Aluminium giant Rusal shares collapse after US sanctions

MOSCOW - Shares in Russian aluminium giant Rusal collapsed on Monday after Washington targeted it with sanctions, putting the metals major at risk of defaulting on part of its debt.

Washington has accused Rusal founder Oleg Deripaska of operating for the Russian government

On the Hong Kong stock market, one of the exchanges where Rusal's stock is listed, it closed 50 percent down at HK$2.34.

The fall wiped more than 3.5 billion euros ($4.3 billion) off the market capitalisation of the company which is headed by billionaire Oleg Deripaska and accounts for some seven percent of the world's aluminium production.

In Moscow, the other exchange where its shares trade, they were down 23 percent in midsession business.

The meltdown came after US President Donald Trump on Friday announced sanctions against Russian oligarchs close to Vladimir Putin following the diplomatic crisis sparked by the poisoning of former spy Sergei Skripal.

Washington has accused Deripaska of operating for the Russian government. Other magnates hit by sanctions include the director of state-owned energy giant Gazprom, Alexei Miller.

Moscow on Monday said it would support Russian companies affected by the sanctions.

"We take great care with our leading companies... In the current situation, as their position becomes more difficult, we will offer them this support," deputy prime minister Arkady Dvorkovich was quoted as saying by news agencies.

Support measures had already been discussed with the companies ahead of the imposition of the new sanctions, he said.

In a statement, Rusal said the sanctions "may result in technical defaults in relation to certain credit obligations of the group".

The latest wave of sanctions also saw Russian stock market indices plummet around 10 percent.

The RTS index, which trades in dollars, fell 11.5 percent, and the MOEX index, which trades in roubles, fell 9.2 percent.

Russia's currency also took a hit, with the dollar and euro rising to 59.37 and 72.85 against the rouble respectively.

- Aluminium price surges -

Meanwhile aluminium prices surged on the London metals stock market (LME).

As of 0930 GMT, the price of aluminium had surged 3.55 percent to $2,114.50, its biggest jump in three years.

"Base metals are making a subdued start to the new week of trading -– with the exception of aluminium," Commerzbank Commodity Research said in a note.

"This is due to sanctions imposed by the US on Russian oligarchs and their companies on Friday," it added.

Matt France, global commodities broker at Marex Spectron, agreed: "No doubt about the outperformer in both price and volume as aluminium surges post the Friday Rusal announcement."

In all, Trump's administration targeted seven oligarchs, 12 companies they own or control, 17 senior Russian officials and a state-owned arms export company.

The sanctions follow weeks of tit-for-tat diplomatic measures between Russia and Western states following the poisoning of a Russia former double agent in Britain last month.

The health of Sergei Skripal, the former Russian spy who was found slumped on a bench with his daughter in the English city of Salisbury, is now improving.

The US said however that Friday's action was taken under a law passed to punish Russia for its alleged bid to interfere in the 2016 US presidential vote, as well as its intervention in conflicts in Syria and Ukraine.