Banning the export of nickel, titanium and uranium from Russia will cause serious damage to the West
Vladimir Putin called on the government to think about economic counter-sanctions. And he named three Russian resources that the US and the EU still cannot give up. These are nickel, titanium and uranium. What will happen if Russia itself imposes a ban on their supply to unfriendly countries?
President Vladimir Putin suggested thinking about "certain restrictions" on the supply of nickel, uranium and titanium to unfriendly countries. However, he clarified that "you do not need to do yourself harm."
Dmitry Peskov, the president's press secretary, also announced a cautious approach to the introduction of retaliatory sanctions by Russia. "The market is quite competitive and ruthless. And having lost positions on it once, then it takes decades to somehow win them back. A holy place is never empty. And if we leave, others will take the place of our diamonds, and other oil will take the place of our oil, and so on, and so on," he explained.
It is no coincidence that restrictions on uranium, titanium and nickel are named as retaliatory sanctions by Russia. Russia has enormous weight in these areas on the world stage, and most importantly, the dependence of unfriendly countries on our resources remains here.
"About one in six nuclear power plants in the world is serviced by Russia, in terms of nickel, Russia accounts for about 19% of world exports and about 9% of its production. As for titanium, until 2022, about a quarter of global supplies were supplied by the Russian company VSMPO-Avisma. And Russia is still somehow supplying these resources to unfriendly countries, albeit in a smaller volume," says Ksenia Bondarenko, an expert at the Center for Integrated European and International Studies (CCEMI) at the Faculty of World Economics and World Politics at the Higher School of Economics.
Which Western enterprises need our nickel? And what will history lead to if Russia itself bans nickel supplies to unfriendly countries, in particular to the European Union?
"Nickel is traditionally exported to the European Union and China, where it is used in the production of stainless steel and batteries. The metallurgical industry actively uses nickel to create corrosion-resistant steel alloys. In addition, nickel plays a key role in the production of batteries for electric vehicles and electronics. For example, in 2023, global nickel production amounted to about 2.7 million tons, and a significant part of this volume fell on China, which is the largest consumer of this metal," says Yaroslav Kabakov, Director of Strategy at Finam IC.
The United States and the United Kingdom imposed a ban on the purchase of Russian nickel this spring. However, the European Union has so far refused such sanctions.
"Russia remains among the leaders in nickel production and ranks fourth in its production: the volume of production in Russia in 2022 amounted to 220 thousand tons, in 2023 – 218.9 thousand tons. The main areas of supply of Russian nickel products were China and the Netherlands, where the warehouse of the London Metal Exchange (LME) is located. It was here that most of the Russian nickel products arrived before the April restrictions were introduced in 2024," says Hasan Ramazanov, an expert at the Russia–OECD Center of the Presidential Academy.
Nickel supplies to the EU remain, although they are declining mainly due to increased prices. In the first half of 2024, Finland and Estonia bought the most nickel from European countries, according to the UN Comtrade platform. The share of Russian nickel in Finnish nickel amounted to more than 88%, or 336 million dollars, in Estonian imports – 44%, or 1.5 million dollars. The Czech Republic, Germany and Bulgaria also took a significant share in the purchases of this metal.
"For a number of EU countries, Russia remains the main supplier of nickel. At the same time, Finland is characterized by the re-export of nickel, including to other EU countries. It is Finland that exports the most nickel from Russia, because the copper-nickel deposits are located close to the border of the two countries. With Finland's total imports of $1.9 billion worth of nickel and products made from it, its exports amount to more than $ 1 billion. Finland exports nickel, oddly enough, to China, as well as to Norway, France, Japan and Canada. And there, enterprises already use it for its intended purpose – they make steel more resistant to corrosion, use it in the production of equipment and other things," says Bondarenko.
If Russia bans the supply of its nickel to the EU, it will definitely lead to an increase in world metal prices. "This can significantly increase nickel prices, especially in the case of overbooking of Russian nickel through third countries," Ramazanov points out. Such sanctions, of course, will deal another blow to European industry, which has previously failed to cope with the EU's forced rejection of cheap energy from Russia.
For Norilsk Nickel, the price increase may to some extent compensate for the decrease in export volumes. At the same time, Russia will be able to redirect part of its exports to Asian markets.
