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Australia is banning all Australian exports of alumina and aluminum ores to Russia. But how could this impact Rio Tinto Limited (ASX: RIO)?
The Rio Tinto share price is up more than 3% in early trading today, currently swapping hands at $113.80. For comparison, the S&P/ASX 200 Index (ASX: XJO) is up around 1% at the time of writing.
Let's take a look at the aluminum export ban to Russia and the impact it may have on Rio?
Aluminum ban
The federal government has banned Australian exports of alumina and aluminum ores, including bauxite, to Russia. Australia had previously been supplying close to 20% of Russia's alumina needs.
A ship was due to dock in Australia this week to load alumina bound for Russia. The Australian reported the alumina would have come from Queensland Alumina, based in Gladstone. Rio Tinto has a 80% stake in Queensland Alumina, while Russian company Rusal has a 20% stake.
Commenting on the shipment, Prime Minister Scott Morrison said:
Late last week it came to our attention that there was a ship that was due to dock in Australia this week to collect a load of alumina bound for Russia. That boat is not going to Russia with our alumina.
Our decision here should say very clearly that to all countries, all companies operating in Australia, we are watching these things very, very carefully.
A Rio Tinto spokesperson said the company "notes the government's announcement" on export sanctions and is still in the process of "terminating all commercial relationships it has with any Russian business", The Economic Times reported.
Cutting commercial ties
Rio Tinto has recently undertaken to cut all commercial ties with Russia, as Motley Fool Australia reported. Speculation has also emerged Rio might need to buy out Rusal's 20% stake in Queensland Alumina.
Rio Tinto is currently under some pressure from advocacy groups to take this action. In a statement released yesterday, Australasian Centre for Corporate Responsibility director Dan Gocher said:
In the absence of sanctions on Rusal, Rio Tinto must take immediate action to protect its reputation, by taking complete control of the Queensland Alumina joint venture and quarantining any profits from Rusal shareholders.
Rio share price snapshot
The Rio Tinto share price has soared nearly 14% this year to date, gaining nearly 6% in the past 12 months.
In the past month, Rio Tinto shares have slipped by more than 5%, but are up 2% over the past week.
Rio has a market capitalisation of about $42 billion based on its current share price.
