Three months after Vladimir’s Putin’s invasion of Ukraine, Australian corporate majors are still struggling to disentangle themselves from their Russia links.

Rusal’s lawsuit against Rio Tinto is the most visible sign of the difficulties faced by Australian companies trying to exit those relationships, with the Russian firm heading to the Federal Court in a bid to restore its right to alumina produced in Queensland.

But Rio is far from the only Australian corporate facing difficulties in making good on promises made to sever relationships.

A tracker run by Yale shows more than 1000 Western companies have promised to cease doing business with Russia, with even laggards such as McDonald’s announcing it will sell its Russian outlets to a local licensee, ending more than three decades of selling burgers in the country.

But Europe remains dependent on Russian gas supplies for its energy needs, and Russian officials say the price spike caused by the war in Ukraine would deliver an estimated $US14bn ($20bn) in extra revenue this year – much of it earmarked for the war effort.

Similarly, Australian corporate majors have not found it easy to exit their business relations with Russia, with multiple companies citing government bans on asset sales and fears for the safety of their staff for their difficulties.

For some the decision was easy. Andrew Forrest’s Fortescue Future Industries had been seeking green hydrogen opportunities in Russia, but quickly announced it was withdrawing any involvement from future project opportunities in the country.

Viva Energy and Ampol both bought occasional shipments of Russian crude oil for their Australian refineries. Both took delivery of shipments that were in transit when Russian forces invaded Ukraine, but say they have bought no more cargoes since.

A spokesman for engineering and contracting company DRA Global told The Australlian it had “stopped all contracting activities in Russia, and is no longer pursuing business opportunities there”.

Others, however. have found the retreat more difficult.

Rio acted quickly on its joint venture with Rusal, using step-in provisions written into the shareholder agreement at Queensland Alumina – drafted after the last time sanctions affected the business in 2016 – to temporarily cut the Russian company out of its right to output from operation.

But that is now under challenge in the courts, with Rusal arguing that Rio had no right to cut it out of QAL, given it is not the target of sanctions and had made assurances that its Australian business would not benefit Russian aluminium smelters or its oligarch shareholders.

The federal government’s Future Fund and major superannuation investors – including Cbus, Australian Super, Aware and REST – were also holding Russian investments when war broke out, albeit it relatively small compared to their total funds.

Bans by Russian authorities have meant most have been unable to sell Russian-listed stocks and other assets.

The Future Fund held about $200m worth of Russian stocks when the invasion was launched, and told a Senate estimates hearing in April it had managed to sell about $20m worth of stock before Russian authorities closed Moscow’s stock exchange.

“We have reduced our holdings from over $200m to around $180m – less than 0.1 per cent of the fund – and intend to wind down the holdings as market conditions allow,” Future Fund chief executive Raphael Arndt said.

A spokesman for Cbus said ongoing bans on trading by foreign investors enforced by the Central Bank of Russia has made it impossible for the fund to exit its residual positions. “In early March, as part of its valuation policy and process, Cbus took the decision to write down the value of these assets to zero. This had an immaterial impact on member returns. Cbus continues to monitor the situation and will seek to exit these very small residual positions once possible,” he said.

As with European countries, others have found that ending their reliance on Russian energy exports has been a major issue. Rio may have acted quickly on QAl, but its Oyu Tolgoi copper mine in Mongolia is sandwiched between China and Russia, with few other options to power its operations than Russian oil.

A Rio spokesman told The Australian that Oyu Tolgoi had “no contracts in place directly with Russian businesses”, but the mine is still believed to be reliant on Russian supplies to power its equipment, bought through Mongolian suppliers, because of the difficulty in finding alternatives in the landlocked country.

“We are closely monitoring Oyu Tolgoi’s supply chain exposure with its Mongolian contractors and looking at options to de-risk where possible,” he said.

For others operating businesses in Russia the task has been even more difficult, not least because of the threat of retribution against local staff. Ansell opened a factory in Russia in June 2021. The company has said it will “suspend” production at the factory in June, but has made no commitment to sell or permanently close the facility beyond that point.

“Difficulties including logistics, customs clearances and energy costs mean Ansell is not accepting new orders and is running down inputs ahead of suspending production in June. Ansell will then monitor future developments to assess options,” a spokesman said.

New Zealand dairy producer Fonterra immediately suspended sales of its products to Russia when the invasion was launched, but is still working its way through the process of closing its Moscow sales office and exit a joint venture in St Petersburg.

“The process for effecting these decisions is well underway but, given the complex business environment in Russia, it will take time to ensure the respective exits are done in an orderly way. Most importantly, Fonterra is committed to ensuring the safety and welfare of our people based in Russia while the transition is worked through,” the company said.

Contract giant Worley is also still working through the process of disposing of its Russian-based businesses, as is gaming machine giant Aristocrat Leisure.

But, while Aristocrat is still working out a way to safely exit its Russian studio, the company immediately suspended its mobile games in the country when war broke out, mirroring the approach taken by Atlassian, which in March suspended sales and licences to state-owned entities.

Canva too has stopped taking money from Russian companies, and stopped payments to Russian creators and contributors.

Extracted in full from: Moscow exit hastens slowly for Australian corporates leaving Russia after Ukraine war (