Commodities trader says it immediately ‘ceased transactions’ with Iralco after learning of its deal with Iranian programme

The commodities trader Glencore supplied thousands of tonnes of alumina to an Iranian firm that has provided aluminium to Iran’s nuclear programme, intelligence and diplomatic sources have told Reuters.

The previously undisclosed barter arrangement between Glencore, the world’s biggest commodities trader, and the Iranian Aluminum Company (Iralco) illustrates how difficult it is for western powers to curb Iran’s ability to trade with the rest of the world. Even as the west imposes stringent restrictions on banks that do business with Iran, United Nations diplomats say that Tehran keeps finding new ways to do business with willing partners.

Reuters first learned about Glencore’s barter deal with Iralco, and an aluminium supply contract that Iralco had with Iran Centrifuge Technology Co (TESA), from a western diplomatic source in early November. That was about six weeks before the EU’s December 2012 decision to levy sanctions on Iralco for supplying aluminium to TESA, which is a subsidiary of the Atomic Energy Organisation of Iran. The source showed Reuters a western intelligence report concerning Glencore’s arrangement with Iralco. It described how Glencore, based in Baar, Switzerland, provided Iralco with thousands of tonnes of alumina last year in exchange for a lesser amount of aluminium metal. The report’s authenticity was confirmed by UN diplomats.

It is not known whether any of the aluminium produced by Iralco from Glencore’s alumina raw material actually ended up with TESA. As part of AEOI, TESA has been subject to UN sanctions in place since 2006.

In a statement to Reuters, Glencore said it first learned about the TESA-Iralco relationship in December and immediately “ceased transactions” with Iralco. It said its last trade as part of the barter arrangement was in October 2012, two months before the EU move.

Glencore acknowledged that it did sign the barter deal with Iralco in August 2011, saying it was legal, and denied wrongdoing or attempts to help Iran bypass sanctions.

It declined to provide details about the barter deal, the value of which is unclear.

Iralco did not respond to an emailed request for a comment. Iran’s UN mission said it was not in a position to comment.

Iran denies allegations by western powers and their allies that it is seeking atomic weapons and has refused to stop enriching uranium. As a result, in addition to four rounds of UN sanctions, Iran has faced much tougher US and EU measures, specifically targeting its financial and energy sectors.

Separately on Friday Glencore pushed back the date to complete its £50bn takeover of Xstrata for the third time, as it waits for regulatory approval from the Chinese authorities. The company warned shareholders on Friday that it would not now be possible to complete the deal by 15 March, which it said in January was the “long stop date” for finalising the deal.