In August, UC Rusal of Oleg Deripaska obtained the consent of ING Bank to change the settlement currency from dollar to euro on a loan raised until April 6, 2018, when US sanctions were imposed on the aluminum producer. This follows from a report for the third quarter of Rusal Bratsk, the company's largest plant.
ING is a loan agent under a pre-export financing agreement of May 24, 2017 for up to $ 2 billion. “ING Bank agrees to make the necessary changes (...) in the trade documents concluded before April 6, 2018, in order to ensure the ability to make or receive payments on them in euros, ”the report says.
The representative of the aluminum company declined to comment, the ING Bank did not respond to the request of RBC.
The US Treasury Department on April 6 included UC Rusal, along with other major assets of Deripaska, in the sanctions list. Those involved in this list are cut off from the American financial system: if they interact with them, all legal entities and individuals are at risk of being subject to secondary sanctions. However, for UC Rusal - the world's largest aluminum producer in the world - these sanctions have not yet come into full force. Back in April, the US Treasury expressed its readiness to lift sanctions from the company if Deripaska gives up control of it. Chairman of the Board of Directors of En + (through which Deripaska owns UC Rusal), Lord Gregory Barker, proposed to the Office of Foreign Assets Control of the US Treasury (OFAC) a plan for changing the group's shareholder structure and management reform. It provides for the transfer of the assets of a businessman and his family to a management structure approved by OFAC.
While the parties have not agreed, but the US Treasury Department continues to provide UC Rusal with the delay in the entry of sanctions into force. The last time the agency extended the deadline for the completion of transactions and operations of American companies with Deripaska’s structures until January 7.
On Tuesday evening, November 13, Deputy Prime Minister Dmitry Kozak, in an interview with Russia 24 TV channel, stated that Deripaska had not yet received a response from the US authorities to the proposals on asset restructuring. “There was no - neither positive nor negative - answer to all of his proposals for the restructuring of companies,” he said.
Preparation for sanctions
As reported by Reuters, most of the payments and credits En + managed to transfer from dollars to euros and pounds before April 2018, when US sanctions were imposed. According to a source from RBC, who participated in the preparation of Deripaska’s structures for these sanctions, it was much easier to transfer En + payments to other currencies than UC Rusal’s trading and procurement transactions worldwide.
As RBC wrote earlier, the term of UC Rusal's annual contracts for the supply of aluminum to foreign consumers ended on October 1. The conclusion of new agreements usually takes place in September-November, Fitch analysts reported. Despite repeated postponements of the entry into force of sanctions, UC Rusal cannot enter into long-term contracts, said RBC Director of the Corporate Ratings Group at ACRA Maxim Khudalov: counterparties do not need risks and uncertainty. But, according to him, the company will be able to continue to sell the metal on the spot market, maintaining the level of production and not creating a shortage of metal in the world.
“I think that the US Treasury Department will postpone the timing of the imposition of sanctions against UC Rusal, but to cancel them is much more difficult than imposing. According to the rules of the sanction, the congress should be lifted at the request of the US president, and such a request is completely drawn to “assist Russia” and could become a pretext for the impeachment of Donald Trump, ”the expert said earlier.
In August, one of the enterprises of UC Rusal, which specialized in the supply of aluminum in the United States, the Nadvoitsky Aluminum Plant, stopped work due to the loss of customers. In September, the UC Rusal foil-rolling plant in Armenia (“Armenal”) began to reduce capacity and transfer employees to part-time jobs due to falling demand for products against the background of US sanctions.