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. Last Updated: 07/27/2016

Snafu Halts Precious Metals Exports

Precious metals exporters are nervously scratching their heads over a bureaucratic snafu that has banned their shipments from leaving the country since Saturday.

A long-awaited presidential decree that was signed by Vladimir Putin in June but only came into effect Aug. 25, aimed to simplify import and export procedures for gems and precious metals, such as gold, silver, palladium and platinum. But instead of making life easier, the decree stopped exports at customs because there are no inspectors ready to approve shipments, as the decree stipulates.

"The government messed up," said a source close to the Finance Ministry, which along with the State Customs Committee and the State Assay Chamber is in charge of regulating precious metals exports. "It took time to develop the law, to publish it, so it came into effect during summer, holiday time."

"In the two months since the law was originally published the government, unfortunately, couldn't work out the procedures," said Anatoly Komrakov, a spokesman for Norilsk Nickel, owner of the lion's share of the world's palladium market and exporter of other platinum group metals.

A spokesman for the State Customs Committee said customs officers were only following the letter of the law by refusing to let the gems and metals leave the country.

"It is negative," said Pavel Loginov, a vice president of Rosbank, whose gold exports are on hold. "We have the right to sell gold to the Central Bank, which means we have a source of liquidity, but it is a less favorable option," he said.

The news of the export halt pushed spot palladium prices to $465.00/$475.00, up from Monday's New York close at $444.00/$454.00, Reuters reported. Gold and silver prices remained fairly static.

Norilsk Nickel and state-controlled Almazyuvilerexport, the only authorized exporter of PGMs, which include palladium, both said Tuesday they hoped the government would come up with a solution by the end of this week.

"Our experience with document processing in the government has not always been positive," said Komrakov.

He said Norilsk would not be affected by the break in exports unless the disruption stretches long enough to exhaust the overseas inventory of its exclusive exporter, state-controlled Almazyuvilerexport, which is overseen by the Finance Ministry.

"We have a number of contracts we have to fulfill. … If this is resolved in the next several weeks, we'll be OK," said Almaz general director Sergei Gorny. "If not, we could face [contractual] penalties. But we will fulfill our long-term contracts, even if it costs us."

"A weeklong interruption should not have an impact on the market," said Kakha Kiknavelidze, metals analyst at Troika Dialog. "If a resolution is delayed for a month or so, other PGM producers, such as South Africa, should benefit from improved prices," he added.

The head of the State Assay Chamber, Boris Borisov, told Prime-Tass that items made from precious metals and gems, such as car parts, surgical instruments and jewelry, could be held up until February unless additional legislation is rushed through. The decree allows licensed producers of such items to export them. The law allowing such items to be produced without a license comes into effect only in February, he said.