Sanctions-hit tycoon Deripaska asks Kremlin to buy some of his aluminium -source
ST PETERSBURG, Russia/MOSCOW, May 24 (Reuters) – Russian aluminium producer Rusal has asked the Russian government to purchase some of its output, a government source said on Thursday, in an effort to alleviate the pain inflicted by U.S. sanctions.
Rusal, the world's second largest aluminium producer, also announced that its chief executive and seven board members had quit – part of a strategy it hopes will persuade Washington to lift the sanctions that have crippled its supply chain, cut it off from Western debt markets and scared off some of its customers.
The United States announced sanctions on Rusal and its main shareholder Oleg Deripaska on April 6, preventing customers with U.S. exposure from continuing to buy Rusal's metal and sending aluminium prices to their highest in almost seven years amid fears of a supply shortage.
Washington said the sanctions, which struck at allies of Russian President Vladimir Putin, were designed to punish Moscow for its alleged meddling in the 2016 U.S. election – something Russia denies – and other "malign activity".
The government source, who spoke on condition of anonymity, said Deripaska had asked the government to start buying aluminium from Rusal and had also applied for loans for Rusal from Russian lender Promsvyazbank.
Deripaska had asked the government to start buying aluminium from Rusal and had also applied for loans for Rusal from Russian lender Promsvyazbank.
The bank is under the control of the Russian central bank and has been earmarked to provide finance to sanctioned Russian firms.
Rusal did not immediately reply to a Reuters request for comment.
Deripaska also sought state support for automaker GAZ , which is part of his business empire and has also been affected by the sanctions, the source said.
Russian authorities have approved the loan for GAZ, but no decision has yet been made on the loan request for Rusal, according to the source.
Changing of guard
The U.S. Treasury Department said last month it would consider lifting sanctions on Rusal if Deripaska ceded control of the company.
Sources close to the firm have told Reuters it plans to appoint an independent board that will in turn install a new management team to try to secure sanctions relief.
In a statement on Thursday, Rusal said it had been "in continuous discussions with various authorities" to try to get sanctions relief and was announcing a raft of board changes, as well as the resignation of its CEO.
Alexandra Bouriko, who took over as CEO in March, had resigned with effect from May 23, it said, and would be replaced by Evgeny Nikitin as acting CEO until the board appointed a new permanent CEO. It also announced the departures of the seven board members.
There was no mention in the company's statement about Deripaska ceding his control over the company, a step the U.S. government is likely to insist on before it considers lifting the sanctions.
The U.S. Treasury Department has given U.S. customers of the company until Oct. 23 to wind down business with Rusal.
In a separate statement to the Hong Kong stock exchange, Rusal said it was of the opinion that international financial institutions were likely to stop dealing with the group unless the U.S. sanctions were lifted or the company was granted a new licence by the U.S. Office of Foreign Assets Control (OFAC).
"Opportunities to provide financing to the group on commercially reasonable terms will be very limited," it said. "The company may not be able to maintain its operating performance at a certain level required to service and repay its indebtedness and that may result in current creditors accelerating repayment."
Rusal resumed shipping aluminium to some customers last week following an extension of the deadline for companies to wind down contracts under the U.S. sanctions, sources told Reuters. Rusal declined to comment.
The company's controlling shareholder, En+, said on May 18 that Deripaska had resigned from its board of directors.
(Additional reporting by Donny Kwok in HONG KONG; Writing by Andrew Osborn and Christian Lowe; Editing by Edmund Blair and Susan Fenton)