Glencore Said to Declare Force Majeure on Some Aluminum Supply

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(Bloomberg) -- Glencore Plc has declared force majeure on some aluminum contracts as a result of the U.S. sanctions against United Co. Rusal, according to people familiar with the matter.

The declaration applies to about 50,000 metric tons of contracts between Glencore and aluminum consumers that specify the metal should be of Russian origin, the people said, asking not to be identified because the matter is confidential.

While that’s a relatively small share of the total amount Glencore sources from Rusal, it highlights how the sanctions have impacted the Swiss commodity firm’s ability to buy metal from the biggest aluminum producer outside of China. Aluminum prices have spiked and Rusal’s shares slumped after the U.S. slapped the harshest penalties yet on companies controlled by billionaire Oleg Deripaska.

Glencore Chief Executive Officer Ivan Glasenberg has resigned from Rusal’s board, but the trader has only said that it’s "still evaluating" its position under its contracts with the Russian company. Glencore is the biggest buyer of Rusal’s metal, thanks to a multi-year arrangement that was worth $2.4 billion in 2017.

A spokesman for Glencore declined to comment on Wednesday.

Read more: Aluminum gets Iran-style crisis as Rusal shut out of market

Force majeure is a legal clause that allows trader to leave contracts unfulfilled because of circumstances beyond their control. While most of Glencore’s aluminum supply contracts allow the trader to supply metal from a variety of origins, in a few cases the contracts specify that the origin should be Russian. It’s those contracts that are subject to the force majeure declaration, the people said.

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