UltraTech carried 157,000 tonnes of coal from Russian producer SUEK, loaded onto the MV Mangas bulk carrier from the Vanino port in Russia’s Far East, according to the document. He cited an invoice dated June 5 that valued the shipment at 172,652,900 yuan ($25.81 million).

Two trade sources familiar with the matter said the cargo sale was arranged by the Dubai-based unit of SUEK, adding that other companies had also ordered Russian coal using yuan payments.

The increased use of the yuan to settle payments could help protect Moscow from the effects of Western sanctions imposed on Russia after its invasion of Ukraine and support Beijing’s efforts to further internationalize the currency and reduce the dollar’s dominance in global trade.

The sources declined to be identified as they are not authorized to speak to the media. UltraTech and SUEK did not respond to requests for comment.

“This move is significant. I have never heard of an Indian entity paying in yuan for international trade in the last 25 years of my career. This is tantamount to avoiding USD (US dollars),” said a Singapore-based currency trader.

The sale underscores how India has maintained trade ties with Russia for commodities such as oil and coal despite Western sanctions. India has longstanding political and security ties with Russia and has refrained from condemning the attack in Ukraine, which Russia says is a “special military operation”.

It was not immediately clear which bank opened the letter of credit for UltraTech and how transactions with SUEK were made. SUEK did not respond to a request for comment.

Mangas is currently docked near the Indian port of Kandla, according to ship tracking data at Refinitiv Eikon.

TRADE BETWEEN INDIA, CHINA AND RUSSIA

India has explored the possibility of setting up a rupee payment mechanism for trade with Russia, but this has not materialized. Chinese companies have used the yuan in trade settlements with Russia for years.

For Indian trade settlements using the yuan, creditors could potentially have to send dollars from branches in China or Hong Kong, or Chinese banks with which they have ties, in exchange for the yuan to settle the trade, two Indian bankers said.

“If the rupee-yuan-ruble path proves profitable, businesses have every reason and incentive to switch to this path. This should happen more often,” said Subash Chandra Garg, former secretary of economic affairs at India’s Ministry of Finance.

India’s bilateral trade with China, where most companies pay in dollars, has flourished even after the deadly military clashes between the two countries in 2020, although New Delhi has stepped up scrutiny of Chinese investments and imports, and has banned some mobile apps for security reasons. . .

An Indian government official familiar with the matter said the government was aware of the yuan payments.

“The use of the yuan to settle import payments from countries other than China has so far been rare, and may be increasing due to sanctions against Russia,” the official said.

India’s energy imports from Russia have surged in recent weeks as traders offer heavy discounts, Reuters reported this month. New Delhi defended purchases of Russian products, saying a sudden stop would drive up prices and hurt consumers.

The Russian coal trader Duba business unit has been an active hub for facilitating deals with India in recent weeks because of Singapore’s fears of provoking Western countries that have imposed sanctions on Russia, said several coal.bass traders in Russia, Singapore, India and Duba. .

A Russian coal trader based in Duba said the biggest challenge was sending rubles to Russia.

“You can receive payments in Duba yuan or receive them in dollars or dhirams (from the United Arab Emirates) and convert them into rubles,” he said, adding that it was easier to convert yuan into rubles and preferred over other currencies. .

($1 = 6.6899 yuan)