The U.S. government has levied sanctions on Russian copper company Ural Mining and Metallurgical Company (UMMC) as part of its ongoing efforts to cripple the Kremlin’s war chest. Ever since Russia invaded Ukraine in early 2022, the United States and its Western partners have sanctioned hundreds of Russian individuals and companies to harm the country’s war effort in Ukraine.
As of writing, the U.S. had added an additional 120 entities and individuals to its sanction list, with the new additions meant to disrupt Moscow’s access to goods and electronics that are aiding its war with Ukraine. The U.S. State and Treasury Departments said that the sanctions are also meant to cripple Russia’s revenue from the mining and metals sector, diminish its access to international payment systems, and “undermine its future energy capabilities.”
Furthermore, the sanctions are meant to limit Russia’s access to technology from the G7 countries, which could help it advance its defense and aerospace industries. American companies will have until Oct. 18, 2023, to cease all transactions with Ural Mining and Metallurgical Company.
Although the company stopped disclosing its copper output a few years ago, it accounted for close to 40% of Russian copper by 2020.
Deputy Secretary of the Treasury Wally Adeyemo said that the recent sanctions were part of American efforts to cripple Russia’s military capacity by reducing the country’s access to war supplies and slowing its economy. Adeyemo stressed that as long as the Kremlin continued to wage war in Ukraine, the United States would keep imposing sanctions to disrupt Russia’s military and its economy.
UMMC has already been barred from trading on the London Metal Exchange after the UK sanctioned a major shareholder last year. This meant that UMMC-produced copper could only be delivered to warehouses owned by the London Metal Exchange if it was proven that the transaction did not breach sanctions.
The U.S. sanctions will make it doubly difficult for the Russian miner to sell its product, especially to Western countries, which undoubtedly made up a majority of its customer base.
Russia has been subject to numerous sanctions from Western countries since it invaded Ukraine last year, with countries sanctioning Russian diamonds, oil, natural gas and numerous Russian oligarchs as well as banning the Kremlin from the international financial system Swift.
Furthermore, more than 1,000 international companies pulled out of Russia in the wake of the Ukraine invasion, and all Russian flights are banned from entering Canadian, EU, UK and U.S. airspace.
When such a major copper producer such as UMMC is locked out of major commodities markets, other extractors such as Southern Copper Corporation (NYSE: SCCO) are likely to see an influx of orders from the entities that had previously been doing business with the Russian producer.
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