Some Chinese precious metals firms grow wary of doing business with Russia on sanction fears
By Amy Lv and Polina Devitt
SHANGHAI/LONDON, July 12 (Reuters) - Some Chinese precious metals companies are showing increasing caution when it comes to cooperating with counterparts from Russia for fear of sanctions imposed by western countries, insiders with several of the firms said this week.
Russia is a major producer of metals including aluminium, copper, nickel, gold and platinum group metals, and has stepped up its trading relations with China in the aftermath of its war in Ukraine.
Last month, the U.S. imposed sanctions on several Hong Kong firms for aiding trade ingold produced by an already sanctioned Russian miner. The U.S. Treasury Department said at the same time that foreign firms helping Russia's war economy now "face greater risk of sanctions".
"We are cautious about doing business with Russia now, as we are worrying about possibly being sanctioned by western countries in the name of providing money support to Russia," said a manager at a Chinese state-owned precious metals producer, asking not to be identified due to the sensitivity of the matter.
"We have branches outside China, so we really cannot run any risk that could affect our overseas business," said the manager, speaking on the sidelines of an industry conference.
Managers at three other Chinesestate-owned precious metals companies, also speaking on condition of anonymity, expressed similar concerns.
One citedfear of possibly being required to provide country-of-origin information for raw materials in products sold in Western countries. Another cited concern that doing business with Russian companies would ruin opportunities to cooperate with western firms.
RUSSIAN EXPORTS TO CHINA SURGE
Russia has become increasingly reliant on trade with China since its invasion of Ukraine in 2022 led to its exports to the West being drastically curtailed, notably its lucrative oil and gas sales to Europe.
Chinese-controlled Hong Kong was the top destination for Russian gold exports in 2023, while mainland China was also among top buyers, according to the Trade Data Monitor.
A fifth Chinese source, a manager at a jewellery fabricator who asked to be identified only by his surname Liu, said his firm was looking for new sources of raw materials, "so it's not bad to have Russia as one more option".
But he added: "We adopt a cautious stance as we need to weigh all possible risks, including payment."
"Moreover, although our business is mainly focusing on the domestic market now, if we are to expand our business outside China in the future, we are concerned that we will be rejected by western companies if they find out that we once had business cooperation with Russian companies," Liu said.
Reporting by Amy Lv in Shanghai and Polina Devitt; Editing by Tony Munroe and Peter Graff
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