Silver bars are piling up at Russia’s Polymetal in search of export routes

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June 23 (Reuters)Silver bars are piling up at Polymetal in Russia POLYP.L As it looks for new export destinations to replace Europe, it said on Thursday, adding that bullion accounts for 5% of its annual sales.

Polymetal was not directly targeted by Western sanctions against Moscow after sending thousands of troops into Ukraine on February 24.

But like other Russian commodity producers, it’s also having an impact, as Western banks and shippers have scaled back their dealings with Russian companies, even if they’re not legally bound by sanctions laws.

“Silver bullion inventories continue to accumulate due to the lack of reliable export channels and a non-existent domestic market. Discussions are ongoing with a variety of commercial and industrial international buyers,” Polymetal said in a statement.

The company’s sales of gold bullion and concentrates from Kazakhstan are continuing as usual, and sales of gold bullion and concentrates from Russia to Asia have returned to the regular schedule in April-May after a significant COVID-related slowdown, it said.

The logistical challenges have slowed inventory turns and pushed up selling costs for Polymetal, the miner said, adding he expects the gap between production and sales to peak in September.

A strong ruble, which has hit a near seven-year high against the US dollar — following capital controls and a sharp drop in merchandise imports — and logistical challenges have boosted Polymetal’s capital spending, the miner said. RUB/RUB

Polymetal said it is on track to produce 1.7 million troy ounces of gold equivalent, a mix of gold and other metals, in 2022.

It does not sell any of its products directly or indirectly to the Central Bank of Russia, she added.

In May, Switzerland imported Russian gold for the first time since the attack on Ukraine

(Reported by Reuters; Edited by David Goodman and Barbara Lewis)

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