According to Rusal’s annual report, commodities group Glencore purchased $1.06 billion worth of aluminum from the Russian producer in 2023. This purchase was made as part of a long-term contract between the two companies.
Rusal is the world’s largest aluminum producer outside of China, accounting for 5.5% of global output. However, some Western clients have been avoiding new deals for Russian-made metals since Moscow’s invasion of Ukraine in 2022.
Glencore has faced pressure to stop buying Russian metals, and its contract with Rusal is set to expire this year unless it is extended. Glencore declined to comment on whether the contract would be extended into 2025, but the company stated in 2022 that it would meet existing obligations while agreeing to no new contracts for Russian material.
Based on the average London Metal Exchange cash price of $2,307 per ton in 2023, Glencore’s purchases from Rusal last year would amount to around 459,000 metric tons. However, the actual price would also include regional premiums that depend on the destination of the shipments.
Rusal’s total aluminum sales in 2023 were 4.2 million tons.
Dealing in Russian metals has become increasingly complicated for traders, as Western countries continue to expand sanctions on Moscow. In the latest development, the U.S. and UK have prohibited the delivery of aluminum, copper, and nickel made in Russia after April 13 to LME-registered warehouses.
While the existing Russian metal stock in the warehouses was initially excluded from these measures, the new rules have created a trading opportunity for Glencore and other trading houses to potentially profit from the rule changes. However, the LME has since clarified the rules to prevent the gaming of the new regulations for Russian aluminum.