Russian aluminum giant Rusal says U.S. sanctions are forcing it to shut down one of its smaller plants that catered to U.S. customers and find new jobs for hundreds of the plant's workers.
The company said on August 6 that operations at the Nadvoitsky aluminum smelter in Russia's Karelia region cannot continue because the plant stands to lose U.S. customers under the sanctions as well as a steady supply of raw materials.
Rusal is the second largest aluminum company in the world and a major employer of an estimated 61,000 Russian miners and manufacturing workers.
Under the sanctions, which were imposed on April 6 and designed to punish Moscow for alleged meddling in the 2016 U.S. election, U.S. customers are required to wind down business with Rusal by October 23.
Production at the Nadvoitsky plant was completely oriented toward the U.S. market, Rusal said, and it has had to stockpile all the aluminum products it has produced at the plant since April, generating what it said were "significant losses."
"Rusal was forced in August to begin closing down electrolysis pots at Nadvoitsky," Rusal told Reuters.
State figures show the plant has a workforce of 343 people and is the primary source of employment in the town of Nadvoitsy, which lies 485 kilometers north of St. Petersburg.
"Employees of the plant will not suffer" from the shutdown, Rusal maintained, as workers will either be offered jobs at a different company, be assisted with finding work in other parts of the country, or be provided with payouts agreed by both sides.
"The company...will provide each person with the opportunity to remain employed, primarily as part of the project to reprofile Nadvoitsky and create profitable businesses using the plant's infrastructure," Rusal said.
Rusal was one os several companies in Russian aluminum tycoon Oleg Deripaska's empire that was targeted with sanctions because of the billionaire's ties to the Kremlin.
U.S. Treasury Secretary Steve Mnuchin, after announcing the sanctions, offered to waive them for Rusal if it severed its ties to Deripaska, saying the billionaire was the main target of the sanctions and it was not Washington's intent to cause the layoff of hundreds or thousands of Russian aluminum workers.
Rusal and other Deripaska companies took up the Treasury's offer and applied for exemptions, with Deripaska announcing that he would relinquish control of Rusal and resign from the boards of its parent company, En+.
However, despite several extensions of time granted by the Treasury, none of the measures the companies said they would take to distance themselves from Deripaska has as yet been carried out, and no waivers have been granted.
The New York Times reported that the company had hired a high-powered Washington lobbying firm to try to negotiate an easing of Treasury's terms for getting a sanctions waiver.
Meanwhile, in a report to Wall Street investors on August 6, a Rusal representative said the sanctions had had a "tangible impact on the company's export activities, logistics, and operations in the financial market," and "the uncertainty generated by the U.S. sanctions remains a major risk for Rusal."