Aluminium prices up after Aussie ban on key exports to Russia
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LONDON • Australia's move to ban alumina exports to Russia has pushed up prices of the so-called everywhere metal.
Aluminium jumped as much as 4.8 per cent on the London Metal Exchange (LME) early yesterday as Rio Tinto Group, operator of the Queensland Alumina joint venture with Russia's aluminium giant United Co Rusal International, said it would comply with all of Canberra's directions.
Australia supplies nearly 20 per cent of Russia's alumina and its exports of aluminium ores, including bauxite, to Russia were prohibited on Sunday. Supplies of the metal - used in everything from cans to airplane parts and window frames - were running low even before war in Europe threw global commodity markets into turmoil. This latest development threatens to add more inflationary pressure to the global economy.
Australian Prime Minister Scott Morrison said that a ship due to dock this week to collect a load of alumina - the key ingredient used in making aluminium - bound for Russia would not deliver its cargo.
Russia is a key supplier of aluminium to markets including Turkey, China and Japan. The metal rose 4.4 per cent to US$3,529 a ton on the LME as at 10.43am in Singapore and is up around 26 per cent this year.
Rio reiterated that it was in the process of terminating its commercial relationships with Russian businesses following the country's invasion of Ukraine. Rusal holds a 20 per cent stake in the Queensland joint venture. Rusal said in a statement it was evaluating the impact of the ban.
While aluminium has not been targeted by global sanctions, Rusal is facing disruption to its supply chains as companies pull back from doing business with Russia.
Australia said the ban would apply to "all relevant shipments" to Russia, although it is unclear whether Rusal will be able to sell alumina from its Queensland mine onto the market, and then buy the feed stock from alternative suppliers.
"The spirit of the sanctions announced would probably suggest that Rusal won't be allowed to profit financially from alumina sales at all, but this is unclear in the current wording," Mr Gavin Wendt, senior resources analyst at consultancy Mine Life, said by e-mail.
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