Almost all major Russian copper producers are subject to US sanctions

The Russian Copper Company (RMC) of Igor Altushkin, one of the largest copper producers in the Russian Federation, found itself under American sanctions following UMMC and Udokan Copper. Thus, almost the entire Russian copper sector is under blocking sanctions, except for MMC Norilsk Nickel. RMK does not disclose consumer data, but most likely the company will redirect supplies to Asia in 2022. According to analysts, sanctions restrictions on the sale of such in-demand raw materials as copper will not have a critical impact, although changes in logistics may be required.

The US Treasury has imposed blocking sanctions against one of the largest Russian copper producers – the Russian Copper Company – and its founder Igor Altushkin. In April Udokan Copper, which is just starting industrial mining, was included in the sanctions list, and in July – UMMC. Andrey Bokarev and Iskandar Makhmudov, who were co-owners of UMMC for many years, left the shareholders in 2022, but on September 14 they still got in SDN-list. Thus, the only major Russian copper producer that has not yet found itself under American sanctions is Norilsk Nickel.

RMK includes 40 enterprises in the Chelyabinsk, Sverdlovsk, Orenburg, Novgorod regions, Khabarovsk Territory and Kazakhstan. The holding company does not publish financial statements. The report “On the state and use of mineral resources of the Russian Federation in 2020” stated that RCC produced 200.5 thousand tons of refined copper. At the end of 2022, the company’s Mikheevsky GOK reduced its net profit under RAS by 1.7 times, to 6 billion rubles. The net profit of the Tominsky GOK also decreased by 1.7 times, to 26 billion rubles. The volumes and directions of RMK exports are unknown, however, the GOK report spoke of an increase in demand for products from Asian countries and a restoration of demand from developed countries. On September 14, RMK declined to comment.

According to the Ministry of Industry and Trade, indicated in the development strategy of the Russian metallurgy, in 2021 Russia produced 989 thousand tons of copper, of which it exported 463 thousand tons.

This year, judging by indirect data, Russia is reducing the export of copper cathodes. According to Eurostat, copper exports to the EU decreased fivefold, to 40 thousand tons, in the first half of 2023. Supplies to China, which is the largest consumer of this metal in the world, decreased by 7%, to 160 thousand tons. At the same time, Russian copper reserves in LME warehouses decreased since the beginning of the year has doubled, to 26 thousand tons, although they increased slightly in August.

Total copper reserves on the LME have doubled since the beginning of the year, to 100 thousand tons, but from a historical point of view they are at minimal levels.

Russian copper in Europe is not subject to sanctions. In March of this year, the head of Norilsk Nickel, Vladimir Potanin, said that Europeans are interested in Russian metal due to its quality and logistics availability, but are refusing it “due to an emotional assessment of the situation.” According to him, the volumes not purchased by Europeans will be sold on the Southeast Asian market.

Independent industrial expert Andrey Maksimov does not expect a strong reduction in copper production and exports due to sanctions, although European statistics indicate restrictions from European buyers, as well as a general economic slowdown. In his opinion, copper exports from Russia will remain at last year’s level. Regarding sanctions restrictions, companies can use various logistics solutions when selling for export. For example, Norilsk Nickel redirected the bulk of its copper exports to the port of Tangier in Morocco, through which it is then sold to Asia.

Evgeniy Zainullin