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Paulwell concerned about US Sanctions on UC Rusal

Thursday, April 12, 2018

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KINGSTON, Jamaica — Opposition People's National Party (PNP) Spokesman on mining and energy Phillip Paulwell has expressed major concern about the fate of the 600 workers employed at the Ewarton, St Catherine plant of Russian bauxite company, UC Rusal against the background of tough sanctions that have been imposed on the company by the United States.

UC Rusal was among 12 Russian companies and their principals who were sanctioned last Friday by the US Government over what authorities considered Russia's “malign activities around the globe” including military interventions and cyber attacks.

Individuals, companies and governments around the world who do business with Rusal face the risk of being blacklisted by the United States.

Rusal, which owns 93 per cent of the WINDALCO alumina company in Jamaica and operates the Ewarton Works and Kirkvine Alumina Refinery in Manchester, and up to two years ago, owned the Alpart refinery in St Elizabeth, is the world second largest alumina producer.

UC Rusal began operations in Jamaica's bauxite and alumina sector in 2007. Closed in 2009 — the Ewarton operation was reopened in 2010 while Kirkvine remains closed.

“In the current situation Jamaica must brace itself and prepare for the worst,” Paulwell said in a statement today.

He further urged the Jamaican Government to begin discussions with WINDALCO's management and the principals of UC Rusal to devise a survival plan for the company's local operations and safeguard the jobs of 600 Jamaican workers who are directly employed and another 400 who are indirectly employed.

Paulwell said the Government and people of Jamaica must take the situation seriously especially in light of the analysis this week from Fitch that Rusal will be impacted by the sanctions as significantly fewer counterparties will be able and willing to provide procurement, marketing, funding or treasury services to the Russian company.

In 2016 UC Rusal sold its Alpart plant in Nain, St Elizabeth to Chinese industrial group, Jiuquan Iron & Steel (JISCO) under an agreement that was facilitated by the then Government led by the People's National Party. The then Government also made concessions to UC Rusal in a bid to save the jobs of its 600 workers.

It is estimated that Rusal's primary aluminium output last year accounted for about 6 per cent of global production and 14 per cent of production when China's production is not factored in.

Since the imposition of the sanctions, aluminium prices have increased dramatically while the value of shares in UC Rusal has dropped to less than half their pre-sanctions levels sending the company and global equities market into great uncertainty.

Yesterday, credit rating agencies Moody's and Fitch both withdrew their rating of Rusal's debt with Fitch also downgrading its outlook on the company's debt to negative, the Opposition highlighted.

Since the imposition of the sanctions, the company said that the US measures may result in technical defaults in relation to certain of its credit obligations. It is not yet clear what the full impact of any such defaults, as well as the plunging value of its stocks and capitalisation, will have on the company's financial position and operations around the world.

On Tuesday this week the London Metal Exchange announced that it would not allow users to deposit Rusal metal in the exchange from April 17 unless they can prove it does not breach the US sanctions, noted the Opposition.

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