London Metal Exchange (LME) suspends Russian nickel

On August 16, the London Metal Exchange or LME banned any Russian nickel from their warehouses in the United Kingdom that had been exported after July 20. The ban is a part of the British Government’s response to the Russian invasion of Ukraine.

London metal exchange
London metal exchange

“The London Metal Exchange is concerned that any metal, which is subject to the regulations and which is put on a warrant in LME-listed warehouses in the UK will be unable to be removed from warrant and imported into the UK without significant additional cost as a result of the regulations,” stated LME. They also added that there was a significant risk of high fees for buyers of Russian nickel. It is important to note that 10% of the world’s nickel, 3.5% of copper, and 6% of aluminum are from Russia. The ban by LME is expected to result in commodity shortages and a price surge. Nickel production in Indonesia rapidly increased because of the suspension.

The lack of visibility over how much business was being done in OTC trades was behind the turmoil that unfolded in March when nickel prices surged nearly 270% over two days, prompting the exchange to halt trading and cancel billions of dollars worth of deals.

The amount of nickel that was traded on the London Metal Exchange decreased by 40%. Average LME nickel decreased by 34,962 lots or 209,772 tonnes in July. According to a metals trader at a natural resources fund, volumes are down generally (on metals markets) partly because of the global slowdown but also because nickel has an extra burden. A nickel trader added that low volumes and open interest is becoming more illiquid day by day.

Nickel is mainly used for making coins, gas turbines, and rocket engines. It has the capacity to resist corrosion at high temperatures, and that’s why the metal is suitable for making wires, nails, and pipes as well.

London Metal Exchange passport gained new certifications

LME recently announced that new certifications had been added to their digital credentials. LME passport’s taxonomy covers environmental, social, and governance or ESG metrics. They are meant to ensure that London Metal Exchange promotes sustainability.

“We’re delighted that producers are increasingly finding value in providing greater visibility of their sustainability credentials via LME passport. As we expand the range of available metrics producers can use to disclose their data, the overall ESG landscape across the metals industry becomes clearer, and this transparency drives progress and mitigation. The more producers are open about their methodologies, their strengths, and the work still to be done, the better we can address industry-level sustainability challenges,” LME Chief Sustainability Officer Georgina Hallet commented.

The four new disclosures include independently assessed aluminum emissions ranges evaluated by the CRU Emissions Analysis Tool, the Aluminum Stewardship Initiative (ASI) Performance Standard Certification, the International Council on Mining and Metals (ICMM) Performance Expectations, and the Initiative for Responsible Mining Assurance (IRMA) Standard for Responsible Mining.

The CRU Emissions Analysis Tool will allow users to compare emissions across the entire aluminum value chain. The ASI Performance Standard Certification explains and defines 59 ESG principles and criteria. Its goal is to address sustainability issues in the chain.

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The Aluminum Stewardship Initiative (ASI) is the only sustainability standards and certification programme for the global aluminum value chain, and we have worked closely with London Metal Exchange in recent years on a range of ESG transparency and due diligence issues. We are pleased to now include the ASI Performance Standard on the LMEpassport platform, to support market-facing disclosures and broader recognition of multi-stakeholder standards.

Several LME brands were among the early ASI members and adopters of the ASI Performance (and Chain of Custody) Standards, sharing a commitment to transparency, improved ESG performance (including but broader than GHG emissions) and driving positive change in the aluminum sector. We look forward to continued engagement and action on sustainability between LME, ASI and its Members along the value chain, from mine to market,” said Dr Fiona Solomon, ASI CEO.

ICMM Performance Expectations are guided by ICMM’s Mining Principles. They explain how members should react or respond to sustainability issues at the corporate and operational levels. Bryony Clear Hill, Manager for Standards, Reporting and Circular Economy at ICMM, stated that they have been working with London Metal Exchange through the development of the LME passport. They also have 26 member companies that are currently working through self-assessments, as well as third-party validation for around 650 sites in 50 countries.

The IRMA Standard for Responsible Mining aims to address the global demand for more socially and environmentally responsible mining. The requirements are divided into four elements, namely: business integrity, planning for positive legacies, social responsibility, and environmental responsibility.

LME to conduct Metals Seminar

Registrations are now open for the LME Metals Seminar, which will take place on October 24, 2022, at the Queen Elizabeth II Centre in London. The sessions are expected to cover different aspects of the metals market ranging from macroeconomic outlook and market trends to issues in the metals industry. Over 600 delegates and guests are expected to attend. The actual event will take place in London, but delegates can also book online tickets to gain access to live content online.

Many influential people from the industry have been invited to speak at the conference, including Inka Guixa of La Farga, Amelia Xiao Fu of Bank of China International, Andrea Hotter of Fastmarkets, Clyde Russel of Thomson Reuters, and Jinny Yang of ICBC Standard, amongst others.

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