Russian tycoon Deripaska asks Kremlin for help after falling under US sanctions
Russian tycoon Oleg Deripaska has appealed to the Russian government, requesting it to buy out aluminum from Rusal, which the company cannot sell being cut off from the world's largest trading floors.
Interfax reports that Deripaska hopes that the Russian government could buy back the company’s product for the State Reserve. Intrerfax’s sources said that "the government is thinking [about it]."
According to the source, this is not the only support measure that Deripaska, who became rich during the chaos surrounding the aluminum industry in the 1990s, has requested.
Deripaska has asked for a loan through Promsvyazbank for RusAl and GAZ Group, which, due to the sanctions, will likely have to stop the production this summer, a government source told TASS.
Judging by the statistics, Raiffeisenbank analysts note, Rusal is drowning in aluminum reserves it cannot sell. According to Rosstat (Russian Federal State Statistics Service), Russian aluminum production jumped by 31% in April. However, international statistics do not confirm this: according to IAI, volumes in Central and Eastern Europe fell by 3%, the analysts from Raiffeisenbank note.
The physical volumes of aluminum production cannot be technically increased on such a scale in one month, says Kirill Tremasov, director of the analytical department of Loko-Invest.
"Most likely, this is primary aluminum that was not in demand for the production of alloys; many customers who made specific alloys [using this aluminum] may have refused to purchase because of sanctions," he explains.
In other words, Rusal continues to produce primary aluminum but cannot ship the final product.
Such assistance would cost the Russian government about $1 billion per year, says George Vashchenko, Chief of Operations for stock market transactions with Freedom Finance. Deripaska had previously asked the government to buy aluminum for the state reserve four years ago, when the price of the metal was lower than the production cost, he recalls.
In May, Rusal appealed to the London Metal Exchange to resume trading in the company's products, but was refused, despite the fact that the US Treasury extended the deadline for closing deals with Rusal until October 23.