Published: Tue, April 10, 2018
Markets | By Terence Owen

Stocks of Rusal collapse 50% after USA sanctions

Stocks of Rusal collapse 50% after USA sanctions

Russian aluminum giant Rusal reported a possible technical default on certain types of debt obligations due to the introduction of new United States sanctions.

Rusal produces nearly 6 per cent of the world's aluminium.

The caricature shows that the decline in the shares of the company UC Rusal.

The US Treasury sanctioned Russian individuals, officials, state-owned firms and companies, including Rusal, the world's second largest maker of aluminum, under provisions of a law Congress passed past year to retaliate against Moscow for meddling in the 2016 USA presidential election, last Friday.

Under the sanctions, Americans are generally prohibited from doing business with the companies, and people of other nationalities could face sanctions themselves if they facilitate transactions for the firms. "We have a whole list of possible measures that are being studied", Tass cited Zakharova as saying.

The sanctions were weighing on broader markets in Russian Federation. The latest sanctions affected companies such as Sberbank, whose shares fell 17% in Moscow.

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"Rusal will probably have to be bailed out by Russian state banks", wrote analysts at TS Lombard.

The sanctions also hit Norilsk Nickel, whose shares were down 16 percent. The commodity giant is one of Rusal's top shareholders and the biggest buyer of its metal, while Glasenberg sits on the board. Glencore shares fell 3.4% to a four-month low.

The fall represented a loss of more than 3.5 billion euros ($4.3 billion) for the company, which is headed by billionaire Oleg Deripaska, and which accounts for some seven percent of the world's aluminium production.

Washington has accused Deripaska of operating for the Russian government. He features in Robert Mueller's investigation into Russian meddling in the United States election because of his ties to Paul Manafort, Donald Trump's former campaign chairman. It said further evaluations were being carried out to assess the impact of the sanctions.

The Kremlin spokesman, Dmitry Peskov, said Moscow was watching events on the markets closely but that an assessment of the impact of the sanctions would take time.

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