Glencore ditches shares swap plan as Russian sanctions bite

The fallout from US sanctions reverberated through London markets again on Tuesday as trading giant Glencore shelved a major share-swap deal with Russian tycoon Oleg Deripaska’s EN+ business.

Glencore had planned to swap its 8.75% stake in aluminium producer Rusal — another Deripaska company — for about 10% in EN+, giving it more exposure to that firm’s power assets.

Rusal is the world’s second-biggest producer of aluminium and Glencore is also its biggest customer under a multi-year deal to buy Rusal’s metal, worth $2.4 billion (£1.7 billion) last year.

But Glencore said on Tuesday it was abandoning the share swap and Ivan Glasenberg — the trading giant’s billionaire founder — has resigned from Rusal’s board.

Swiss-based Glencore also said it was “evaluating the position” under its contracts with Rusal, although it stressed they were “not material” to the group.

That helped the shares to bounce back 6.6p, or 2%, to 345.7p today after fears the company could be caught up in the fallout from the sanctions hit the stock yesterday.

The dramatic moves announced last week ban US individuals and companies from doing business with 24 Russians — including Deripaska — and 14 companies in total.

Although Glencore is not a US firm, the sanctions massively complicate doing business with the oligarch, laying open the risk of heavy penalties for sanction-busting. Deripaska has called the US move “groundless, ridiculous and absurd”.

Glencore said it was “committed to complying with all applicable sanctions in its business and is taking all necessary measures to mitigate any risks to the business”.

But sources also said Glasenberg could revive the share swap deal if and when sanctions are lifted.