Despite sanctions, Russian bomb factory bought Siemens tech via middleman

As Russia sought to ratchet up military production for the war in Ukraine, a state-owned explosives manufacturer circumvented Western sanctions by purchasing equipment made by Germany’s Siemens from a middleman that imports technology from China.

The acquisition of the Siemens equipment needed to automate machinery at the Biysk Oleum Factory (BOZ), in southern Siberia, was made via a Russian intermediary that sources industrial technology from Chinese wholesalers and re-sellers, according to customs data and state procurement records reviewed by Reuters.

The acquisition of the equipment shows how Russian military firms have been able to easily avoid Western sanctions to boost their production. US President Donald Trump has given Moscow until Friday to agree a ceasefire in Ukraine or face additional sanctions.

BOZ’s parent company, Federal State Enterprise Ya. M. Sverdlov Plant, is already subject to US and EU sanctions for assisting Russia’s war effort.

BOZ signed a deal in October 2022 to acquire the Siemens equipment from a Russian intermediary, Techpribor, the procurement records show. Soon before the expiry of the 140-day deadline to deliver the equipment, Techpribor received a shipment from a Chinese supplier of industrial equipment called Huizhou Funn Tek, based in Guangdong province, customs data showed.

By matching Siemens product codes with customs codes, and reviewing descriptions in the documents, Reuters established that two Siemens power regulator devices supplied by Huizhou Funn Tek were identical to the models BOZ ordered.

Reuters found no evidence Siemens knew its equipment was sold to the Russian explosives maker.

A spokesman for the German engineering multinational said the firm strictly complies with international sanctions and demands the same from its customers, but he added that some goods could reach Russia without it knowing.

Techpribor did not respond to a Reuters request for comment. Questions sent to BOZ and its parent company also went unanswered.

Though it’s well documented that Russian defense manufacturers have sourced Western technology from China, Reuters’ reporting traces the path of equipment to show how a Russian defense firm can obtain Western equipment with minimal difficulty.

Since Russia began its full-scale invasion of Ukraine in February 2022, the BOZ factory, in the southern Siberian city of Biysk, has been expanding. It has been building a new facility to produce another type of high explosive, called RDX, a Reuters investigation found.

Acquiring automated machine tools is crucial to the Russian defense sector’s drive to produce more munitions. They allow higher productivity with fewer workers, a vital consideration given the sector is experiencing a labor shortage, according to an October 2024 report by British defense think tank RUSI and the Open Source Centre, an organization that uses open data to study conflict, corruption and crime.

Russia has only a limited track record of producing its own automated machine tools and defense manufacturers must often import them.

Konrad Muzyka, director of the Rochan military consultancy in Poland, said the continued delivery of Western-made machinery to Russia was prolonging the war by feeding Moscow’s rearmament drive.

“These high-precision components are often irreplaceable within advanced manufacturing processes, including missile production, drone assembly, and tank refurbishment,” he said. “Without them, Russia’s capacity to sustain or scale its war effort would be more time consuming, expensive and place a bigger burden on the labor market.”

Russian middleman

Tender documents on the state procurement database showed that in 2022 and 2023, the parent company of BOZ purchased three sets of Siemens industrial automation equipment, and specified they were for the plant in Biysk. The electronic devices, which carry the Siemens Simatic sub-brand, can be patched into industrial machinery, allowing it to be automated and monitored remotely.

The tender documents identified the firm that won the contract to supply some of the equipment: Techpribor Company LLC, registered in the Russian exclave of Kaliningrad, situated between Poland and Lithuania.

Reuters reviewed confidential tax service data that confirms it did business with BOZ’s parent company.

By examining Russian customs data, Reuters established that Techpribor, between February and November 2023, imported consignments of Siemens equipment from companies in China.

Techpribor bought several shipments on the same date from Huizhou Funn Tek, which describes itself as a trader in industrial automation gear. The shipments included the two Siemens power regulators that matched the order placed by BOZ.

The data reviewed by Reuters does not contain enough information to establish that the power regulators in the customs documents were the ones delivered to BOZ. The data does show though that they are the same model of Siemens gear.

On its website, Huizhou Funn Tek identifies Siemens as a “partner” company.

A representative of Huizhou Funn Tek, who gave her name as Ms. Chen, said the company was able to buy directly from Siemens. “They don’t ask who the end user is,” she said.

Although Huizhou Funn Tek has many Russian clients, it wouldn’t ship goods to entities that might use them for military purposes, Chen said.

Loophole in sanctions

Later in 2023, Techpribor imported more consignments of Siemens gear from a different Chinese supplier, called New Source Automation Co., Ltd., based in Xiamen, south-eastern China. The equipment in those consignments belonged to the same product category as devices that were supplied to BOZ, but there was not enough data to make a precise match.

A manager at New Source Automation, who gave his name as Ryan Wu, confirmed when contacted by Reuters that his firm supplied equipment to Techpribor. He also said his firm can source as many products from Siemens as it needs, and that Siemens doesn’t ask who the end-user is.

Neither Huizhou Funn Tek nor New Source Automation responded to Reuters’ written requests for comment.

The Siemens spokesman said it asks all its clients to comply with Western sanctions but did not respond directly to a question about whether Huizhou is a partner company. Siemens would immediately investigate any indications of contravention of sanctions and involve the appropriate authorities, he said.

The supply of Siemens equipment from China to Russia highlights what European policymakers say is a major loophole helping Russia sustain its war against Ukraine.

European Union and US sanctions bar companies from inside those jurisdictions from supplying goods or services that could help Russia’s war effort. Russian defense manufacturers have been able to avoid that by sourcing Western-made equipment from wholesalers and re-sellers in China.

EU leaders have moved to close the loophole. In December 2024, the bloc for the first time imposed fully-fledged sanctions on Chinese entities for supplying components to Russian defense firms. A further 7 firms from China and Hong Kong were added to the sanctions list on July 18. The bloc’s chief diplomat, Kaja Kallas, said in February that China’s export of goods was fueling Russia’s war against Ukraine, and called on Beijing to stop it.

Russia’s Ministry of Industry and Trade did not respond to a Reuters request for comment. The Russian defense ministry did not respond to questions about what work the BOZ plant is doing for the military. China’s Ministry of Commerce also did not respond to a request for comment.

Explosives for Russian bombs

BOZ makes the explosives TNT and HMX, according to a marketing video the factory released. While those explosives do have civilian uses, BOZ’s parent company is a defense manufacturer owned by the Russian state, and BOZ fulfills defense orders for the defense ministry, according to the website of the regional administration.

The expansion at the BOZ plant was part of a wider drive by the Russian defense sector to increase its production of explosives.

A shortage of the material is one of the bottlenecks holding back Russian production of artillery shells, mortar rounds and air-dropped bombs, forcing it instead to source munitions from its allies North Korea and Iran, Ukrainian intelligence officials and Western defense analysts have said.