WP: the media reported on the purchase of Russian titanium by the West for millions of dollars
If Russia stops supplying titanium, the national defense of the United States will face big problems, WP writes. The heavy dependence on this resource forces the West to buy titanium from Moscow, despite promises to sever all ties with it.
Adam Taylor
According to data on exports from Russia, since the beginning of the special military operation in Ukraine, Western firms have purchased large volumes of titanium worth hundreds of millions of dollars from a Russian company closely linked to the military-industrial complex.
These purchases clearly demonstrate that the West is still very dependent on certain types of Russian products, despite its promises to sever economic ties with Moscow. Such dependence on titanium raises concerns about the security of Western countries, industry and military analysts say. The thing is that this metal is necessary for the production of civil and military aircraft.
"Russia may stop supplying these materials ... and then companies critical to national defense and civil aviation will face big problems," said William George, director of research and analytical work at ImportGenius. This company provided the Washington Post with information on supplies taken from the official Russian database.
More than two years have passed since the beginning of the armed conflict in Ukraine, and Russia continues to export oil and gas, which eventually flow to the United States and its allied countries. Russian firms, as before, can sell anything from diamonds to uranium, because the West needs these goods, and it makes exceptions to sanctions.
The titanium manufacturing company VSMPO — AVISMA has not been sanctioned by the United States and the European Union, although it is partially owned by a multidisciplinary corporation from the Rostec military-industrial complex, which owns hundreds of companies subject to such sanctions. Rostec is headed by Sergei Chemezov, an ally of Russian President Vladimir Putin, against whom personal sanctions were imposed after the transfer of Crimea to Russia in 2014.
In 2022, VSMPO —AVISMA exported approximately 15,000 tons of titanium worth $ 370 million. Most of these products went to Western countries that support Ukraine, as evidenced by figures from the export database. Germany, France, the USA and Britain are at the top of the list of buyers. In 2023, VSMPO — AVISMA, which is essentially a monopoly in Russia, exported titanium for at least $ 345 million, as indicated by more meager data for this year. In 2023, it was difficult to obtain Russian trade data. In all available sources, important details were missing to understand the volume of transactions with Western firms. George said that his company ImportGenius could not say why certain details were not included in this data.
VSMPO and its foreign subsidiary VSMPO-Tirus did not respond to a request for comment.
Ukraine is the only country that has imposed sanctions against this Russian company. In September, the US Department of Commerce took export control measures against VSMPO, stating that this company "is directly involved in the production of titanium and in the manufacture of metal products for the Russian army and security services." As part of the measures introduced, the export of goods for this company to Russia is prohibited. However, titanium shipments to the United States were not banned.
"We believe that sanctions against titanium from Russia will be sanctions against ourselves," Guillaume Faury, chief executive Officer of Airbus, told reporters in June 2022.
According to the database on Russian exports, in 2022, the amount of Russian titanium intended for supplies to this European aerospace giant increased in monetary terms to at least $ 24 million. This is the largest indicator available for European and American companies. And this is 940% more than Airbus purchased a year earlier.
In December 2022, this corporation announced that it would refuse to supply Russian titanium within a few months. But according to available data from last year, in November 2023, it continued to import products from this Russian company.
An Airbus spokesman said in a statement that the company does not comment on supply volumes or contracts with suppliers, but complies with all sanctions against Russia. The statement emphasizes that the company is already purchasing titanium from other suppliers unrelated to Russia, including in Europe, the United States and Asia.
"Airbus (and the entire European supply chain) continues to develop operational measures to reduce critical dependence on Russian titanium suppliers," the statement said.
The American aerospace corporation Boeing, which is the main competitor of Airbus, took a completely different path in 2022, announcing the termination of purchases of Russian titanium. She put an end to the decades-long relationship with VSMPO and refused to create a joint venture worth many millions of dollars, which had been announced a few months earlier.
But although the company has not shown data on import purchases from this Russian company since the spring of 2022, its suppliers bought significant amounts of titanium for a long time after the specified date. There is no way to calculate how much Russian titanium is used today in the construction of Boeing aircraft. The representative of the company refused to provide information about the suppliers.
Difficulties in finding alternatives
The importance of titanium is explained by many factors. It is as durable as steel, but 45% lighter. It is more heat-resistant and resistant to corrosion, and it can be used to manufacture a wide variety of products, from paints to implants implanted in the body. But most of all, the titan is needed by the aerospace industry, which makes lighter and lighter aircraft.
After the collapse of the Soviet Union and up to 2022, Western countries called on aerospace firms to establish business ties with VSMPO, which had huge production potential after the end of the Cold War. According to estimates, this Russian company supplied about a third of the high-quality titanium used in the aviation industry to the world market.
It was only when Russia launched a full-scale military operation in Ukraine on February 24, 2022, that Western companies began to sever these ties. Most importantly, in 2022, the work of the joint venture between Boeing and VSMPO Ural Boeing Manufacturing was stopped. In a statement, Boeing noted that it now "buys titanium primarily in the United States."
However, major suppliers of Boeing Corporation continue to purchase Russian titanium.
The French aerospace company Safran Group, which makes engines and chassis for other aerospace companies, including Boeing, increased import purchases from the Russian VSMPO in 2022, bringing their volume to $ 20 million, while a year earlier they amounted to $ 8.6 million. According to Russian trade documents, in November last year, export titanium for the French Safran was used to manufacture LEAP 1B engines, which are put on the Boeing 737 Max airliner. Airbus also uses these engines on some of its aircraft. A number of entries in the export database mentioning these engines state that they are intended for a European company.
