India’s biggest cement producer, UltraTech Cement (ULTC.NS), is bringing in 157,000 tonnes of coal from Russian producer SUEK and paying using Chinese yuan, a rare payment method that traders say could become more common, Reuters reported.
The coal will be brought in on the bulk carrier MV Mangas from the Russian Far East port of Vanino, the document showed. It cites an invoice dated June 5 that values the cargo at 172,652,900 yuan ($25.81 million).
Two trade sources familiar with the matter said the cargo’s sale was arranged by SUEK’s Dubai-based unit, adding that other companies have also placed orders for Russian coal using yuan payments.
The increasing use of the yuan to settle payments could help insulate Moscow from the effects of western sanctions imposed on Russia over its invasion of Ukraine and bolster Beijing’s push to further internationalise the currency and chip away at the dominance of the U.S. dollar in global trade.
India’s energy imports from Russia have spiked in the recent weeks as traders have offered steep discounts, Reuters reported this month. New Delhi defends its purchases of Russian goods, saying a sudden halt would inflate prices and hurt consumers.
Business units of Russian coal traders in Dubai have become active hubs for facilitating deals with India in the recent weeks, as Singapore has grown wary of provoking western nations that invoked sanctions against Russia, said multiple coal traders based in Russia, Singapore, India, and Dubai.
A Russian coal trader based in Dubai said the biggest challenge was sending roubles to Russia.
“You can either take payments in yuan in Dubai, or receive it in dollars or (Arab Emirates) dhiram and convert it to rouble,” he said, adding it was easier to convert the yuan to rouble and was preferred over other currencies.
In May, Russia rose to become India’s second-biggest supplier of oil, pushing Saudi Arabia into third place.
According to data, Indian refiners received about 819,000 barrels per day (bpd) of Russian oil, the highest thus far in any month, compared to about 277,00 in April.
Former Prime Minister Imran Khan had claimed that his government was ready to purchase Russian oil at 30% cheaper rates right before it was ousted. According to Imran Khan, PTI was removed from government by a US-backed regime-change conspiracy due to Russia’s visit.
But in an interview with CNN earlier this month, Finance Minister Miftah Ismail denied the inking of any deal, adding that even though former minister Hammad Azhar wrote a letter, Russia did not respond.
Russian Ambassador to Pakistan Danila Ganich also confirmed on June 12 that “no MoU has been signed on the trade of wheat and oil at cheaper prices with Pakistan.”
However, interestingly, ARY News reported on Wednesday that the current PMLN-led coalition government had begun a consultation to buy cheaper oil from Russia.
It said, “The Petroleum Division has penned down letters to the head of four major oil refineries – Pak-Arab, National Refinery, Pakistan Refinery Limited (PRL) and Byco Petroleum.”
Reportedly, officials of the Petroleum Division have held separate informal meetings with heads of oil refineries to figure out the payment method. “The government will hold a meeting with four major refineries today.”
Reuters report with input from GVS