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Commodity trading giant Glencore brought thousands of tonnes of Russian copper routed through Turkey to Italy in July this year, highlighting how shipments via third countries obscure Europe’s true reliance on Russian commodities.
The London-listed oil and metals trader purchased at least 5,000 tonnes of copper sheets made by Russia’s Ural Mining and Metallurgical Company (UMMC) that were exported from Turkey to Italy’s Livorno port in July, according to customs documents and photographs seen by the Financial Times.
Although there are no blanket sanctions over trading Russian metals, restrictions have been put on certain oligarchs and producers since the war began. The UK and the EU placed sanctions on UMMC executives last year but not the company itself.
The US followed with wider sanctions on UMMC in July this year after Glencore’s last trades with Russia’s second largest copper producer were already under way.
There is no suggestion that Glencore has breached sanctions. However, the trades underline Europe’s dependency on Russia for critical commodities as well as the growing role of Turkey as a transshipment hub. It also highlights how Dubai has become a home to middlemen for importing Russian commodities into Europe.
The shipments were sold to Glencore by Haldivor Energy, a UAE-based entity set up in 2019, and were destined for the Carlo Colombo wire rod factory in Lombardy, northern Italy, to manufacture copper products that go into electric cables, transformers and electronics.
“You have Turkey as a staging point for Russian zinc and copper and to a lesser extent aluminium,” said one senior commodity trader. “It creates the entrepot point.”
Glencore said that the transaction was the “final part” of a contract that was in place before Russia waged war on Ukraine and it “has undertaken no new business with UMMC since the outbreak of the war”. It added that it was in line with its own policy not to engage in new Russian business, introduced in March 2022.
Turkey has not joined western sanctions on Russia and has retained close diplomatic and economic ties with Moscow since Vladimir Putin launched a full-scale invasion of Ukraine. Russia is a pivotal trade partner for Turkey, which needs to import large amounts of energy to fuel its $900bn economy.
Turkey’s energy and natural resources ministry and Haldivor Energy did not respond to requests for comment. Glencore has no other prewar supply contracts in place, according to people familiar with the matter.
Large western trading houses such as Glencore, Trafigura and Mercuria are having to tread carefully between western sanctions in support of Ukraine and European policymakers’ desire to mitigate the harm inflicted on their economies by limiting access to Russian raw materials.
European officials have said that trade with Russia through third countries such as Turkey, China and the UAE is hampering the effectiveness of western sanctions.
“Imports and exports via third countries is the problem the EU is having with sanctions implementation,” said an Italian government official.
Imports of Russian copper by Turkey have nearly tripled to 159,000 tonnes in the first seven months of 2023 compared with the same period a year earlier, according to Trade Data Monitor. This accounts for a third of the country’s imports of the red metal.
CRU Group, a research firm, estimates that overall Turkish imports of copper cathode and wire rod at 330,000 tonnes were 125,000 tonnes higher year on year in the first six months of 2023, which it says is “far in excess of domestic requirements”.
Italy has become Turkey’s largest export destination for copper, growing 3 per cent in this year, compared with steep falls for Germany, and the UK. This points to Italy becoming an integral part of the trade route for Russian copper, said experts.
Glencore continues to trade Russian aluminium under a multiyear supply deal with producer Rusal, a contract that chief executive Gary Nagle expects to expire by the end of next year, depending on the volumes traded.