The United Arab Emirates (UAE) has become a key trading hub for Russian gold since Western sanctions cut off Russia's traditional export routes, Russian customs records show.
Before the Russia-Ukraine conflict broke out on February 24, 2022, Russian gold was typically shipped to London, a gold storage and trading hub. However, shortly after that, many multinational banks, logistics service providers, and precious metals refiners stopped handling Russian gold.
On March 7, 2022, the London Bullion Market Association (LBMA) banned the production of gold bullion in Russia in 2022. More than a month later, the European Union, the UK, Switzerland, the US, Canada and Japan also banned the import of Russian gold bullion.
The shift of Russian gold exports away from London is not seen as a major blow because the region is not heavily dependent on Russia. In 2021, Russian gold accounted for 29% of London's imports, compared with just 2% in 2018, according to UK trade data.
With Russia unable to consume all the $20 billion in gold it mines each year, the country has turned to smaller partners to fill the void left by buyers like JPMorgan and HSBC.
Russia is the world's second largest gold producer with an output of more than 300 tons/year. Photo: New York Times
Export records show that Russian gold producers have quickly found new markets in countries that have not imposed sanctions on Moscow, such as the UAE, Türkiye and China.
Russian companies have been selling gold bars at a discount of about 1% to the global benchmark price to encourage trading, Reuters reported.
Customs records from February 2022 to March 2023 show that the UAE imported 75.7 tonnes of gold worth $4.3 billion from Russia, compared to just 1.3 tonnes in 2021.
The Gulf state has long had a thriving gold industry and is a major global exporter of gold bars and jewelry. Trade data shows it imported an average of about 750 tonnes of pure gold each year from 2016 to 2021.
China and Türkiye were the next largest destinations, with around 20 tonnes of gold each from February 24, 2022 to March 3, 2023. Together, these three countries accounted for 99.8% of Russia's gold exports during the period.
Most of Russia’s gold shipments to China arrive in Hong Kong. China’s Foreign Ministry said its cooperation with Russia “will not be interrupted or forced by any third party.”
The customs data shows that Russia exported 116.3 tonnes of gold from February 24, 2022 to March 3, 2023. However, according to estimates by consultancy Metals Focus, Russia produced around 325 tonnes of gold in 2022.
The remainder of the gold mined in Russia may have remained in the country, or been exported in transactions not included in customs records .
Nguyen Tuyet (According to Reuters, Business Insider)
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