The U.S. Treasury Department’s sanctions on Gazprombank present a challenge for Uzbekistan’s Yoshlik copper mine expansion, a $4.8bn project aimed at nearly doubling the country's copper production. Gazprombank has been a key financier of the project, and its removal from the international payments system could disrupt funding for the expansion unless alternative financing is secured.
The Yoshlik mine expansion is being overseen by Almalyk MMC, Uzbekistan's state-owned mining company. The project, set to increase copper output by 78% and gold output by 50% by 2026, relies on financing from Gazprombank, which extended a $1bn credit line for purchasing equipment from European companies.
To date, $670mn of this credit has been used to acquire equipment from firms such as Germany’s Thyssenkrupp, Switzerland’s ABB Group, and the U.K.’s Weir Group.
Gazprombank's sanctions are the latest complication for the Yoshlik project, which has faced financial challenges since Russia’s full-scale invasion of Ukraine. In 2021, Gazprombank and VEB.RF, another Russian bank, signed $2bn in deals with Almalyk MMC to fund the purchase of Russian mining equipment. However, after sanctions were imposed on VEB.RF in 2022, a $800mn tranche of the deal collapsed.
The U.S. sanctions on Gazprombank could lead Almalyk MMC to seek refinancing, as failure to exclude Gazprombank from the financing could result in secondary sanctions. The U.K., which has imposed sanctions on Gazprombank since 2014, has continued supporting U.K. firms working on the Yoshlik project, including Weir Group. In 2022, a U.K.-led delegation facilitated a €14.2mn export deal for Weir Group equipment, and in 2024, U.K. Export Finance guaranteed a refinancing deal through Spain’s Santander bank.
Germany also has significant financial ties with Almalyk MMC. In 2023, KfW IPEX-Bank helped organize €2.55bn in financing for the Yoshlik project. The involvement of European companies in the project could be impacted by Gazprombank’s sanctions, as their transactions have been indirectly financed by the Russian bank.
Almalyk MMC now faces the task of securing alternative financing sources to ensure the continuation of the Yoshlik project and avoid further complications related to U.S. sanctions.
Earlier, the U.S. imposed sanctions targeting entities that supported Russia’s defense sector, including Uzbek firms Uzstanex, The Elite Investment Group, Intheme Lab, and Mvizion. These measures spurred efforts to strengthen economic ties between Russia and Central Asia, attracting interest from Asian and European partners. Central Asia emerged as a hub for industrial expansion, driven by its strategic location and growing young workforce.
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