Russian gold exports may have fallen nearly threefold in the year after the start of the war
Before the war in Ukraine, Russian gold was sent to London and partly to Switzerland. After the invasion and the imposition of Western sanctions, the United Arab Emirates has become a major center of trade, according to data obtained by Reuters on foreign trade transactions.
Russian customs documents contain data on a total of nearly 1,000 shipments sent abroad between February 24, 2022 and March 3, 2023. Available records show that the UAE imported 75.7 tons Russian gold worth $4.3 billion.
This is 58 times more than in 2021, when the UAE only imported 1.3 tonnes.
Two other importers of Russian gold were China and Türkiye, which were buying about 20 tons. Combined, these three countries accounted for 99.8% of the supplies in the first year after the start of the war.
The London Gold Market Association (LBMA) imposed a ban on accepting Russian bars on March 7, 2022, although deliveries continued for some time under previously concluded agreements. Until the end of August, the embargo on imports of gold from Russia was imposed by the United Kingdom, the European Union, Switzerland, the United States, Canada and Japan.
In total, a year after the start of the war, Russia was removed 116.3 tons of gold, according to Reuters. This is almost three times less than in pre-war 2021, when exports, according to the Union of Gold Producers of Russia, amounted to approx. 302 tons for USD 17.4 billion (however, Reuters warns that it may not have all the data on exports).
According to the union, gold production in 2021 was 363.5 tonnes. It does not provide data for 2022, but Rosstat recorded only a relative change – an increase of 2.4%. According to the consulting company Metals Focus, production in 2022 amounted to 325 tons.
The revenues of gold mining companies collapsed last year, not only because of export restrictions. The price of gold on the world market, despite a jump after the start of the war, practically did not change until the end of 2022. But due to the increase in the ruble exchange rate, the proceeds from the sale of a gram of metal fell by almost 30%, the profitability of many enterprises fell to almost zero, the Union of Gold Producers noted.
The need to redirect supplies via new routes also hits the pockets of gold prospectors – although not as much as the pockets of oil producers, whose discount on Urals oil last year sometimes exceeded 30 percent. to Brent. A spokesman for one company that has shipped large quantities of Russian gold over the past year told Reuters that sellers are offering them at a 1% discount from the world price to encourage trade.
According to him, most of the gold he delivers to the United Arab Emirates is destined for smelting.
Dubai is a major hub for precious metals trading between East and West. Some companies that buy Russian products have offices in the Dubai Gold Bazaar, Bloomberg wrote, which also analyzed Russian customs records (as of August 2022), while others are entering a profitable business for the first time. Reuters identified more than 100 non-Russian companies trading Russian gold in the year after the start of the war. Previously, operations were mainly conducted by such market giants as JPMorgan Chase and HSBC banks, as well as Western companies Brink’s and Loomis specializing in the transport of precious metals.
The largest supplier of gold to the UAE, according to Reuters, was Temis Luxury Middle East, the Dubai subsidiary of French logistics company Temis Luxury, – 15.6 tons for USD 863 million. EU sanctions usually do not apply to foreign subsidiaries of European companies, Ten Notes Albayrak, sanctions lawyer at Reed Smith in London. Temis Luxury told Reuters that it complies with all UAE regulations.
In Hong Kong, through which mainly Chinese supplies pass, the largest importer was the Chinese company Vpower Finance Security Hong Kong – 20.5 tons for USD 1.2 billion. In Turkey, no company imported more than a few tons.