The London Metal Exchange and the Chicago Mercantile Exchange will now ban Russian exports in an effort to hinder one of the country’s biggest sources of revenue, the Treasury said
The UK and the US have declared that new aluminium, copper and nickel produced by Russia will no longer be traded at the world’s two largest metal exchanges, the London Metal Exchange and the Chicago Mercantile Exchange.
In an attempt to obstruct one of Russia’s major sources of income, these exchanges will now prohibit Russian exports, according to the Treasury. These exchanges, which have warehouses globally, assist in establishing global benchmark prices for base metals trading.
Existing stocks of Russian metal will be exempt from these measures to prevent market instability. Last December, the UK Government had already introduced legislation to directly ban imports of Russian metals.
Metal is Moscow’s second-largest export commodity after energy, and despite its value declining since the invasion of Ukraine, it has generated around $40billion (over £32 billion) in revenue through trade since 2022. It is anticipated that this latest round of exemptions will help to cripple Vladimir Putin’s war machine by limiting Russia’s ability to profit from new metals.
According to a Treasury official, these restrictions were designed to avoid market disruptions. While they are not expected to completely stop Moscow from selling metals, they are likely to impact prices, resulting in Russian metals being traded at a discount.
Chancellor Jeremy Hunt has stated: “Disabling Putin’s capacity to wage his illegal war in Ukraine is better achieved when we act alongside our allies. Thanks to Britain’s leadership in this area, our decisive action with the U.S. to jointly ban Russian metals from the two largest exchanges will prevent the Kremlin funnelling more cash into its war machine.”
The UK has imposed a new ban as part of a comprehensive package of sanctions on the Russian economy. The Treasury has confirmed that over 2,000 individuals and entities have been sanctioned since Russia initiated its full-scale invasion of Ukraine.
Sanctions Minister Anne-Marie Trevelyan commented: “Today’s action ratchets up economic pressure on Putin, further depriving him of the key resources and revenue streams he needs to fund his illegal war in Ukraine. We have now imposed extensive trade sanctions on Russian-origin oil, gas, gold, diamonds, iron, steel, and base metals, dealing a heavy blow to Putin’s war economy. But we must continue to work with our allies to further tighten the screws on the Kremlin.”
