You are here: Home » Reuters » News
Business Standard

Exclusive: Rusal triggers Iran-style defence after U.S. sanctions - source

Reuters  |  LONDON 

By and Pratima Desai

LONDON (Reuters) - Russian aluminium giant <0486.HK> has activated a contingency plan asking customers to pay in euros instead of dollars to try to skirt round U.S. sanctions, a source close to the matter said.

The plan follows the example of Iran, which a few years ago opted to use gold, and the Japanese yen to pay for goods that would typically be priced in dollars.

"has triggered an Iran-like defence plan," a top at one of Rusal's shareholders said, declining to name the banks that would process the transactions.

declined to comment.

Last week, the imposed sanctions on seven Russian oligarchs and 12 companies they own or control, saying they were profiting from a Russian state engaged in "malign activities" around the world.

This included and his Hong Kong-listed company <0486.HK>, which CRU analysts say accounts for 14 percent of aluminium supplies outside of top producer

The sanctions explicitly bar U.S. entities from doing with the named individuals and companies, making it difficult for them to conduct in dollars.

"There are a number of banks in that can deal with payment in euros. Some of Rusal's customers have begun switching payments, but it is taking time," the top said.

Shares in , the world's second-biggest aluminium producer, were 1 percent higher in after losing more than 34 percent of their value in two trading days.

A source with a major U.S. which used to deal with said all payments were currently going to an escrow account, complicating the completion of payments between buyers and sellers.

Financial sanctions imposed on in 2012 to punish the country over its nuclear programme played havoc with its ability to import key food items, forcing to find alternative ways to pay for its needs.

Banks involved in metals are likely to be extremely cautious after French BNP Paribas in 2015 paid $8.9 billion to settle claims it violated U.S. sanctions against Sudan, and

European banks are technically not banned from processing Iranian transactions in euros, but they too have been wary, worried they could be hit with so-called "secondary sanctions" by the for aiding a blacklisted entity.

resorted to buying grains using gold and as payment and used the Japanese yen to pay for a large volume of wheat.

The (LME) said on Tuesday it would temporarily suspend Rusal's aluminium from its list of approved brands from April 17 after some members raised concerns about settling LME contracts with sanctioned companies.

(Reporting by Pratima Desai; Editing by and Mark Potter)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, April 11 2018. 01:04 IST
RECOMMENDED FOR YOU