Ukraine downs Russian fighter jet near Avdiivka; Siemens energy chair defends business with Rosatom

Ukraine downs Russian fighter jet near Avdiivka; Siemens energy chair defends business with Rosatom
Participants of the Right Sector's training camp on 27 October 2023 in Lviv, Ukraine. (Photo: Stanislav Ivanov / Global Images Ukraine via Getty Images)

Ukraine downed a Russian Su-25 military fighter jet near Avdiivka in the eastern region of Donetsk, Ukrayinska Pravda reported, citing state border service spokesperson Andriy Demchenko. There was no comment from Russia’s defence ministry. A fierce battle for control continued near Avdiivka on Saturday, with Russian forces making no confirmed territorial gains. Kremlin forces are said to have sustained heavy losses in the offensive.

Andriy Yermak, a top aide to Ukraine’s president, met during this weekend’s national security advisers’ summit in Malta with Roberta Metsola, president of the European Parliament, to discuss Ukraine’s progress on fulfilling seven European Commission recommendations needed to kick off EU accession talks this year. The need to strengthen sanctions against Russia and explore mechanisms for using frozen Russian assets was also emphasised, according to a post on President Volodymyr Zelensky’s website. A Ukrainian initiative to hold a Global Peace Summit at the heads-of-state level was discussed but nothing was finalised.  

A top ally of President Vladimir Putin warned that Moscow would retaliate in kind if the European Union makes use of its frozen Russian central bank reserves. “Such a decision will require a mirror response from the Russian Federation,” Vyacheslav Volodin, speaker of the lower house of Parliament, said on Telegram. He added that far more assets from “unfriendly countries” would be confiscated than Russia’s frozen reserves. 

Latest developments

Traders and banks strike deals in Russian metals as taboo fades

Nearly two years since the invasion of Ukraine, a handful of Western banks and traders, from Citigroup to Trafigura Group are increasingly willing to enter new deals for Russian metals, seizing opportunities for profit while competitors hold back.

The deals show how some traders are navigating the thicket of sanctions and other restrictions on Russia in order to keep its natural resources flowing, amid conflicting messages from Western capitals about whether they want companies to handle Russian commodities. At a time when many are struggling to make money in metals trading, deals involving Russian supplies are one of the few areas where it’s possible to make a solid profit, according to the head of one trading house, speaking privately.

There are no blanket restrictions from Western governments on trading Russian metal, and the deals don’t involve those companies that are under US or European sanctions. However, the status of Russian material has been a fraught subject in the metals world, as many Western buyers pulled back — resulting in a sharp increase in sales to Asia — while rival producers lobbied unsuccessfully to have even non-sanctioned supplies banned by the London Metal Exchange (LME). 

Now, a period of uncertainty over the legal and moral status of dealing in Russian metal is giving way to greater stability 20 months after the invasion of Ukraine. 

Among the trading houses, Trafigura has actively sought new deals to buy and sell Russian metal, according to people familiar with the matter, as it moves to steal a march on rival Glencore — which remains a major buyer of Russian aluminium but has said it won’t do new business in the country.

And on the LME, financial firms including Citi and Squarepoint Capital have been buying large volumes of the Russian aluminium that now dominates the exchange’s stockpiles.

The top metal traders have adopted varying stances. Glencore said in March 2022 that it would “not enter into any new trading business in respect of Russian origin commodities”, although it retains a large long-term contract to buy aluminium from United Company Rusal International. The company has also continued to buy copper from Russia and to supply alumina to Russia since the war broke out, according to trade data.

“These transactions form part of contracts that were in place before the war in Ukraine broke out and is in line with our policy regarding Russian business activities that was put in place at the end of March 2022,” a spokesperson said. “Glencore has undertaken no new business activities with Russian companies since the outbreak of the war.”

Trafigura, on the other hand, has actively sought new deals in the Russian metals industry, according to several people familiar with the matter, who asked not to be identified as the discussions are sensitive. It struck a term deal to buy over 100,000 tonnes of copper from MMC Norilsk Nickel and has also been buying significant quantities of nickel from the Russian company, making it one of the mining giant’s largest customers, the people said.

Trafigura struck an agreement to buy nearly 200,000 tonnes of aluminium from Rusal this year, in a direct challenge to Glencore, separate people familiar with the matter said. 

The trader also is bidding to win a long-term contract to buy the zinc ore that will be produced by the vast Ozernoye mine in Siberia, which is due to start production in the next few months and is set to be one of the world’s largest zinc mines once it is producing at full capacity, other people said. Other companies seeking to buy from the mine include Swiss trading house Open Mineral, as well as two Chinese companies, one of the people said. 

IXM, the third-largest metals trader behind Glencore and Trafigura, does not do any business inside Russia, Chief Executive Kenny Ives said in a recent interview. “Do we buy Russian metal outside of Russia? Yes, we do. And I plan on continuing buying Russian metal outside of Russia provided we’re able to and our competitors are doing the same,” he said. 

