US Treasury Secretary Janet Yellen says the new prohibitions on key metals, in coordination with its partners in the UK, will target the revenue Russia can earn to continue its war against Ukraine. Photo: Reuters
Washington and London on Friday prohibited metal-trading exchanges from accepting new aluminium, copper and nickel produced by Russia and barred the import of the metals into the US and Britain.
The action is aimed at disrupting Russian export revenue amid Moscow’s ongoing invasion of Ukraine, which has killed or wounded tens of thousands and reduced cities to rubble. Russia is a major producer of aluminium, copper and nickel.
Russian metals producers Rusal and Nornickel did not immediately reply to a Reuters request for comment, nor did the Russian embassy in Washington.
The US Treasury Department said Friday’s action would prohibit the London Metal Exchange (LME) and Chicago Mercantile Exchange from accepting new Russian production of aluminium, copper and nickel.
“Our new prohibitions on key metals, in coordination with our partners in the United Kingdom, will continue to target the revenue Russia can earn to continue its brutal war against Ukraine,” US Treasury Secretary Janet Yellen said in a statement.
“By taking this action in a targeted and responsible manner, we will reduce Russia’s earnings while protecting our partners and allies from unwanted spillover effects.”
Existing stock
A UK official said London expected any market disruption to stabilise quickly, and that the government had consulted colleagues in the US, the LME, the Bank of England and the Financial Conduct Authority to minimise any possible disruption.
“The LME reflects all relevant sanctions and tariffs in its operations, and so will take steps... to implement these sanctions for its own operations, and the operation of its market,” the LME said in a statement, adding that it will release further guidance before the market opens on Monday.
Both the British and US measures will exempt the existing stock of Russian metal on these global exchanges so they can still be traded and withdrawn in an effort to minimise the risk to market stability, the British government said in a statement.
The action does not block bilateral contracts, which will be able to continue, US and British officials said, speaking on condition of anonymity.
The officials said continued trading of Russian metals off of the exchanges is expected to be at a discount, and that while the action does not restrict supply, it is expected that the amount of revenue Russia can get per trade will be reduced.
Washington and London will monitor the discount at which Russian metal is continuing to be exchanged elsewhere, the officials said.
Available aluminium stocks in London Metal Exchange-registered warehouses were 91% of Russian origin in March, unchanged from the previous month, LME data showed on Wednesday.
The high share of Russian-origin metal in LME inventories has been a concern for some producers, which compete with Russia’s Rusal, and some Western consumers who have avoided Russian metal since Moscow's invasion of Ukraine in 2022.
The share of Russian-origin copper stocks rose to 62% in March from 52% the previous month and the share of Russian nickel rose to 36% from 35% over the same period, the LME said.
Friday’s action is the latest in a series of sanctions imposed on Russia by the US, Britain and allies over the February 2022 invasion of Ukraine.
The US last year extended its economic measures against Russia into the metals and mining sector with tariffs on the metals. Officials on Friday said the US imports of the three metals had effectively fallen to zero since.
Britain banned the import of base metals from Russia in December 2023, and said it would extend the prohibition to related ancillary services when it could be done in concert with international partners.
REUTERS