Mnuchin Gives Rusal Sanctions Escape Route After Market Tumult

The Trump administration has given United Co. Rusal a clear yet tricky way for getting out of the U.S. sanctions list: sever ties with its largest stake-holder, Oleg Deripaska, Bloomberg informed.

Treasury Secretary Steven Mnuchin made the statement early Monday after weeks of complaints from investors worried about a move that had blasted metals markets and put the company’s future in jeopardy.

Yet actually getting back into the good graces of the American financial system could be complicated. Deripaska controls a 48 percent stake in Rusal and that may not be easy to sell because he himself has been sanctioned.

Aluminum consumers and banks are wary of doing business with any individual or company on a sanctions list, analysts say.

Mnuchin extended the deadline by five months for companies to wind down dealings with Rusal, and said it would provide relief if Deripaska relinquished control. But even if Deripaska divests his stake, uncertainties remain about the company’s future, said John Mothersole, a metals analyst at IHS in Washington.

“The risks in dealing with Russian aluminum are so great now that people will keep them at arm’s length until there’s more clarity,” Mothersole said in an interview. “I see boards all across the globe, whether it’s a light-vehicle manufacturer, aerospace producer or rolling mill, saying they don’t want to take the headache.”

Mnuchin’s statement offered an unusually explicit formula for a sanctioned entity to free itself of the U.S. restrictions, signaling the administration’s desire to target President Vladimir Putin’s allies without inflicting broader economic harm.

“This is good policy — if the U.S. can make sure that Deripaska doesn’t benefit from the wind-down and the assets are out from under the perceived thumb of Putin, it’s a big win for the sanctions,” said Brian O’Toole, a senior fellow at the Atlantic Council who previously worked in Treasury’s sanctions unit.

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