International commodity traders have stopped buying from Russian company UC Rusal, in the wake of sanctions by the United States.
The move is likely to affect Jamaica’s bauxite and alumina sector, because UC Rusal , owns and operates Windalco alumina company, the entity responsible for the Ewarton plant in St. Catherine.
According to reports in Bloomberg, the international trading houses have stopped buying aluminium from United Company Rusal, as US sanctions on the Russian company sent shock waves through the market for the metal used in everything from airplanes to beer cans.
Trading houses have reportedly been advised by their banks and lawyers that they can’t continue trading with the Russian company.
In turn, Rusal – the biggest aluminium supplier outside China – has reportedly asked trading houses to immediately withhold all payments to the company.
Bloomberg’s Greg White reported that the Russian government has indicated that steps will be taken to protect entities targeted by the US sanctions, including U C Rrusal.
Irie FM News sought a reaction from the Opposition regarding this latest development on the sanctions by the United States on Russian companies, including bauxite aluminium giant, U C Rusal.
Spokesman on Mining Phillip Paulwell told Irie FM News that he is concerned about the fate of about one thousand workers employed at the Ewarton plant against the background of the sanctions.
Mr. Paulwell says in the current situation, Jamaica must brace itself and prepare for the worst.
He notes that since the imposition of the sanctions, aluminium prices have increased dramatically, while the value of shares in U C Rusal has dropped to less than half their pre-sanctions levels, sending the company and global equities market into great uncertainty.
Since the imposition of the sanctions, the company said that the US measures may result in technical defaults in relation to certain of its credit obligations.
The Opposition Spokesman says it is not yet clear what the full impact of any such defaults, as well as the plunging value of its stocks and capitalisation, will be on the company’s financial position and operations around the world.
He says Jamaica must take the situation seriously especially in light of the analysis this week from Fitch that Rusal will be impacted by the sanctions, as significantly fewer counter parties will be able, and willing, to provide procurement, marketing, funding or treasury services to the Russian company.
He is urging the government to begin discussions with Windalco’s management and the principals of U C Rusal to devise a survival plan for the company’s local operations and safeguard the jobs of workers.