Glencore found itself engulfed in a fresh scandal following reports it delivered aluminium produced by an oligarch’s Russian firm to the London Metal Exchange (LME).
The FTSE 100 mining and commodities giant shipped large amounts of aluminium to LME-registered warehouses in South Korea.
The metal was produced by Rusal, a Russian metal conglomerate controlled by Oleg Deripaska, who is one of Vladimir Putin’s closest allies and has been sanctioned by the UK.
Glencore found itself engulfed in a fresh scandal following reports it delivered aluminium produced by an oligarch’s Russian firm to the London Metal Exchange (LME)
The delivery highlights difficulties facing the firm as buyers shun Russian metal after the invasion of Ukraine, according to a Reuters report citing sources with knowledge of the matter.
The shipment is likely to be part of a long-term contract signed in 2020 for Rusal to supply Glencore with 6.9m tons of aluminium until 2024.
While there are currently no restrictions on purchasing Russian metal, many buyers do not want Rusal’s aluminium in their products.
As a result, there are concerns that the unwanted metal has ended up in the LME system, the last-resort market for products and consumers, which could distort prices. Glencore shares dropped 2.1 per cent, or 10.05p, to 473p following the report. The company declined to comment.
The shipments are another headache for Glencore, after it this year admitted in a London court multiple counts of paying bribes to secure preferential access to oil in African countries including Nigeria, Cameroon and the Ivory Coast.
The scandal also saw the firm slapped with an £888m fine by US regulators. Aluminium prices briefly surged last week following news that the US government was considering a ban on Russian imports.
The jump was blamed by traders on a kneejerk reaction to fears that Rusal, which is the biggest producer of the metal outside of China, could be sanctioned.
Meanwhile, the LME launched a discussion paper last month as it considered banning new supplies of Russian metal from being traded on the exchange.
Such a move could send shock waves through global markets due to Russia’s status as a massive producer of major industrial metals such as aluminium, nickel and copper.
