May 2, 2018 / 6:57 AM / in 3 months

U.S. sanctions extension may ease Rusal restrictions: Rio Tinto CEO

MELBOURNE (Reuters) - An amendment by the U.S. Treasury to its Russian sanctions program may greatly reduce the restrictions on aluminum giant Rusal, Rio Tinto Chief Executive Jean Sebastien Jacques said on Wednesday.

FILE PHOTO - Rio Tinto CEO Jean-Sebastien Jacques poses for a photograph prior to the company releasing its 2017 full year results, in London, Britain, February 7, 2018. REUTERS/Peter Nicholls

Washington last month imposed sanctions on Russian billionaire Oleg Deripaska and several companies in which he is a large shareholder, including En+ Group Plc and aluminum giant United Company Rusal Plc, in response to what the United States called Russia’s “malign activities.”

Late on Tuesday, the U.S. Treasury gave investors an additional month to divest or transfer their holdings in sanctions targets, including Rusal and En+.

“We are still digesting (the announcement) ... which means that potentially the restriction on Rusal may have been reduced in a dramatic way,” Jacques said in Melbourne after the miner’s annual general meeting.

“We are reviewing the situation, but today we can see a way forward. We’ll come back to the market as and when the situation is clear,” he told a media briefing.

The United States has said previously it would consider lifting sanctions if Deripaska, who holds a 48 percent stake in Rusal through his 65 percent holding in En+, ceded control of the company.

Deripaska agreed last week to cut his shareholdings in En+ to less than 50 percent and resign from the board.

Under the latest U.S. Treasury amendment, the deadline to divest financial holdings in sanctions targets would be extended to June 6 from May 7.

The sanctions have upended the global aluminum industry. Rio Tinto, which buys from and sells to Rusal and jointly owns an alumina refinery in Australia, said last month it would declare force majeure on some contracts, a legal term that allows a firm not to deliver on contacts due to circumstances outside its control.

“It does just underline the unintended consequences of trade sanctions,” Rio Tinto Chairman Simon Thompson said at the briefing.

“This was directed at Oleg Deripaska .. In fact it has had major repercussions across the whole market because the aluminum industry is integrated by international trade.”

Reporting by Melanie Burton; editing by Richard Pullin

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