Indian cement maker used yuan to purchase Russian coal: Report

An Indian cement manufacturer recently purchased Russian coal by paying with the yuan currency with the help of India’s biggest private bank, HDFC Bank, news agency Reuters reported.

The main aim of the report was not to pinpoint that the purchase breaches the sanctions imposed by the West on Russia in the wake of the Ukrainian invasion.Rather it seeks to highlight the various ways Russia can sell items abroad without heavily relying on the US dollar.

Citing an invoice dated June 5 and a source familiar with the matter, Reuters reported that HDFC Bank backed cement maker Ultratech's purchase of Russian coal from producer and trader SUEK for 172.7 million yuan ($25.74 million).

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The HDFC Bank’s Mumbai branch of Andheri East issued the letter of credit for the deal, according to the invoice.

The dollar is the currency of choice for global trade in raw materials, but some traders say the yuan could be increasingly used to settle payments for supplies from Russia.

In the invoice, SUEK requests Ultratech remit the 172.7 million yuan to SUEK's account at the Shanghai branch of China Everbright Bank. SUEK lists the Hong Kong branch of international lender HSBC as the correspondent bank. A correspondent bank acts as a middleman in the transfer of money from one bank to another.

Reuters could not determine if a payment had been received by China Everbright or if HSBC or any other bank was involved in a transfer of funds. HDFC Bank and HSBC declined to comment. Ultratech, SUEK and China Everbright Bank did not respond to requests for comment.

It was not clear from the invoice which currencies were used to effect the yuan payment. The amount listed was quoted in Chinese yuan and Reuters reported last week that Ultratech imported 157,000 tonnes of coal from Switzerland-registered SUEK and agreed to settle the final payment in that currency.

Greater use of the yuan to settle payments could help insulate Moscow from punishment and bolster Beijing's push to further internationalise the yuan and chip away at the dominance of the U.S. dollar in global trade.

(With inputs from agencies)

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