Sanctions against UC Rusal could impact Windalco

With the United States, Britain, and other members of the G7 countries imposing harsh sanctions against Russia for invading Ukraine, its impact on UC Rusal’s Windalco operations in Jamaica could be crippling.

These sanctions, according to the United States and Britain, will also be imposed at powerful Russian oligarchs and their families. This could mean that former Chairman of UC Rusal Oleg Deripaska could see any assets he owns outside of Russia being frozen.

Opposition Spokesman on Mining and Energy Phillip Paulwell said we will have to wait and see, but he is hoping that the sanctions will not have an impact on UC Rusal’s operations in Jamaica, namely Windalco.

“We were coming from a situation three years ago where sanctions that were imposed on the company by the US, in fact, had very crippling effects on the operations of the company,” Paulwell said.

He added that since UC Rusal had gone through a realignment and rearrangement and is now a public company, with new leadership and directorate that has embraced other international personnel in the leadership capacity, and even diversified its market to include Europe and Canada, he thinks this might assist them.

“So it all depends on how the US administration imposes the sanctions. If they are indeed applicable to UC Rusal’s operation here in Jamaica, it would mean that over 600 or so people who are directly employed could be thrown out of a job, and millions and millions of dollars in bauxite levy revenues that would no longer flow at a time when the price of alumina is actually increasing,” Paulwell said, adding that the price of alumina is the highest he has seen it, even when he was in charge of the mining and energy ministry.

TREMENDOUS HARDSHIPS

Paulwell observed that if the sanctions are applicable it would be tremendous hardships for Jamaica; factoring in last year’s fire at Jamalco’s Clarendon plant and Alpart operations still down, there would be no bauxite earnings coming to Jamaica except that from Maranda.

Sanctions were imposed by the US on UC Rusal in April 2018 and lifted in 2019, which created a major disruption in the transport, construction, and packaging industries worldwide.

During that time, the Jamaican Government sought a waiver from the Treasury Department as the administration moved to address any possible fallouts. However, the US lifted the sanctions on UC Rusal in January 2019, so there was no need for the waiver to be granted.

Minister of Tansport and Mining Audley Shaw said it was too early to determine any possible fallout in bauxite revenue if blanket sanctions are imposed on UC Rusal, or even how employees at the company could be affected.

“I will have to wait and see, it’s too early to tell. I will have to study the issue some more,” Shaw told The Gleaner when contacted for comments.

Analysts say the price of aluminium could also be affected if blanket sanctions are imposed on UC Rusal, the world’s third-largest producer of the metal, which is the final product derived from bauxite.

UC Rusal accounts for about six per cent of the global production of alumina, which is estimated to be about 70 million tonnes this year.

The Russian company acquired majority shares in Windalco in 2014 when then Minister of Science, Technology, Energy and Mining Paulwell finalised the sale of Jamaica’s seven per cent shares in the entity at a cost of US$11 million. At the time of the sale, some US$21.15 million was owed to UC Rusal ,so the purchase price was credited against the debt owed.

It was announced that the remainder of the debt would be settled by the Jamaica Bauxite Mining Company. Paulwell disclosed at the time that Jamaica saved some US$3 million from the sale.

ruddy.mathison@gleanerjm.com