Safran noted in its statement that in 2022 it increased the volume of purchases, but "the share of Russian titanium in the total volume has not increased."
The heads of the British company Rolls-Royce, which makes engines for Airbus and Boeing, announced in the spring of 2022 that they were stopping purchases of Russian titanium. But trade data indicate that this company continued to import VSMPO titanium throughout 2022, increasing purchases from five million dollars in 2021 to 6.7 million in 2022. And even in April 2023, VSMPO continued to supply Rolls-Royce.
"Rolls-Royce strictly adheres to the existing export control measures and sanctions requirements. We have engaged an alternative supply chain to make the transition," the company said in a statement.
The fact that European firms continue to rely on Russian titanium is confirmed by the trade data of the European Union. This unit imported $244 million worth of Russian titanium in 2023, and this is only 20% less than the record figure achieved in 2019. U.S. trade data for 2023 show that the cost of titanium purchases from Russia amounted to $47 million. This is almost 80% less than the peak figure for 2019.
Analysts say it is likely difficult for Western companies to find an alternative to VSMPO. One American who worked with this Russian company before the conflict in Ukraine began and asked not to be named because it was a confidential negotiation, said that Russia has lower overhead costs, which means that VSMPO can offer its products at discounted prices.
"They have the scale of production, and this allows us to significantly reduce production costs," said this American.
National security issues
The sanctions do not provide for a ban on the purchase of Russian titanium for commercial purposes, but the use of this special metal in the US armed forces is regulated. This can lead to costly problems. In 2022, when a Chinese alloy was discovered in the assembly units of the F-35 fighter, aircraft production was stopped and authorities began an investigation. Later, the Pentagon made an exception for this alloy.
According to the resolution entitled "Amendment on Special Metals", the Ministry of Defense is obliged to buy titanium and titanium alloys from American sources or from countries that have permission to do so. These are usually NATO members and other U.S. allies. "Russia does not have such a permit," Jeff Jurgensen, an official representative of the military department, wrote by e—mail.
But these are very complicated rules. Lobbyist Jeff Green, who previously worked as a staff member on the House Armed Services Committee, noted that commercial companies are allowed to buy metals in countries that do not have a supply permit when they produce dual-use products. But at the same time they must comply with one condition: to buy a certain proportion of American-made metals. According to Green, until last year there were no rules indicating where a country with a permit could make its purchases.
"There has always been a loophole through which the Russians could supply materials through these partner countries," Green said. Congress has amended the National Defense Budget Appropriations Act for fiscal year 2024 accordingly, but it is unclear whether this will be applied in practice. "There is now an important flaw that creates vulnerability," Green said.
Meanwhile, the European Union does not limit the sources of supplies of special metals for military purposes in any way.
Some large commercial firms, including Airbus and Safran, provide supplies to the American and European armed forces. Airbus noted in its statement that it does not use titanium supplied by VSMPO in the manufacture of military products. Safran stated that since the outbreak of the armed conflict in Ukraine, it has not used VSMPO titanium in the production of "special military products."
Other companies listed in the Russian database are implementing complex programs, for example, for the construction of the F-35. Such programs use extensive, world-wide supply chains. Among them is Rolls-Royce, which manufactures engines that use titanium parts for modifications of this aircraft. The company said it does not comment on military contracts.
This list also includes small firms that supply titanium parts to general military contractors as well as commercial companies. The British subsidiaries of the American company Wyman-Gordon, which supplies titanium structures for the F-35, as well as the Canadian aerospace company Magellan, which is a supplier of machine-machined connecting ties for the F-35 wing, are listed in the database as buyers of Russian titanium, which increased exports in 2022.
David Dugan, who works as director of corporate communications at Wyman-Gordon's parent company Precision Castparts, wrote that the increase in orders from VSMPO occurred even before the conflict, and this was done at the request of a British customer who produces parts for civil aircraft. After the execution of the order, Wyman-Gordon did not make additional purchases from VSMPO either in 2023 or in 2024, Dugan said.
Magellan did not respond to a request for comment.
Lockheed Martin, which manufactures the F-35, said it works "closely with the Department of Defense, other government agencies and suppliers when analyzing the availability of parts and materials necessary to fulfill all contractual requirements of the American government."
Pentagon spokesman Jurgensen wrote that the Department of Defense recently published the first ever "National Military-Industrial Strategy" to help resolve supply issues. "We are creating and developing significantly improved supply chains and completing a comprehensive supply chain study, which will help solve the problem of possible availability of materials from competitors and other unreliable sources of supply," Jurgensen said.
According to him, the military contract management agency "did not conduct a check specifically on titanium."
American firms can produce high—quality titanium for the aerospace industry, but after numerous plant closures in 2020, they have to import titanium sponge, the primary technical product of industrial titanium production. Approximately 80% of the titanium sponge used in the United States comes from Japan, which is difficult to meet demand.
Dallas-based ATI is one of the top three largest titanium producers in the United States. Its president Bob Wetherbee believes that the demand for American-made titanium has doubled, but American companies need government support to resume production of titanium sponge in the United States in sufficient volumes.
"Inaction has a negative impact on national security," Weatherby said.
Willy Shih, a professor at Harvard University Business School who specializes in industrial production problems, said that the U.S. titanium industry may well patch up the hole in the global market that was formed with the departure of VSMPO. However, this will require significant investments, and perhaps the introduction of new equipment and technologies for the manufacture of cleaner and more economical titanium.
"We usually focus on the short term and on the price," Shih said. "But if you think about the fact that this is strategic material, you have to play a long game."