Meanwhile, Red Metal, a Swiss trading company that had been a significant buyer of Russian copper, has now wound down that business, according to Managing Director Milan Popovic. “Red Metal has completely terminated all contracts with Russian suppliers and the last delivery we received was on September 6, 2023,” he said, adding that the company would now focus on other countries including Serbia, Uzbekistan, Mongolia, China and Kazakhstan.

There is a similar variation in policies in the banking industry. Very few banks are willing to finance the purchase of Russian metals directly from a Russian company, according to traders and bankers, out of concerns ranging from potential exposure to sanctions to logistical difficulties and ethical and reputational issues.

But once Russian metal has been delivered on to the LME, some banks have in recent months been increasingly willing to buy it — arguing that there is a difference between financing a trade involving a Russian entity and buying metal via the world’s main exchange. 

For example, Citi has been one of the most active buyers of Russian aluminium on the LME in recent months. The bank had until recently been avoiding metal produced by Rusal, Bloomberg reported in August, but is now happy as a major participant on the LME to take delivery of Russian metal if it comes via the exchange. 

Other major banks in the metals markets that have adopted a similar stance include ICBC Standard Bank and Macquarie Group, both of which are willing to finance Russian metal if it has been delivered on to the LME, according to people familiar with the matter. 

Sanctioned tycoon denied extra cash by UK court

Russian billionaire Mikhail Fridman failed to win some relief from strict sanctions imposed on him, after a UK court denied his request for access to extra cash to pay for staff and the upkeep of his north London mansion. 

The court agreed with the UK’s Office of Financial Sanctions Implementation (OFSI), which had decided the additional payments requested for maintenance of the house were not for “basic needs” but to enable Fridman “to continue enjoying the lifestyle he had prior to being designated”. 

London courts have seen a flurry of challenges to the UK’s sanctions regime since the government imposed them on a number of Russian billionaires and businesses in the wake of the country’s invasion of Ukraine. Britain’s National Crime Agency dropped its investigation into alleged sanctions evasion by Fridman after a high-profile raid of his home.

Fridman would continue the fight against the curbs “until all legal avenues have been exhausted”, he said in a statement, claiming that the sanctions regime undermined the presumption of innocence and was unjust. “This sends a disconcerting message to potential foreign investors in the UK: that property rights may no longer be as sacrosanct as once believed,” he said.

Fridman had sought permission to pay a £30,000 monthly management fee as well as payments for internal phone lines, TV equipment and staff costs.

“[The] OFSI acted rationally and within the bounds of its residual discretion,” the judge said in the ruling published on Thursday. The government had permitted the billionaire to make payments of around £1-million for ongoing already incurred expenses and cover Fridman’s “basic needs”, the lawyers for the government had said during the hearing.

Fridman bought his property, named Athlone House, in London’s Highgate, for £65-million in 2016.

He is the founder and main shareholder of Alfa Group, which includes Russia’s largest private bank. The European Union and the UK imposed sanctions on Fridman and his partners soon after Russia invaded Ukraine in February 2022. The US sanctioned him in August, while he was living in London.

Fridman, who holds Israeli and Russian citizenship, left London earlier this month for Israel, complaining it was impossible to live in the UK under the sanctions regime. He moved to Israel and then flew to Moscow after the attack by Hamas militants on the country. 

Germany’s Siemens energy chair defends business with Rosatom

Siemens Energy supervisory board chairperson Joe Kaeser defended plans to continue doing business with Russia’s nuclear giant Rosatom in Hungary amid criticism that such deals help fill the Kremlin’s coffers. 

Breaching the contracts, which were signed in 2019, could end up being very expensive, Kaeser told Welt am Sonntag

“There are non-governmental organisations that demand that our management doesn’t comply with these valid contracts and is then possibly sued by an EU state for almost unlimited sums,” Kaeser said. 

The controversy centres on two new power units for the Russian-built Paks 2 plant in Hungary, for which Siemens Energy is supplying safety technology. Construction started in August. 

According to a recent Greenpeace report, European companies like Siemens Energy and France’s Framatome have contracts worth hundreds of millions of euros for Rosatom’s nuclear projects outside of Russia. Without these technology and knowledge transfers, many of the state giant’s new projects would grind to a halt.

Read more: The Manhattan project to wean the US off Russian uranium

The US and Europe are making efforts to wean themselves off Russian uranium but haven’t sanctioned nuclear technology, meaning Rosatom has operated as normal since Moscow’s full-scale invasion of Ukraine in February 2022. 

The alternative for the Rosatom facility in Hungary “would be for the Chinese to step in and supply the controls for the nuclear power plant, which is much closer to Germany than Chernobyl was back then”, Kaeser said. DM


Comments - Please in order to comment.

  • Graeme J says:

    By its own admission (on its website) Siemens profited by doing business with the Nazis from 1933. It should come as no surprise that they continue to business with Putin and his criminals in 2023.

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