Commodity-Backed Currencies?

The last few days have seen Western anti-Russian rhetoric and red lines escalate dramatically as the military and economic issues come to light in any push back against Putin’s pressure. From NatGas export fallacies to “boomerang”-ing sanctions, the west seems stuck (for now).. which brings up the question - why is China and Russia making huge investments in commodity-miners? Russia’s largest gold miner Polyus Gold is considering a complete onshoring of its activities and China is buying a huge Peruvian copper mine from Glencore. The outcome would appear to enable both firms to do away with USD but not having to buy this resource in the market… just mine it?

Russia is onshoring its commodity miners… [6]

Polyus Gold, Russia’s biggest gold miner, is considering state proposals to encourage the rebasing of Russian firms currently owned by offshore entities and intends to explore these issues with the government, the company said on Friday.

 

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Russian President Vladimir Putin has been pushing for the so-called “de-offshorisation” of the Russian economy, whereby companies with offshore entities re-register them in Russia and pay taxes in Russia.

 

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Earlier this week First Deputy Prime Minister Igor Shuvalov urged companies listed on foreign stock exchanges to consider relisting in Moscow to protect themselves from sanctions imposed by the West over Russia’s annexation of Crimea.

 

Polyus’s biggest shareholder is Russian tycoon Suleiman Kerimov, who owns 40.22 percent.

and China is buying commodity miners… [7]

A Chinese consortium is buying Glencore Xstrata’s copper mine in Peru in a $6bn (£3.6bn) all-cash deal, marking one of China’s largest mining acquisitions.

 

The consortium is led by MMG Limited and includes China’s Citic Metal.

 

The acquisition is subject to regulatory approvals but all parties expect the deal to be done by the end of September.

 

Analysts expect Glencore to use the proceeds from the sale to reduce its debt.

 

The mine is expected to produce more than 450,000 tonnes of copper a year in its first five years.

 

China relies heavily on the metal, which is used in electronics production.

Another peg in the anti-USD hegemony board? Shift each nation’s need to use USD to purchase critical resources and instead own them away from control by western states…?

Of course, in the case of China’s copper mine acquisition, one can’t help but wonder if – on theback of the collapse in commodity-finance deals - whether China simply bought the mine to shut it down and maintain artificially high copper prices and thus keep collateral chains from crumbling in the shadow banking system.

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