Commodities Crumble After US Says It May Ease Rusal Sanctions

That didn't take long: just one day after we reported that "in a surprise twist", most of Europe was pushing the Trump administration to ease Russian sanctions due to growing concerns of stagflation and outright recession should supply chains remain crippled, on Monday morning the US appears to have caved, and in a notice the Treasury announced it would provide sanctions relief to the world's largest aluminum maker outside of China, United Co. Rusal, if Oleg Deripaska relinquishes control and sells his controlling stake, while extended the deadline for companies to wind down dealings with Russian aluminum producer.

In the notice, the Treasury said that for Rusal, "the path for the United States to provide sanctions relief is through divestment and relinquishment of control of Rusal by Oleg Deripaska."

“Rusal has felt the impact of U.S. sanctions because of its entanglement with Oleg Deripaska, but the U.S. government is not targeting the hardworking people who depend on Rusal and its subsidiaries,” the statement added.

In a separate statement, Treasury Secretary Steven Mnuchin said that the U.S. said it was considering a petition from Rusal to remove it from the sanctions list.

The Treasury also issued a new general license, extending the period during which companies may continue to trade with Rusal to October 23; the notice is below:

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today issued General License 14 in the Ukraine-/Russia-related sanctions program.

General License 14 authorizes U.S. persons to engage in specified transactions related to winding down or maintaining business with United Company RUSAL PLC (RUSAL) and its subsidiaries until October 23, 2018.  In accordance with preexisting OFAC guidance, OFAC will not impose secondary sanctions on non-U.S. persons for engaging in the same activity involving RUSAL or its subsidiaries that General License 14 authorizes U.S. persons to engage in.

RUSAL has felt the impact of U.S. sanctions because of its entanglement with Oleg Deripaska, but the U.S. government is not targeting the hardworking people who depend on RUSAL and its subsidiaries,” said Treasury Secretary Steven T. Mnuchin. “RUSAL has approached us to petition for delisting.  Given the impact on our partners and allies, we are issuing a general license extending the maintenance and wind-down period while we consider RUSAL’s petition.” 

In addition to General License 14, today OFAC also published several FAQs regarding to the general license’s authorizations and limitations, and issued an amended General License 12A.
On April 6, 2018, OFAC designated RUSAL for being owned or controlled by, directly or indirectly, EN+ Group.  In that same action, OFAC designated EN+ Group for being owned or controlled by, directly or indirectly, Oleg Deripaska and other entities he owns or controls.  RUSAL is based in the Bailiwick of Jersey and is one of the world’s largest aluminum producers.

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