Russian coal is being paid for by UltraTech Cement in Chinese Yuan

30 Jun 2022 , 12:49 PM

According to an Indian customs document examined by Reuters, the largest cement manufacturer in India, UltraTech Cement, is importing a shipment of Russian coal and paying with Chinese yuan, a unique payment option that dealers predict may become more popular.

As per the document, UltraTech is importing 157,000 tonnes of coal from the Russian manufacturer SUEK, which was loaded into the bulk carrier MV Mangas at the Vanino port in the Russian Far East. The value of the shipment, according to a cited invoice dated June 5, is 172,652,900 yuan ($25.81 million).

Two industry insiders with knowledge of the situation said that the sale of the shipment was orchestrated by SUEK’s Dubai-based subsidiary and that other businesses have also made orders for Russian coal using yuan payments.

The growing use of the yuan as a means of payment could support Beijing’s efforts to further internationalize the currency and challenge the dominance of the U.S. dollar in international trade, as well as shield Moscow from the effects of western sanctions imposed on Russia due to its invasion of Ukraine.

Since they are not permitted to speak to the media, the sources declined to give their names. A request for feedback from UltraTech and SUEK was not met with any response.

“This action is important. In the last 25 years of my profession, I have never heard of an Indian organization paying in yuan for foreign commerce. In essence, this is avoiding the USD (U.S. dollar) “a currency broker located in Singapore explained.

The transaction demonstrates how India has continued to do business with Russia in exchange for commodities like coal and oil despite western sanctions. India has maintained long-standing relations with Russia in terms of politics and security, therefore it has refrained from denouncing the attack in Ukraine, which according to Russia was a “special military operation.”

It was unclear how the transaction with SUEK was carried out and which bank provided a letter of credit for UltraTech almost away. A request for comment from SUEK was ignored. According to ship-tracking information on Refinitiv Eikon, the Mangas is now anchored close to the Indian port of Kandla.