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Russia's Nornickel: China payment problem persists despite Xi and Putin meetings

A senior executive of metals producer Nornickel stated on Thursday that Chinese banks continue to delay payments for Russian imports up to four full weeks, despite assurances given by Russian officials about the improvement in payment issues with China.

Last year, the problems of settlements with China and Russian trading partners reached a peak as Western regulators pressed banks to comply with Western sanction. This forced firms to use cryptocurrencies or barter.

This issue was discussed between Russian President Vladimir Putin, and Chinese President Xi Jinping. After their meeting in Moscow, in May, Russian officials claimed that the situation had improved and that payments were now being made.

Both leaders avoided discussing the payment issue during Putin's visit to China, which lasted four days this week. Xi also called for a global economic and security order.

Most executives avoid elaborating on the subject of international payments to avoid attracting unnecessary attention. Anton Berlin, Nornickel's vice president for sales, said that the problems persist.

Chinese banks halt payments for a period of 2-3-4 weeks as soon as new sanctions are announced. It doesn't really matter whether they don't impact our company or products. "They need to read the documents (that accompany the sanctions) and payments are delayed," Berlin said at a panel debate held at the Far East Economic Forum, Vladivostok.

Berlin stated that "in the past we used to receive money the following day or within two days. But now, several days are the norm and several weeks are not unusual."

He said that this issue is affecting the ability of the company to maintain working capital, and that it forces the company to increase borrowing rates at very high rates due to the central banks policy to combat inflation.

Un senior official from the finance ministry told the same panel he believed payments were not being delayed anymore. Alexei Yakovlev stated that he believes cross-border payments are no longer a problem.

Nornickel is a major producer and exporter of nickel and palladium. China is the biggest buyer. Berlin stated that the company ran several parallel schemes to execute payments without providing any further details.

Berlin stated that Western sanctions were not as bad as the restrictions that Chinese banks and their other trading partners impose on themselves out of fear that they could be targeted by Western regulators.

He urged greater secrecy in Russia's international trade transactions to shield it from Western regulators, and said that a new system of international payments independent from the West is needed.

"It has always been said that transparency in financial transactions is important. But now anonymity also becomes an important factor. He said that transparency should only be limited to regulators. (Reporting from Anastasia Lyrchikova in Moscow, Gleb Bryanski at Vladivostok and Olesya Astakhova in Vladivostok. Editing by PhilippaFletcher.)

(source: Reuters)