Since Western sanctions imposed due to the Ukraine conflict disrupted Russia's conventional export routes, the United Arab Emirates (UAE) has emerged as a primary destination for Russian gold, according to Russian customs records.
The records detail almost a thousand gold shipments over the past year, indicating that the Gulf state imported 75.7 tonnes of Russian gold worth $4.3 billion, a significant leap from the mere 1.3 tonnes imported in 2021. China and Turkey followed closely, collectively accounting for 99.8% of Russian gold exports, along with the UAE, from Feb. 24, 2022, to March 3, 2023.
Russian gold, which traditionally found its way to London, one of the world's prominent gold trading and storage hubs, experienced a setback after several multinational banks, logistics providers, and precious metal refiners ceased handling it post the Ukraine conflict. The London Bullion Market Association prohibited Russian bars minted from March 7, 2022, and by August, major economies including Britain, the European Union, the U.S., Canada, Japan, and Switzerland all instituted bans on Russian bullion imports.
However, Russian gold manufacturers rapidly identified new markets in countries that didn't enforce sanctions on Moscow, such as the UAE, Turkey, and China. Louis Marechal, a gold sourcing expert at the Organisation for Economic Co-operation and Development, warned about the potential risk of Russian gold being melted down, recast, and resurfacing in U.S. and European markets under a hidden origin.
The UAE government's Gold Bullion Committee underscored that the state operates with stringent procedures against illegal goods, money laundering, and sanctioned entities. The nation pledged to maintain its honest and open trade relationships in adherence to international norms established by the United Nations.
Despite Washington's warnings to countries, including the UAE and Turkey, about potential loss of access to G7 markets if they engage with entities under U.S. sanctions, the data analyzed by Reuters suggests no evidence of any violation of U.S. sanctions by these nations.
Customs data revealed exports of 116.3 tonnes between Feb. 24, 2022, and March 3, 2023. However, Metals Focus consultancy estimates that Russia produced 325 tonnes of gold in 2022. A portion of the gold mined likely remained within Russia or was exported through transactions absent from the records.
In spite of a shift in Russian exports from London, the UK capital remains unscathed as its dependency on Russia is minimal. Meanwhile, the UAE continues to flourish as a significant exporter of bullion and jewelry, with Russian imports constituting roughly 10% of its total imports.
As an incentive, Russian firms have been selling gold in the UAE at approximately 1% below global benchmark prices. The majority of the gold is typically shipped to refineries to be melted down and recast.