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MARCH 21 — APRIL 3, 2022 / VOL. 108 ISSUE 6 / GLOBAL MINING NEWS · SINCE 1915 / $5.25 / WWW.NORTHERNMINER.COM
After suspending operations, Kinross mulls a ‘full exit’ from Russia
Queensland Alumina is the world’s largest alumina refinery with access to a deep-water port in Queensland, Australia. RIO TINTO
GOLD
| Company has been operating in the country for almost 25 years
K
Rio Tinto cuts ties with Russian businesses over Ukraine war RUSSIA
| Decision will affect company’s aluminum and bauxite operations
BY CECILIA JAMASMIE
R
io Tinto (NYSE: RIO; LSE: RIO; ASX: RIO) has become the first major mining company to announce it was cutting all ties with Russian businesses, joining a massive exodus of Western companies since Moscow’s invasion of Ukraine. The world’s second largest miner, which operates aluminum refineries in Russia’s east together with aluminum producer Rusal International, had said it wanted to keep its relationships with local business “steady.” This, as the company was trying to avoid diesel supply issues at its giant Oyu Tolgoi copper-gold mine next door, in Mongolia. On Mar. 10, however, the company said in an emailed statement that it was “in the process of terminating all commercial relationships it has with any Russian business.” The miner not only is reviewing its 80-20 joint venture with Rusal in Queensland Alumina (QAL), which runs a refinery in the Australian northeast state, but it also plans to stop supplying bauxite and sourc-
ing alumina from Rusal’s Aughinish refinery in Ireland that’s a key supplier to Europe’s aluminum industry. Rio was historically the largest supplier to the Aughnish plant, but the company has been looking to make its supply chain more resilient after the previous U.S. sanctions to Russia, in 2018. It’s not clear what percentage of the plant’s bauxite supply and alumina production it currently ships, but Europe’s automakers have reason to be nervous. Carmakers around the world were already forced to postpone the production of millions of new vehicles in 2021 due to the semiconductor shortage. An aluminum crisis could severely compound that problem. Rio Tinto’s decision comes as more Western businesses turn their backs on Russia over the ongoing invasion of Ukraine. The conflict has already killed thousands and displaced more than two million people, quickly becoming the largest humanitarian crisis in Europe since the Second World War. Sanctions on Russia have largely excluded the energy sector, where
the country is a major player as the world’s third-largest oil producer and number two of natural gas. Oil and gas companies, already feeling the heat from climate activists to invest in renewable energy, were among the first companies to announce their exit from Russia as they realized the potential risks to their reputations by continuing with business as usual. Aluminum prices soared on the London Metal Exchange on the news of Rio’s plans and the U.K. government’s sanctions on Russian billionaire Oleg Deripaska, who has a stake in Rusal’s parent En+ Group International PJSC. The metal jumped as much as 5.8% to US$3,535 per tonne. Deripaska is one of the seven Russian oligarchs targeted by the U.K. in an estimated £15 billion (US$20 billion) sanction hit. Royal Dutch Shell Plc stopped buying oil from Russia and said it would cut links to the country entirely while the United States stepped up its campaign to punish Moscow by banning Russian oil and energy imports. TNM
BY NAIMUL KARIM
inross Gold (TSX: K; NYSE: KGC) may permanently exit Russia after operating in the country for about 25 years, a BMO metals and mining analyst said, as the nation continues to attack Ukraine. On Mar. 2, Kinross announced that it would suspend its Russian operations following Western sanctions. However, in a research note to clients on Mar. 6, BMO analyst Jackie Przybylowski stated that the company is “likely to pursue a full and permanent exit from Russia — including potential sale of its assets in the country.” The analyst, who recently spoke to Kinross management, also expects potential buyers to be limited to “Russian-based public or private miners.” “We are in the process of evaluating next steps to land on the appropriate transition plan,” Louie Diaz, a spokesperson for Kinross Gold, told The Northern Miner by e-mail, when asked if the company had decided to pull out of Russia. The news of Kinross Gold’s possible exit from Russia came days after Moscow spelled out the terms and obligations for foreign companies operating in the country. Russia said firms could either stay, transfer their shares to Russian partners until they return to the market later, or permanently terminate operations, close production and dismiss employees. While a number of Western companies have announced that they were quitting the country, some continue to operate. BMO has removed Kinross Gold’s Russian operations from its estimates, but maintains the company’s ’outperform’ rating. “Even with Russia entirely removed from our model, we still calculate a US$10.50/share oneyear target; which still represents a nearly 100% return to target,” wrote Przybylowski. “We continue to see significant value from Kinross’s flagship Tasiast mine, as well as Dixie (recently acquired with Great Bear Resources).”
Q1 2022 GLOBAL MINING SYMPOSIUM WRAP-UPS / 6
A gold pour at Kinross Gold’s Kupol mine in Russia. KINROSS GOLD
Kinross operates the Kupol underground mine and mill in Russia’s Far Eastern region of See KINROSS / 16 PM40069240