April 13, 2018 / 3:17 PM / 8 months ago

Rio to call force majeure on some Rusal-linked contracts

FILE PHOTO: The Rio Tinto mining company's logo is photographed at their annual general meeting in Sydney, Australia, May 4, 2017. REUTERS/Jason Reed/File Photo

LONDON (Reuters) - Rio Tinto said it will declare force majeure on certain customer contracts after the U.S. imposed sanctions on its partner Russian aluminum producer Rusal.

The mining group said on Friday it was working with its customers to minimize disruptions to supply and would fully comply with U.S. sanctions.

Rio also said it was reviewing Rusal’s 20 percent stake in the Queensland Alumina refinery, Rusal’s supply and offtake arrangements, bauxite sales to Rusal’s refinery in Ireland and offtake contracts for alumina.

The United States imposed sanctions last week against Russian entities and individuals, including Rusal, to punish Moscow for its alleged meddling in the 2016 U.S. election and other “malign activity”.

Rio owns the other 80 percent of the Queensland refinery, which produces 3.95 million tonnes of alumina per year. Rio produced 3.6 million tonnes of aluminum in 2017.

Force majeure is a clause in a contract that allows both parties not to fulfill the contract terms when they are affected by an extraordinary event or circumstance beyond their control.

The sanctions on Rusal, which produces 7 percent of global supply, pushed aluminum prices in London to their biggest weekly gain on record.

(This story has been corrected to delete reference in second paragraph about all of Rio’s aluminium production coming from a JV with Rusal in Australia)

Reporting by Zandi Shabalala. Editing by Jane Merriman and Alexander Smith

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