WASHINGTON – The US Treasury Department lifted sanctions on three firms tied to Russian tycoon Oleg Deripaska, including United Co. Rusal, a move that will provide relief to the global aluminum market. The metal fell in London.
Deripaska, an ally of Russian leader Vladimir Putin, will remain under US sanctions, and his property will remain blocked. But the Treasury Department is removing restrictions on Rusal, EN+ Group and EuroSibEnergo.
“The companies have also agreed to unprecedented transparency for Treasury into their operations by undertaking extensive, ongoing auditing, certification, and reporting requirements. All sanctions on Deripaska continue in force,” the Treasury’s Office of Foreign Assets Control said in a release.
In a separate statement, EN+ announced the addition of seven independent directors to its board, as well as a securities swap with Ivan Glasenberg’s Glencore. Under the deal, the London-listed commodity trader will get global depositary receipts representing 10.55% of EN+’s enlarged share capital in exchange for its existing 8.75% stake in Rusal.
Rusal said that Chairman Jean-Pierre Thomas had resigned as a director after an “imperative request” from OFAC as a condition for lifting the sanctions. His departure was effective from January 26. The company’s shares rose as much as 5% in Hong Kong on Monday, gaining for an eighth straight day.
At EN+, new independent directors include Christopher Burnham, chairman of Cambridge Global Capital, who was a member of the Trump transition team at the State Department.
Congressional Democrats has tried to block the action, citing concerns about the Trump administration’s motives at a time when Special Counsel Robert Mueller is continuing his investigation of Russia interference in the 2016 presidential election and possible connections to the Trump campaign.
“This represents just one more step in undermining the sanctions law, which President Trump has obstructed at every opportunity, while Russian aggression remains unabated,” said Representative Lloyd Doggett, a Texas Democrat.
Sanctions relief for Rusal, the world’s second-largest aluminum producer, will remove a source of uncertainty from the market. Aluminum surged in April when Treasury announced the financial restrictions, but tumbled in recent months on speculation that the sanctions would be lifted. The price fell on Monday, losing as much as 1.4% on the London Metal Exchange.
Deripaska’s agreement with Treasury, negotiated over eight months, includes cutting his direct and indirect share ownership below 50 percent in each company, overhauling the boards of En+ and Rusal, and “committing to full transparency with Treasury by undertaking extensive, ongoing auditing, certification, and reporting requirements,” the department said in December when announcing its plans to remove the sanctions.
Rusal is among the largest companies the US has ever put on its sanctions designation list. The value of the aluminum producer has declined by more than half from $9.2-billion more than eight months ago.