Novelis Reacts to Verdict in Rusal Lawsuit Against LME
President and CEO says Ruling will be Destructive to Market
ATLANTA, March 28, 2014
ATLANTA, March 28, 2014 /PRNewswire/ -- Novelis Inc. President and Chief
Executive Officer Phil Martens issued the following statement today in
response to Thursday's ruling by the UK High Court regarding planned changes
to aluminum warehousing rules by the London Metal Exchange (LME):
Novelis President and CEO Phil Martens says, "This court decision will stifle
the LME's proposal to alleviate the unprecedented backlog at LME warehouses
and will be very destructive to the market."
"We are very disappointed with the outcome of the legal process in the UK,"
said Martens. "We have worked closely with the LME and other stakeholders for
two-and-a-half years to push for changes. Unfortunately, Rusal's unilateral
action resulting in this court decision will stifle the LME's proposal to
alleviate the unprecedented backlog at LME warehouses and will be very
destructive to the market.
"It is indefensible that queues of more than a year exist at warehouses and
unconscionable that players in the aluminum market are actively working to
maintain the status quo to protect artificially inflated premiums. The
divergence between the LME price and the physical market price is undermining
the credibility of the industry's pricing discovery process and causing havoc
in the fabricating and consuming end of the industry. This is a global issue.
"Primary aluminum producers, traders and banks have created an artificial
global shortage and driven spot premiums to ridiculously high levels. The
change in the LME load out rate was intended to restore equity in the LME
system and remove the queues which are directly responsible for driving up the
premiums in the first place.
"This recent legal action taken outside of the LME's consultation processis
grievous -- it sanctions the continuation of this destructive regime. At the
same time, the producers are continuing to make outsized windfall gains, which
a year ago we estimated to be $3 billion, but are now twice that level. This
exploitation of an artificial market squeeze appears to us to be blatant, and
the effects are being felt further down the supply chain and ultimately by the
"Novelis had hoped that the LME changes together with possible regulatory
actions would identify any wrong doing that may have taken place and
dramatically improve the scrutiny of the market and market convergence. The
court decision, unfortunately, throws yet another wrench in the works and does
nothing to settle the ongoing supply chain risk to aluminum fabricators and
beverage marketers and other customers where premiums are at the highest
levels in history."
Novelis Inc. is the global leader in aluminum rolled products and the world's
largest recycler of aluminum. The company operates in nine countries, has
approximately 11,000 employees and reported revenue of $9.8 billion for its
2013 fiscal year. Novelis supplies premium aluminum sheet and foil products to
automotive, transportation, packaging, construction, industrial and consumer
electronics markets throughout North America, Europe, Asia and South
America.The company is part of the Aditya Birla Group, a multinational
conglomerate based in Mumbai, India. For more information, visit
www.novelis.comand follow us on Twitter at twitter.com/Novelis.
Photo - http://photos.prnewswire.com/prnh/20140328/CL93108
SOURCE Novelis Inc.
Contact: Novelis Contacts: Media: Charles Belbin, +1 404 760 4120,
firstname.lastname@example.org; Investors: Megan Cochard, +1 404 760 4170,
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