On April 12, 2024, the British government implemented a revised sanctions package on Russian metals. By LME Circular 24/171 dated 13 April 2024 announcing the immediate suspension of the generation of warehouse receipts for Russian-related metals produced on or after 13 April 2024, There are also restrictions on the cancellation of warehouse receipts and pick-up qualifications for Russian metals by UK LME Members and UK Clients. At the same time, the LME has divided Russian metal Warrants into two types, Type 1 Russian Warrants and Type 2 Russian Warrants (see figure) :
The LME has since communicated with market participants to ensure the effectiveness of the measures enacted in order to comply with the UK sanctions programme. Following communication with the market, the LME has decided to further refine the measures already in place, with the aim of ensuring fairness, reducing administrative burdens, facilitating the flow of globally available metals and protecting the market from breaches of the UK Government's sanctions programme as far as possible.
It is important to note that the LME's interpretation does not constitute legal guidance and member companies and clients should seek independent legal advice to assess the impact and applicability of the sanctions on their business. Nor does it include restrictions imposed by other jurisdictions, or other UK sanctions or tariff actions.
For the full text of Circular 24/174, please refer to:
https://www.lme.com/api/sitecore/MemberNoticesSearchApi/Download?id=272b0909-1d0a-4111-906d-636adf943afa
Key information excerpts are as follows (if there is any discrepancy with the English version, the English version shall prevail) :
1. The LMEsword system will use the new RIMO code (reissuance/movement code) to track the movement of reissued Russian metal CFS and/or Russian metal CFS between LME-designated delivery warehouses. RIMO will contain the original receipt number. Non-russian metal receipts and non-reissued or moved Russian metal receipts will not contain the RIMO code. RIMO will make it easier for market participants to determine the type of Russian metal receipt.
2. Simplify the following process
(i) a new warehouse receipt for cancelled Category 1 Russian metal is generated in the same warehouse, or
(ii) Transfer between different warehouses for fully processed (in accordance with the warehouse approval and operation policy) Category 1 Russian metal warehouse receipts
3. Regarding access to warehouse subsidies: The LME would like to remind all market participants of the Warehouse Agreement and RuleBook provisions relating to warehouse rental in general and the use of PSEIA (PostSale Economic Incentive Arrangements) in particular. The LME also reminds warehouse companies of their obligations with respect to PSEIA and will require warehouse companies to provide relevant information, including reasonable reasons for the transfer from Class 1 to Class 2 warehouse receipt and determination of compliance with the PSEIA Warehouse Agreement. If insufficient information is provided, the LME may refuse to give a no objection to the generation of a Category 2 Russian metal receipt.
4. Russian Metal Warehouse Receipt and unregistered Warehouse receipt Inventory Report: Upon request from market participants, the LME plans to divide the Russian metal entry in the Country of Origin inventory report into three categories:
(i) Russian Category 1 Warehouse receipt (issued on or before April 12, 2024, or RIMO status is RIMO_1_1)
(ii) Russian Type 2 warehouse receipt, which meets the conditions for regenerating Type 1 warehouse receipt (RIMO status is RIMO_1_2)
(iii) Russian Type 2 warehouse receipt, which does not meet the conditions for reproducing a Type 1 warehouse receipt
To allow the LME time to assess the reporting process and accuracy, the first report in the revised format will be published as early as June 10, 2024, with data as of May 31, 2024.
#LME #Russian Metal
