By Nilutpal Timsina and Pratima Desai

April 13 (Reuters) - The London Metal Exchange (LME) on

Saturday banned from its system Russian metal produced on or

after April 13 to comply with new U.S. and UK sanctions imposed

for Russia's invasion of Ukraine.

The sanctions aim to restrict revenues for Russia from the

export of metal produced by companies such as Rusal and

Nornickel that help to fund its military operations in Ukraine.

The U.S. Treasury Department and the British government on

Friday prohibited the 147-year old LME and the Chicago

Mercantile Exchange (CME) from accepting new Russian production

of aluminum, copper and nickel.

If an owner of Russian metal can provide evidence that it

was produced before April 13, it can still be put on LME warrant

- a title document conferring ownership, the LME said.

"Russian metal warrants issued on or after 13 April 2024 for

metal produced before 13 April 2024 are still subject to

restrictions that prevent UK LME Members and clients from

cancelling or withdrawing the corresponding metal unless they

are doing so for the account of a non-UK Client," the exchange

said in a statement.

In response to Reuters question on the sanctions and the

share of Russian metal in its warehouses, the CME said: "We are

reviewing and will communicate any impact to our markets. We do

not disclose the origin or brands of the eligible or registered

metal we have in store and that is consistent across all of our

physically delivered markets."

On Friday, a UK official said London expected any market

disruption to be short-lived and that the government had

consulted with colleagues in the U.S., the LME, the Bank of

England and the Financial Conduct Authority to minimise any

impact.

The announcement of the ban was made while trading was

closed for the weekend.

One industry source, speaking on condition of anonymity,

predicted price reaction would be muted when trading resumes in

Asian time on Monday, while another said a repeat of the kind of

aluminium price jump spurred by U.S sanctions on Rusal in April

2018 was possible.

Both said any European Union sanctions would be almost

certain to trigger a price surge. The bloc last year imported

around 500,000 metric tons of aluminium for use in transport,

construction and packaging.

LOOPHOLES?

The action does not block bilateral contracts between two

companies, rather than via the LME, British officials said on

Friday, speaking on condition of anonymity.

The officials said continued trading of Russian metals off

of the exchanges is expected to be at a discount and that it

does not restrict supply.

The share of available aluminium stocks of Russian origin in

warehouses approved by the LME stood at 91% in March, while the

proportion of copper stocks rose to 62% from 52% in February.

Russian nickel in LME warehouses amounted to 36% of the total.

The high share of Russian-origin metal in LME inventories

has been a concern for some producers, who compete with Russia's

Rusal, and some Western consumers who have avoided Russian metal

since Moscow's invasion of Ukraine in 2022.

Britain banned the import of base metals from Russia in

December and said it would extend the prohibition to ancillary

services when it could be done in concert with international

partners.

The LME, the world's largest and oldest forum for trading

metals, is owned by Hong Kong Exchanges and Clearing ( HKXCF ).