US lifts sanctions on Aughinish Alumina parent company

The Government has welcomed a US Treasury announcement that it intends to lift sanctions against Rusal, which is the parent company of the Aughinish Alumina plant in Limerick.

The move is a positive one for the estimated 600 staff directly employed at the aluminium plant. The sanctions are expected to be lifted following a 30-day congressional review period.

“Since sanctions targeting the business interests of certain Russian individuals were announced in April, the Government has engaged extensively with the US administration to outline the risks these measures posed to Aughinish Alumina and to work towards a solution which safeguarded the company’s future and the livelihoods of those employed there,” said Tánaiste Simon Coveney.

“Today’s announcement is therefore a very welcome return on the intensive efforts made to protect Aughinish Alumina and the many jobs that are sustained and supported by the firm.”

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Protection

Workers’ representatives also welcomed the US Treasury’s announcement. Ray Mitchell, an industrial organiser with Siptu, said the move was “good news for the protection of jobs” in Limerick.

“The fate of the workers at the Aughinish Alumina plant were always uppermost in our minds,” he said. “Hopefully the factory can keep going now at full production.”

He said he expects that a trade union organising committee would meet with management at the plant on Thursday to discuss any impact from the lifting of the sanctions.

The sanction had been imposed on Rusal and two other companies, EN+ and EuroSibEnergo, for their links with Russian billionaire Oleg Deripaska. The US Treasury Department said the companies had implemented enough corporate governance changes to distance themselves from Mr Deripaska, who was the target of the sanctions.

"Treasury sanctioned these companies because of their ownership and control by sanctioned Russian oligarch Oleg Deripaska, not for the conduct of the companies themselves," Steven Mnuchin, US Treasury secretary, said in a statement.

“These companies have committed to significantly diminish Deripaska’s ownership and sever his control,” Mr Mnuchin said. “The companies will be subject to ongoing compliance and will face severe consequences if they fail to comply. [the treasury’s Office of Foreign Assets Control] maintains the ability under the terms of the agreement to have unprecedented levels of transparency into operations.”

Aughinish Alumina supports about 2,000 jobs overall in the Republic. The company’s future had been in some doubt due to the impact of the sanctions on its business.

Under the agreement with the US Treasury Department, the three groups have agreed to reduce Mr Deripaska’s ownership stake, overhaul their boards of directors and commit to “full transparency with Treasury by undertaking extensive, ongoing auditing, certification and reporting requirements”.

Sanctions

The Treasury Department said Ofac would “continue to aggressively enforce its sanctions on Deripaska” and closely monitor the companies’ compliance with the promised corporate governance changes. Mr Deripaska would remain a “specially designated national”, it added.

Mr Deripaska, EN+, Rusal and EuroSibEnergo have been under US sanctions since last April. Those sanctions, which overall targeted 24 Russian businessmen and political officials along with any related entities, were designed to punish Moscow for alleged interference in the 2016 US presidential election.

The reprieve comes after months of intensive negotiations with Ofac by EN+ and Rusal, and between Mr Deripaska and the two companies’ chairmen, to secure a deal that would both meet regulatory requirements and be palatable to the Russian oligarch. Sources said that Mr Deripaska has explored various strategies, including shifting a portion of his shareholdings to a Russian state-owned bank or a blind trust, rather than selling the shares immediately.

Mr Deripaska has already ripped up shareholder agreements that gave him control over the two companies, sacked executives close to him and installed new independent directors.

(Additional reporting: The Financial Times Limited 2018)