Rusal Making Consistent Payments On Tax Bill But Imposition of Sanctions Could Have Adverse Effects

• Russian aluminum giant—Rusal—has been making steady payments to Jamaica as part of a 2021 agreement to pay back production taxes it owes the government, according to Jamaican Transport and Mining Minister Audley Shaw. 
• Rusal has paid about 45% so far of a $35Mn bauxite production levy that it owes Kingston, and is current and consistent in payment. As part of the 2021 agreement, Rusal paid the government 40% of the debt upfront last fall and then agreed to make 30 monthly payments starting in November 2021. 
• Russia's March invasion of Ukraine, which Russia terms "a special military operation," fueled a range of international sanctions against Moscow and Russian-based companies. 
• Rusal is not under sanctions by Jamaica or the United States, but the company has warned that Western sanctions on Moscow may complicate its international projects. Rusal, the world's largest aluminum producer outside of China, runs a bauxite and alumina production complex in Jamaica via its subsidiary WINDALCO. 
• WINDALCO has an annual production capacity of 502,000 tonnes of alumina and 4Mn tonnes of bauxite, according to its website. 
• Rio Tinto, one of the world's largest aluminum producers, said earlier this month that any sanctions on Rusal would cause "pretty significant disruption" to the global aluminum market. Given that Jamalco and Alpart are currently closed, sanctions on Rusal and by extension Windalco, would further lower the sector’s contribution to foreign exchange and gross domestic product (GDP) growth. This presents a downside risk to Jamaica’s 2022 real GDP growth forecast of 2.5% (IMF).

(Source: Investing.com & NCBCM Research)