The U.S. Treasury Department, in coordination with the United Kingdom, is clamping down harder on Russia’s ability to wage war against Ukraine by banning the import of Russian-origin aluminum, copper, and nickel.
The world’s two largest metal exchanges, the London Metal Exchange and the Chicago Mercantile Exchange, will no longer trade in new aluminum, copper, and nickel produced by Russia, the Treasury announced in a press release Friday. To implement the new policy, the Treasury issued two new determinations that will be enforced by its Office of Foreign Assets Control (OFAC).
“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,” said Janet Yellen, Secretary of the Treasury, in the release.
The prohibitions specifically target metals produced on or after April 13, 2024, the Treasury noted, with specific bans against the exportation, re-exportation, sale, or supply to any person located in the Russian Federation conducting warranting services or services to acquire metals as part of a derivative contract.
“Warranting services” refers to issuing, registering, accepting, or acquiring a warrant or the underlying metal on a global metal exchange, the Treasury clarified in an FAQ.
The Treasury further advised U.S. global metal exchanges to remove brands that produce Russian metals from their list of accepted brands; abstain from adding additional brands of Russian metals to their list of accepted brands; cease providing clearing services for Russian metals; and halt acting as a central counterparty to the trade of Russian metals, according to another FAQ.
In addition, any U.S. trader “that is a counterparty to a derivative contract cannot take physical delivery of covered Russian metals when it comes time to settle that contract, even if the importation of the metal” would not be in the United States, that FAQ noted.
The new determination does not impose new prohibitions or requirements relating to the processing, clearing, or sending of payments by intermediary banks on behalf of non-U.S. persons, according to another FAQ.
In December, OFAC announced sanctions targeting Russia-based entities involved in the importation, production, modification, and sale of defense-related and industrial technology. The U.S. State Department concurrently designated more than 100 individuals and entities targeting Russia’s future energy export and production capabilities, metals and mining sector, and sanctions evasion networks.
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