New sanctions bar UK entities from trading most Russian metals

New UK sanctions will prohibit British citizens and companies from trading in a wide range of Russian metals, according to documents published by the government Thursday.

Prices of metals produced by Russia surged as panicky traders struggled to understand how widespread the impact of the measures would be. Aluminum rose as much as 3.7% and copper 3.1%. Palladium, which isn’t covered, jumped as much as 12%.

In legislation published by the UK government, new restrictions were introduced stating a UK person “must not directly or indirectly acquire metals which originate in Russia or are located in Russia.” 

The document listed copper, nickel, aluminum, lead, zinc, tin and cobalt as being subject to the restriction but didn’t reference precious metals such as palladium.  

It wasn’t immediately clear how wide the impact of the sanctions would be. While the UK is not a significant consumer of metals, many companies are incorporated there, including significant traders such as Glencore Plc and many major banks.

Some Western companies and banks seek to comply with all US, European Union and UK sanctions, potentially giving the measure greater force.

The London Metal Exchange, its members and clients had been granted a license allowing the continued trade of Russian metals on the exchange, the bourse said, and it expected that the sanctions wouldn’t impact trading access to the LME. 

“The LME understands that the UK Government’s intention when introducing the recent sanctions in respect of Russian metal is (among other things) to prevent UK persons acquiring physical Russian metal,” the exchange said in a notice to members. 

Still, the rules potentially may prevent UK persons from withdrawing Russian metal they buy on the bourse starting Dec. 15, it said. The bulk of the new rules enter force Friday; the remainder do so Dec. 26.

Representatives for the UK Treasury and Foreign Office didn’t immediately respond to a request for comment.

Anne-Marie Trevelyan, a foreign office minister with responsibility for sanctions, said in a Linkedin post that the UK was announcing “new measures which will disrupt Putin’s ability to supply and fund his war machine,” including “a ban on the import of Russian metals and diamonds, Russia’s largest export sectors after oil and gas.”

An explanatory memorandum published alongside the legislation referred to “limited exceptions” to the metals restrictions.

“These specifically cover ‘old stock’ goods: goods of Russian origin having left Russia, legally, prior to their relevant prohibition dates,” it said.

Russia is a major producer of aluminum, copper and zinc. The LME already restricts deliveries of Russian metal into its UK warehouses after prior government sanctions and trade limits.

It tightened those restrictions Thursday but added there currently isn’t any Russian metal warranted in LME-listed warehouses in Britain.