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US to lift sanctions on firms linked to Russian businessman Oleg Deripaska

Deripaska will remain under sanctions, the Treasury said. However, the three Deripaska companies - Rusal, En+ and power firm EuroSibEnergo - have agreed to restructure to reduce Deripaska's stakes

Polina Devitt & Nathan Layne | Reuters 

Oleg Deripaska (Photo: Reuters)
Oleg Deripaska (Photo: Reuters)

The will lift sanctions on the core empire of Russian Oleg Deripaska, including aluminium giant and its parent En+, watering down the toughest penalties imposed since Moscow's 2014 annexation of Crimea.

In April, the imposed sanctions on Deripaska, Rusal, and other in which he owns stakes, citing "malign activities" by Russia, prompting turmoil in global aluminium markets.

After lobbying by European governments, postponed enforcement of the sanctions and started talks with Deripaska's team on removing and from the blacklist if he ceded control of

will remain under sanctions, the Treasury said. However, the three - Rusal, and power firm - have agreed to restructure to reduce Deripaska's stakes.

Rusal shares soared as much as 26.8 per cent on Thursday to their highest since April, the month when the sanctions were announced.

"These have committed to significantly diminish Deripaska's ownership and sever his control," the Treasury said in a statement on Wednesday, adding that the sanctions would be lifted in one month.

The Irish government, which lobbied heavily in for the removal of sanctions to protect 600 jobs at an alumina plant, said the move was "a very welcome return" on those efforts.

The will be free from the threat of sanctions following a 30-day Congressional review period, the Irish foreign ministry said in a statement. The facility churns out a third of Europe's alumina, a material used to make aluminium.

Prices for aluminium fell to $1,911 a tonne after the Treasury statement, their lowest since August last year.

Rusal, the world's second largest after China's Hongqiao, was not immediately available for comment.

said that it would lift its suspension on aluminium produced by Rusal if the U.S. sanctions were removed.

The deal, agreed with the (OFAC) in the United States, will prevent obtaining cash or receiving future dividends from the companies.

His stake in En+ will fall from 70 per cent to 44.95 per cent. The deal also includes Swiss company Glencore, or its subsidiary, swapping shares in Rusal for a direct ownership interest in En+.

declined to comment.

VTB Bank, Russia's second-largest lender, or another assignee approved by OFAC, will take ownership of a block of Deripaska's shares in En+ pledged as collateral for outstanding obligations.

Deripaska will also donate a block of shares to a charitable foundation and assign any voting rights above 35 per cent of En+ shares to a voting trust. Several shareholders with professional or family ties to him will also assign their voting rights to an independent third party.

As part of the agreement, half of En+'s restructured board of directors will be U.S. or UK nationals and Rusal's will step down. En+ will create a board of 12 directors, with eight directors independent of Deripaska, in 30 days.

After the restructuring En+ will no longer be subject to sanctions and will own a 56.88 per cent stake in Rusal, retaining its right to nominate Rusal's chief executive.

Deripaska will retain a direct shareholding interest in Rusal of just 0.01 per cent.

First Published: Thu, December 20 2018. 08:12 IST