25 Sep 2018 16:29

Foreign cos wary of buying Rusal technologies due to sanctions - source

YEKATERINBURG. Sept 25 (Interfax) - Russian aluminum giant UC Rusal held talks with several foreign companies in the middle of September on providing them with technologies, but was unable to reach agreement with them due their concerns about U.S. sanctions, a source with knowledge of the outcome of the talks told Interfax.

The talks took place during the Nonferrous Metals & Minerals 2018 exhibition in Krasnoyarsk from September 10-14, attended by some 700 representatives of companies from nearly 20 countries, some of whom were interested in Rusal's latest know-how.

"Specialists from other countries, including China, Norway and Canada, approached the stand. They asked about Rusal's technologies for producing aluminum, cast-house alloys and scandium oxide, which are being produced on a trial basis at the Uralsky Aluminum Works. But they were unable to reach agreement on specific meetings for further discussion let alone contracts. The visitors said they were interested, but unable to do business with Rusal while the sanctions are in place," the source said.

The source said technology cooperation with Rusal could have been lucrative for foreign companies, but that with the sanctions in place, economic logic was now "less of a concern to foreign clients than the fear of secondary sanctions being imposed by the U.S. Treasury Department."

"They realize that by acquiring technologies from the company they could be making money and cutting costs, and improving their environmental footprint, but that due to the sanctions, they must refrain from partnership with Rusal, even to their own detriment," the source said.

Rusal's press office declined to comment on the information about talks with foreign companies.

Rusal has been subject to U.S. sanctions for six months already. A source close to Rusal said earlier that, if sanctions against the company are not lifted soon, products intended for export will again start going to warehouses as of October 1. Warehouses still hold some aluminum that was not sold in April, when sanctions were first imposed.

Prior to the sanctions, Rusal exported about 80% of its products. Government officials have long talked about the need to expand the domestic aluminum market, but this is a long-term process and, in the event of serious difficulties with sales on foreign markets, purchases into the state reserve remain the only option for temporarily tackling the problem without dramatically cutting production.

Rusal sales of primary aluminum and alloys declined 12% to 1.748 million tonnes in H1 2018 and were down 22% year-on-year in Q2. Sales of value-added product, which are mainly exported, fell to 869,000 tonnes from 941,000 tonnes in 2017 due to the imposition of sanctions by the U.S. Treasury Department's Office of Foreign Assets Control (OFAC), Rusal has said.