Reuters has reported that the Russian Copper Company (RMK) and various Chinese importers have allegedly been circumventing taxes and international sanctions by disguising new copper rod as scrap metal. According to sources familiar with the matter, this practice has been ongoing since December 2023, with the processing reportedly taking place in the Xinjiang Uygur Autonomous Region of northwestern China.
The manipulation involved milling the copper rods, typically supplied in coils, to resemble scrap metal. This subterfuge reportedly exploited discrepancies in tariff classifications, benefiting from lower duties on scrap compared to new metal. Specifically, while Russia’s export duty on copper rod was 7%, scrap was taxed at 10%. In contrast, imports of copper wire rod in China face a 4% duty, but scrap imports from Russia are duty-free.
Significant discrepancies in trade data from Russian and Chinese customs further support these allegations. Chinese customs records indicate a sharp increase in imports of copper scrap from Russia since December, with 97% of these imports reportedly passing through the Alashankou border point. However, data on Russian exports suggest that the actual shipments of copper scrap to China were minimal, indicating a possible mislabeling of new copper rods as scrap.
The Federal Customs Service of Russia has not provided foreign trade data since April 2022, and Chinese customs in Xinjiang have not responded to inquiries. RMK has denied these allegations, stating that it supplies products only to Russian customers and declined to comment further. Similarly, OJSC Kyshtym Copper Electrolyte Plant, implicated by independent data providers as a supplier in these transactions, has maintained that it sells its products solely to domestic companies. 
