- LME urged to resist calls to ban Russian aluminium
- Ban could hurt smaller metal producers in Africa
- African producers need alternative markets to mitigate impact
The London Metal Exchange (LME) has been urged to resist calls to ban Russian aluminium from its system by five European industry associations. In a joint statement, the associations argued that a ban on Russian aluminium would have a devastating impact on smaller metal users in Europe. The LME decided last year not to ban Russian aluminium from its system as there were no western sanctions on the metal since Moscow invaded Ukraine. However, Norwegian producer Norsk Hydro has urged the LME to reconsider its decision not to ban Russian aluminium from its warehouse network.
The potential ban on Russian aluminium by the LME brings to the fore the impact of geopolitical tensions on the global metal market, with smaller producers in Africa likely to feel the brunt of any decision made by the LME. This is especially true for countries that rely heavily on exports of aluminium to the European market.
As we previously reported, the loss of benchmark status by the LME could have a significant impact on Zimbabwe's already struggling economy. The country depends heavily on exports of chrome and platinum to the LME, and any loss of benchmark status would deal a severe blow to the country's economy.
The ban on Russian aluminium would further compound the challenges faced by smaller metal producers in Africa, as they would have to find alternative markets for their products. Countries such as Guinea, Ghana, and Mozambique, which have been increasing their aluminium production in recent years, risk losing out on the European market if the LME decides to ban Russian aluminium.
According to Muzi Manzi, the CEO of the Aluminium Federation of South Africa (Afsa), South Africa emerged as the top aluminium-producing country in Africa in 2021, having produced approximately 720,000 tonnes of refined aluminium.
According to a report by Mining.com, the ban on Russian aluminium could also lead to an increase in aluminium prices, which would hurt smaller producers in Africa. The report notes that a ban on Russian aluminium could lead to the LME's aluminium prices rising, which would increase the price of aluminium, a benefit for smaller producers in Africa.
The pushback against calls to ban Russian aluminium by the LME highlights the intricate interplay between geopolitical tensions and the global metal market. As African producers brace for the potential impact of a ban on Russian aluminium, it is clear that any decision made by the LME will have far-reaching consequences for the global metal market.
As geopolitical tensions continue to shape the global metal market, it is crucial that African producers to diversify markets for selling their products so as to mitigate the downside impact of any decision made by the LME.
The current geopolitical tensions between Russia and Ukraine have led to calls for a ban on Russian aluminium by the LME. While the LME has resisted such calls in the past, the pressure on the exchange to ban Russian aluminium has increased in recent times.
If the LME decides to ban Russian aluminium, it could lead to a significant shift in the global metal market. The ban would not only impact smaller metal producers in Africa but also lead to an increase in aluminium prices globally. This rise in prices would arise due to the reduction in the supply of aluminium, which would force consumers to pay more for the metal.
Additionally, the ban on Russian aluminium could lead to a shift in the balance of power in the global metal market, with China likely to emerge as the leading producer of aluminium. Overall, the outlook for the aluminium market remains uncertain, as geopolitical tensions continue to shape the global metal market.
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