LME says looking at expanding eligibility for Rusal metal
LONDON (Reuters) – The London Metal Exchange (LME) is working to see if it can expand access to Rusal’s aluminum, which is under suspension due to U.S. sanctions, but the exchange needs to be cautious, Chief Executive Matthew Chamberlain said on Tuesday.
“We are working very closely with all the parties involved to see if we can expand that eligibility, but I think the market does agree that we should put caution first,” Chamberlain told the International Derivatives Expo in London.
The LME did not want their members to inadvertently end up with metal that would create problems with U.S. authorities, he added during a panel discussion at the conference.
The exchange, the world’s oldest and largest market for industrial metals, suspended Rusal’s aluminum from April 17 after the U.S. Treasury Department imposed sanctions on the Hong Kong-listed company and other Russian firms and oligarchs.
The Treasury has extended its deadline for U.S. consumers to wind down business with United Company Rusal to Oct. 23 from June 5 previously and said it would consider lifting sanctions if Rusal’s major shareholder, Russian tycoon Oleg Deripaska, ceded control of the company.
“There have been a number of exemptions granted by the (U.S.) administration and that could open the way for a more permissive regime on metal being brought in,” Chamberlain said.
Last month, sources told Reuters that Glencore and Rusal had asked the LME to temporarily lift its suspension on Rusal’s aluminum after an extension of the deadline for companies to wind down contracts with Rusal.
The extension detailed in General Licence 14 (GL-14), issued late April, effectively means aluminum produced and sold by Rusal until Oct. 23 is free of U.S. sanctions, so long as the deal to buy was signed before they were imposed on April 6.
Proving that metal is compliant with GL-14, however, would be a difficult, time-consuming and expensive process involving things such as checking the original contract and making sure the amounts involved are what was agreed, experts said.
The LME is owned by Hong Kong Exchanges and Clearing Ltd..
(By Eric Onstad; Editing by Jason Neely and Louise Heavens)