There are two reasons why the aluminium metal markets are not making long-term bets on the price of the metal, the alumina required to make it, and the share prices of the metal producers, including Russia’s aluminium monopoly United Company Rusal. The first reason is that the US Treasury Secretary Stephen Mnuchin (lead image, right) has decided to eliminate Rusal’s controlling shareholder, Oleg Deripaska (left), but leave Rusal to carry on its business without him. The second reason is that President Vladimir Putin cannot make up his mind on whether to sacrifice Deripaska for the good of the company and Russia’s metal industry. If Putin refuses Mnuchin’s deal, the US sanctions to put the company out of business, announced on April 6, will be enforced in full. Pricing the consequences now of then is next to impossible.
According to Mnuchin’s statement on Monday, “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. 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.”
On Tuesday Putin responded through his spokesman Dmitry Peskov. “so far it is difficult to say how consistent our American counterparts are in their approach. We still consider these sanctions to be illegal. We believe that in relation to a single company such actions are akin to asset grabbing.”
That is Deripaska himself doing the talking. The only man in Russia who thinks that state recovery of a heavily indebted asset from an oligarch is an asset grab is Deripaska. Putin has yet to disagree.
Mnuchin has given Putin six months until October 23 to make up his mind.
The President has been masking his indecision by spending an unusual amount of time away from the Kremlin, at the official dacha at Novo-Ogaryovo. He’s been there now since April 15. In April a year ago, Putin spent just one day at the dacha. Starting with his choice of a new prime minister and government, due after Putin’s inauguration on May 7, there is much more for the president to decide this year than last year; he wants to do so without as many eavesdroppers as there are in the Kremlin.
This month too, the Kremlin website has been publishing unusually little of Putin’s daily schedule....MUCH MORE