Sanctions on Gazprombank Threaten Uzbekistan’s Yoshlik Copper Mine Expansion
The U.S. Treasury Department’s sanctions on Russia’s Gazprombank have created a significant challenge for the $4.8 billion expansion of Uzbekistan’s Yoshlik copper mine. This project, managed by state-owned Almalyk, is key to nearly doubling the country’s copper production by 2026. However, the sanctions, which remove Gazprombank from the international payments system, may disrupt the critical funding needed for the project unless alternative financing sources are identified.
Gazprombank has been a primary financier of the Yoshlik expansion, providing a $1 billion credit line for acquiring equipment from European manufacturers. To date, $670 million of this credit has been used to purchase machinery from companies such as Germany’s Thyssenkrupp, Switzerland’s ABB Group, and the U.K.’s Weir Group.
This development is the latest in a series of financial difficulties for the Yoshlik project. The project had already faced setbacks following Russia’s full-scale invasion of Ukraine. In 2021, Almalyk secured $2 billion in agreements with Gazprombank and VEB.RF, another Russian bank, to fund the acquisition of Russian mining equipment. However, sanctions imposed on VEB.RF in 2022 led to the collapse of an $800 million tranche of this deal.
The new sanctions could force Almalyk to refinance its plans. Continuing to involve Gazprombank in the project’s funding risks triggering secondary sanctions. Meanwhile, European partners with stakes in the project may face challenges. Germany’s KfW IPEX-Bank arranged €2.55 billion in financing for Yoshlik in 2023, and the U.K.’s Weir Group remains a key supplier. Despite sanctions, the U.K. has supported Weir Group’s involvement, with U.K. Export Finance guaranteeing a refinancing deal through Spain’s Santander bank in 2024.
Uzbekistan’s Almalyk is now tasked with identifying alternative financing to ensure the Yoshlik project stays on track. The sanctions highlight broader geopolitical and economic tensions, as Uzbekistan navigates its position amid growing Central Asian industrial expansion and its partnerships with European and Asian entities.
