rusal, according to a document sent to members.
The head of trade group European Aluminium said the group prepared the internal memorandum for planning purposes and that they had no information about any imminent European Union sanctions. The European Commission declined to comment.
The document, seen by Reuters, said members of European Aluminium had discussed the possibility of “actively calling for EU sanctions on Russian aluminium.”
The document, dated July 2023, refers to “the possible imposition of restrictive measures on Russian aluminium in the framework of the EU Common Foreign Security Policy”.
But while substituting other supply for Russian ingots would be feasible in Europe, the wide global spread of Rusal’s operations makes sanctions on the company more difficult, the memorandum said.
“Due to its strategic importance on the global aluminium market, European Aluminium recommends avoiding that EU sanctions would target Rusal as a company,” the association said.
Rusal, which did not reply to a request for comment, produced 4 million metric tons of primary aluminium last year, about 6% of global supply.
The document pointed out that Rusal owns Ireland’s Aughinish, the EU’s largest refinery of raw material alumina, as well as the Kubal smelter in Sweden.
The benchmark aluminium price on the London Metal Exchange was up 0.2% at $2,282.50 a metric ton in afternoon trading, having declined by 4% so far this year.
SANCTIONS LIMITED SO FAR
The EU has so far imposed only very limited sanctions on aluminium products from Russia over its Ukraine invasion. It has restricted imports of a limited number of specific aluminium products from Russia – aluminium plates, sheets or strip with thickness exceeding 0.2 mm.
Its latest sanctions package was adopted in June and active discussion on another package are not expected in the near term.
In February the United States announced plans to impose a 200% tariff on aluminium and derivatives produced in Russia while in May, Britain published plans to ban imports of Russian aluminium along with diamonds, copper and nickel.
“Our members asked us to consider the issue and this is purely an internal exercise,” Director General Paul Voss told Reuters. “There is no suggestion at all as far as I’m aware that the Commission is planning any new sanctions at this stage.”
The document says the EU’s dependence on Russian aluminium has fallen since 2018, when the United States slapped sweeping sanctions on Rusal, which froze the bulk of the company’s exports as well as paralysing global supply chains.
Last year, Russian aluminium ingots made up 12% of EU imports, down from 25% in 2018, it said.
Due to the widespread disruption of the aluminium industry by the 2018 U.S. sanctions, Washington scrapped them in 2019.
If the EU imposed sanctions on Russia, it also must make sure that supply does not evade the measures through third countries, the document said.
“Specific attention should be given to Turkey and China which are seen by several analysts as current and future alternative destinations for Russian metal.”
The industry group said any sanctions would need a “reasonable transition period” so alternative sources could be found, especially for certain products, such as alloyed ingots.
(Reporting by Pratima Desai, Eric Onstad and Polina Devitt; additional reporting by Gabriela Baczynska in Brussels; editing by Jason Neely and Conor Humphries)