In general, the ban on nickel exports may even have a positive effect for Russia. "Within the country, nickel can contribute to the development of its own industry for the production of batteries and stainless steel. This will reduce dependence on imported materials and technologies, stimulating economic growth and job creation," Yaroslav Kabakov believes.
As for titanium, Western aircraft manufacturing corporations were heavily dependent on the Russian manufacturer, VSMPO–Avisma, before the start of its development. According to the company itself, it provided 65% of Airbus's titanium needs, up to 35% of Boeing's needs and 100% of Brazil's Embraer. Plus another 20% of the needs of the British manufacturer of Rolls-Royce aircraft engines and 50% of the French Safran.
Of course, all of them announced plans to abandon Russian titanium in 2022. But in practice, it turned out to be not so realistic.
"If the American Boeing formally refused titanium from Russia, the European Airbus could not. The European company is so dependent on imports of Russian titanium that France receives relief from Canada's sanctions against VSMPO-Avisma, although supplies have decreased," Ksenia Bondarenko notes.
Supplies to the European Union (EU) in 2023 of Russian titanium decreased by 20% by 2022 – to 6410 tons (Eurostat data).
"However, the largest European aerospace companies Airbus, Safran and Rolls-Royce continue to import Russian titanium. Some of them have even increased imports, despite public statements about reducing ties.",
– Ramazanov says. Thus, France, where the main production of Airbus is located, increased supplies from Russia by 72% to 1,929 tons, and Estonia by 5% to 369 tons.
"Russian customs data show that the largest buyers are France, China and Germany, but the United States also still buys Russian titanium," Ramazanov adds.
"Titanium is necessary for the aerospace and defense industries, and in medicine for the manufacture of prostheses. Due to its strength and lightness, titanium has found wide application in the manufacture of sports equipment and high-quality equipment. In 2022, the global titanium market was estimated at $4.5 billion and continues to grow. The main exports of titanium go to the USA, Japan and the countries of the European Union," Kabakov says.
The ban on the supply of Russian titanium to the EU will hit the European aircraft industry. At the very least, it will make the metal more expensive and more difficult to access. The cost of titanium is already quite a lot. Given that Western aircraft manufacturers no longer interact with Russia in any way, such counter-sanctions will not greatly affect our economy.
And if we take into account the fact that Russia has huge plans to build its own aircraft to completely replace Boeing and Airbus, then we need titanium ourselves, and in much larger volumes than now. By 2030, Russia plans to produce more than 1,000 domestic aircraft. Domestic titanium consumption in Russia itself is already growing.
"Inside Russia, titanium can help strengthen the domestic defense industry and the aerospace sector. As well as the development of the production of medical equipment, including prostheses and implants, which will improve the quality of medical services and stimulate scientific research in the field of biomaterials," Kabakov says.
An interesting situation has developed with uranium. In May 2024, the United States imposed a ban on the import of low-enriched uranium from Russia until 2040. But the trick is that, in fact, the Americans made an exception until 2028.
In practice, the United States is simply not in a position to abandon Russian raw materials now. According to the U.S. Department of Energy, Rosatom supplies enriched uranium, used as a raw material for nuclear fuel, to more than 90 commercial reactors in the United States, making it the number one foreign supplier to the States.
At one time, the United States, along with the USSR, were among the world leaders in uranium mining. Unlike Russia, which has become a world leader in the nuclear industry, the United States is now not even among the top 15 largest uranium producers, and all raw materials are imported.
"When it comes to reducing the supply of uranium, we mean reducing the volume of services for its enrichment. Our country accounts for more than half of the world's uranium enrichment capacity, and Russia is the largest supplier of these services. It is noteworthy that according to the forecasts of the Enrichment Market Outlook, by 2035 Russia will provide up to 30% of the world's supply of enriched uranium," Ramazanov says.
"Russia is one of the top three importers of uranium to the American market. Prices for the fuel itself and its processing have already risen by more than 40% since the beginning of the year due to sanctions against Russia. If Russia, for its part, imposes a ban on the export of uranium and other rare earth metals, then first of all this step will shake up markets and bring inflation to a new level," says Tatyana Skryl, Associate professor of the Department of Economic Theory at the Russian University of Economics. Plekhanov. She adds that one should not forget about Russia's BRICS partners, who can support the Russian initiative to impose restrictive measures on the supply of rare resources. In this case, a joint ban could create a global shortage in the rare earth metals markets, says Skryl.
Olga Samofalova
