Lugano's traders under sanctions

The Russian steel houses of the Luganese

Chapter F.I has described how the opening of the former Soviet economies after 1991 brought the export companies of the large Russian steel groups to Ticino. By 2022 three of them were established in the Luganese. MMK Steel Trading, the trading company of the Magnitogorsk Iron and Steel Works (MMK), had been present in Ticino since 2002 and was registered in Pazzallo. NLMK Trading, the trading arm of the Novolipetsk group controlled by Vladimir Lisin, had been established since 2007 and was reported to handle more than 30 per cent of Russian steel exports. Severstal Export GmbH, the export company of the Severstal group controlled by Alexey Mordashov, had its seat at Galleria 2 in Manno.¹ Together with Duferco's trading arm, by then controlled by the Chinese Hesteel group, and smaller houses specialized in Ukrainian and Black Sea steel, they made Ticino, the third commodity trading centre of Switzerland after Geneva and Zug, a place where steel was traded in large volumes. Duferco alone marketed about 13.5 million tonnes of steel and ferrous metals a year from Lugano. Of the 123 trading companies registered in the canton in 2022, 51 specialized in minerals and metals.²

The listings of 2022 struck these houses through their owners. The European Union listed Alexey Mordashov on 28 February 2022, and Swiss Italian television reported a few days later that he was also on the Swiss list and subject to financial measures. The Manno company itself was not named on the list.³ Viktor Rashnikov, the majority owner and chairman of MMK, followed in the European fourth package of 15 March 2022 and on the Swiss list on 16 March 2022. The grounds given were that he was active in economic sectors that provide a substantial source of revenue to the Russian government.⁴ Vladimir Lisin was not listed by the European Union or by Switzerland at that time.⁵ On 2 August 2022 the United States designated MMK itself and Rashnikov under Executive Order 14024, together with MMK's Turkish steelmaking subsidiary MMK Metalurji.⁶ Under the American ownership rule discussed later, any trading subsidiary owned 50 per cent or more by MMK became blocked property for American persons from that date, whether or not it was named.

Two mechanisms combined. The first was the freeze. Because the Ticino companies were owned or controlled by listed persons, banks and counterparties treated them as subject to the freeze unless SECO authorized otherwise, and the companies could only ask for authorizations to continue specific operations.⁷ The second was the trade measure. Even a Russian-owned trading company that was not frozen, such as NLMK's, could no longer buy Russian iron and steel products for sale anywhere once Article 14a of the Ukraine Ordinance had prohibited the purchase of such products by persons in Switzerland. The core function of a Swiss export company of a Russian mill, which was to buy from the mill and resell to the world, had become unlawful for the products covered by the ban. What remained possible were products outside Annex 17, such as iron ore and, until the twelfth package, pig iron, and the trade in non-Russian steel.⁸

Notes

1. Franchini, swissinfo.ch, 29 March 2022 (above) (MMK Steel Trading since 2002; NLMK Trading since 2007 and more than 30 per cent of Russian steel exports; Severstal Export GmbH in Manno); tio.ch, report on the interpellation of the MPS of 15 April 2022, https://www.tio.ch/ticino/politica/1577784/cantone-aziende-ticino (MMK Steel Trade AG in Pazzallo); RSI, "Bandito dalla Svizzera il presidente di Severstal", March 2022, https://www.rsi.ch/info/ticino-grigioni-e-insubria/Bandito-dalla-Svizzera-il-presidente-di-Severstal--1786745.html (Galleria 2, Manno). ↩
2. Franchini, swissinfo.ch, 29 March 2022 (above) ("il terzo centro di commercio della Svizzera"; Duferco "controllato dal colosso cinese" Hesteel; about 13.5 million tonnes of steel and ferrous metals a year from Lugano; 51 of 123 trading companies specialized in minerals and metals); see also Chapter F.I. ↩
3. RSI, "Bandito dalla Svizzera il presidente di Severstal" (above); Council Implementing Regulation (EU) 2022/336 of 28 February 2022, https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/? uri=CELEX:32022R0336 (listing of Alexey Mordashov). ↩
4. RSI, "Bandito dalla Svizzera anche l'oligarca Viktor Rashnikov" (above) (Swiss listing of 16 March 2022; grounds); Franchini, swissinfo.ch, 29 March 2022 (above) (EU listing of 15 March 2022). ↩
5. RSI, "Oligarchi in lista nera, pagano anche le società" (above) (NLMK in Paradiso; Lisin "not yet" sanctioned). ↩
6. U.S. Department of the Treasury, "Treasury Sanctions Elites and Companies in Economic Sectors that Generate Substantial Revenue for the Russian Regime", press release jy0905, 2 August 2022, https://home.treasury.gov/news/press-releases/jy0905. ↩
7. RSI, "Oligarchi in lista nera, pagano anche le società" (above). ↩
8. Annex 17 of the Ukraine Ordinance ("Eisen- und Stahlerzeugnisse", table of contents above) corresponds to Annex XVII of Regulation (EU) No 833/2014, which as inserted by Regulation (EU) 2022/428 of 15 March 2022, https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/? uri=CELEX:32022R0428, lists iron and steel products of CN chapters 72 and 73 and does not include iron ore (CN 2601) or pig iron (CN 7201). Pig iron was brought under the prohibitions of Article 3i of the EU regulation, with transitional quotas of 1,140,000 tonnes until 31 December 2024 and 700,000 tonnes from 1 January 2025, by Regulation (EU) 2023/2878 (above), and Switzerland adopted the measure with the twelfth package (cash.ch, 24 February 2024, above: "Neu sind auch der Kauf und die Einfuhr von Roheisen [...] aus Russland verboten"). ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.