Rio Tinto, however, said on Thursday it was “in the process of terminating all commercial relationships it has with any Russian business,” it said in an emailed statement.
The miner not only is reviewing its 80-20 joint venture with Rusal in Queensland Alumina (QAL), which runs a refinery in the Australian northeast state. It also plans to stop supplying bauxite and sourcing alumina from a Rusal’s Aughinish refinery in Ireland that’s a key supplier to Europe’s aluminum sector.
Rio was, historically the largest supplier to Aughnish plant, but the company has been looking to make its supply chain more resilient after the previous US sanctions to Russia, in 2018. It’s not clear what percentage of the plant’s bauxite supply and alumina production it currently ships, but Europe’s automakers have reasons to be nervous.
Carmakers around the world were already forced to postpone the production of millions of new vehicles in 2021 due to the semiconductor shortage. An aluminum crisis could severely compound that problem.
Pulling out
Thursday’s decision comes as more western businesses turn their backs on Russia over the ongoing invasion of Ukraine. The conflict has already killed thousands and displaced more than two million people, quickly becoming the largest humanitarian crisis in Europe since World War II.
Sanctions on Russia have largely excluded the energy sector, where the country is a major player — world’s third-largest oil producer and number two of natural gas.
Oil and gas companies, already feeling the heat from climate activists to invest in renewable energy, were among the first companies to announces their exit from Russia as they realized the potential risks to their reputations by continuing with business as usual.
Aluminum prices soared on the London Metal Exchange on the news of Rio’s plans and the UK government Thursday sanctions to Russian billionaire Oleg Deripaska, who has a stake in Rusal’s parent En+ Group International PJSC.
The metal, which hit a record high earlier this week, jumped as much as 5.8% to $3,535 per tonne.
Deripaska is one of the seven Russian oligarchs targeted by the UK in estimated £15 billion ($20bn) sanction hit.
Earlier this week, Royal Dutch Shell Plc stopped buying oil from Russia and said it would cut links to the country entirely while the United States stepped up its campaign to punish Moscow by banning Russian oil and energy imports.
