In a move that stunned the aluminium world, Glencore plc announced that it is not renewing its US$16 billion contract with Russian aluminium titan UC Rusal.
In an interview with Bloomberg, Glencore’s CEO Gary Nagle said it will complete the contract it has with Rusal, but, under its new policy of shunning business from Russia, the aluminium smelter can expect no renewal from the commodities trader upon its expiration at the end of next year.
“It’s the right thing to do,” Nagle noted in an interview last week. He went on to say that his company would do no further business with Russian firms unless ordered to by a government.
The lapse of the contract in 2025 throws the door wide open for Glencore’s rivals, as Russian aluminium is not currently under sanction. However, if no deal or deals of sufficient size are struck with another buyer, the London Metal Exchange may see a surge of Rusal’s primary aluminium shipments.
Nagle hedged slightly however, noting that a change in the situation in Ukraine may lead to a change in the company’s stance on Russian products.
“You can’t foresee every single situation that involves a change of policies.”
“You review your policy based on what goes on in the world,” Nagle continued. “If there’s peace in Ukraine tomorrow, and the world is comfortable with people doing business with Russia again, yes, we’ll be involved.”
Nagle went on to assure the market that the firm would still provide shareholder value, noting its record trading profits of US$6.4 billion in 2022.
“Look how well we did last year with our policy. We had a fabulous year doing that by trading non-Russian material. So we provided a service to the world and we had a great return on our trading business.”
News of the non-renewal of Glencore’s contract comes just shortly after its bitter rival Trafigura Group was reportedly in talks with Rusal to purchase its own supply of Russian aluminium.