London precious metals market locks down Russian gold refineries

Employees process ingots of 99.99 percent pure gold at the Krastsvetmet non-ferrous metals plant, one of the world’s largest producers of the precious metals industry, in the Siberian city of Krasnoyarsk, Russia November 22, 2018. REUTERS/Ilya Naymushin

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LONDON, March 7 (Reuters) – The London Bullion Market Association (LBMA) announced Monday that it has suspended the licenses of six Russian bullion refiners, meaning they can no longer sell gold and silver on the London market, the world market biggest.

The LBMA gave no reason for the suspension, but the association told Reuters last week it had asked refiners if they had trading ties with sanctioned Russian companies.

Since the Kremlin deployed troops to Ukraine on February 24, governments including those of the United States and the European Union have imposed sanctions on scores of Russian individuals, companies, banks and the Russian central bank. read more

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According to consulting firm Metals Focus, Russia produces about 330 tons of gold annually, worth about $20 billion at current prices, about 9% of the world’s total.

It produces approximately 1,350 tons of silver annually, valued at approximately $1 billion, approximately 5% of the world’s mine supply.

Most of this metal is bought by Russian commercial banks, which send it to refiners before selling it abroad, or to Russia’s central bank, which said on February 27 it would resume buying gold in the local market.

Bankers and traders have said removing Russian refineries would have little impact on the market and Russian metal would still find buyers in places like China and the Middle East.

Gold and silver bars produced by the refiners while accredited remain valid for trading, under LBMA rules, which state that refiners “must comply with all relevant economic/trade sanctions lists.”

The six refineries suspended by the LBMA are JSC Krastsvetmet, JSC Novosibirsk Refinery, JSC Uralelectromed, Moscow Special Alloys Processing Plant, Prioksky Plant of Non-Ferrous Metals and Shyolkovsky Factory of Secondary Precious Metals.

All of these were accredited to produce both gold and silver, with the exception of the Moscow Special Alloys Processing Plant, which was only accredited to produce gold.

“These six refineries will no longer be accepted as Good Delivery by the London bullion market until further notice,” the LBMA said in a market statement.

Neither refiner responded to requests for comment.

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Reporting by Peter Hobson; Edited by Jonathan Oatis and Mark Potter

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