Rio caught in Russia-US crossfire

RIO Tinto has warned it may need to cut its aluminium production forecast because of US sanctions targeting Russia.

The miner has become embroiled in the increasingly testy relationship between the US and Russia that resulted in the former targeting key Russian companies and business figures earlier this month.

Russian aluminium producer Rusal was among those singled out as the US took action against Moscow for interfering in the 2016 US presidential election.

Rusal owns 20 per cent of Rio’s aluminium refinery in Queensland and is also a major buyer of the Anglo-Australian miner’s alumina and bauxite.

Rio last week said it was in the process of invoking a clause in its contract that would allow it to stop supplying its Russian partner with alumina and bauxite.

Most of Rio’s aluminium is made in Canada and sold in the US, meaning its partnership with Rusal could complicate sales in its biggest market.

Rio had previously advised investors it expected to produce 3.5 million to 3.7 million tonnes of aluminium this year. Yesterday, it said that projection would be adjusted following the sale of two smelters in France and Iceland this year.

It also warned it may need to make further cuts due to the US sanctions.

Aluminium is Rio’s secondbiggest earner, accounting for about 17 per cent of its underlying earnings last year.