The London Bullion Market Association (LBMA) has currently suspended transactions with all six Russian silver and gold refineries. The ban of Russian refineries on LBMA’s “Good Delivery” list is part of the US, EU, and the UK sanctioned imposed on Russia for its incursion on Ukraine.
LBMA will still accept Russian bars produced prior to the ban.
The Following Six Russian Refineries Banned From “Good Delivery” Effective Immediately Are:
- Moscow Special Alloys Processing Plant (gold)
- Shyolkovsky Factory of Secondary Precious Metals, SOE (gold and silver)
- Prioksky Plant of Non-Ferrous Metals (gold and silver)
- JSC Novosibirsk Refinery (gold and silver)
- JSC Krastsvetmet (gold and silver)
- JSC Uralelectromed (gold and silver)
Will LBMA replace the six Russian Refineries?
As of today, the LBMA has not stated if they will fill in the vacancies with other refineries. The LBMA recently said that they are not expecting a huge impact on the supply chain.
The ban on Russian gold and silver can have terrible consequences on the global supply chain.
Russia is the second-largest producer of precious metals in the world but does not export significant amounts of gold or silver. The global economy is still recovering from the COVID-19 pandemic, with manufacturing trying to keep up with pent-up demand for goods.
Although the six Russian refineries aren’t the top supplier, any precious metal market disruptions will be felt everywhere, leading to higher premiums than before.
Are Platinum and Palladium Supplies Effected by the Ban?
The London Platinum and Palladium Market (LPPM), the world’s largest, said that it will continue its relationship with two of its accredited Russian refineries. Both the Prioksky Plant of Non-Ferrous Metals and JSC Krastsvetmet will be able to participate in the London exchange.
Why are Russian Refineries Allowed in the LPPM but not the LBMA?
Platinum Group Metals (PGMs) are in high demand. Russia supplies 40% of the world’s palladium, which is the main component in catalytic converters. As a result, since Russia provides a large number of precious metals, it gives them leverage with LPPM.
A ban on palladium would be a catastrophic hit to the automotive industry, which uses the precious metal for catalytic converters. This is a situation that the UK, US, and EU would like to prevent.
The market for precious metals is certainly under pressure. Analysts are certain that demand will spike as supplies continue to dwindle, causing higher prices to persist for the near term.