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| From March 2022 to July this year, Europe imported 13.7 billion euros worth of key raw materials from Russia. (Source: TASS) |
Since Russia launched a military operation in Ukraine in February 2022, the 27-nation European Union (EU) has imposed 11 sets of sanctions targeting raw materials including oil, coal, steel and timber. However, the minerals that the EU considers critical raw materials – 34 in total – continue to flow freely from Russia to Europe in large quantities.
While some Western allies have targeted Russia’s mining sector, with the UK recently banning Russian copper, aluminum and nickel, the EU has continued to import. Airbus and other European companies are buying titanium, nickel and other commodities from companies close to the Kremlin, more than a year after the special military operation.
Rely on a third party
Data from the European statistical office (Eurostat) and the EU Joint Research Centre show that from March 2022 to July 2023, Europe imported 13.7 billion euros worth of key raw materials from Russia.
In the first seven months of this year, more than €3.7 billion flowed from the EU to Russia, including €1.2 billion for nickel. Up to 90% of the nickel used in Europe comes from Moscow suppliers.
At a conference in September, EU Special Envoy for Sanctions David O'Sullivan stressed: "Why are critical raw materials not banned? Because they are so critical."
The 27-member bloc is desperate for key raw materials to meet its goal of being climate neutral by 2050. These items are essential for electronics, solar panels and electric cars, as well as for traditional industries such as aerospace and defense.
However, all of these items are in scarce and uneven supply globally.
Analysis of Russian customs data shows that Vsmpo-Avisma - the world's largest titanium producer - sold at least $308 million worth of titanium to the EU through its subsidiaries in Germany and the UK between February 2022 and July 2023. The company is part-owned by a Russian defense conglomerate.
Among Vsmpo-Avisma’s biggest European customers is Airbus, the aerospace giant partly owned by France, Germany and Spain. From the start of the military campaign through March 2023, Airbus imported at least $22.8 million worth of titanium from Russia; the value and tonnes quadrupled compared to the previous 13 months.
“Airbus is currently ramping up production of its commercial aircraft and this is having an impact on its overall titanium purchases,” an Airbus spokesperson said. “Although it will take time, the group is reducing its reliance on Russia.”
Aluminum giant Rusal also used tax havens to ship minerals to Europe. Trading companies based in Jersey and Switzerland brought at least $2.6 billion of aluminum into the bloc in the 16 months after the Russia-Ukraine conflict. In August 2023, Rusal said Europe still accounted for a third of its revenue.
The British Financial Times reported that third-country supplies masked the EU’s true dependence on Russian raw materials. One example of this was the Swiss company Glencore supplying thousands of tonnes of Russian copper to Italy via Turkey in July 2023.
A London-listed metals and oil trader bought at least 5,000 tonnes of copper sheet produced by Russia’s Urals Mining and Metallurgy Company (UMMC), according to customs documents and photographs obtained by the Financial Times . The products were exported from Turkey to the Italian port of Livorno in July.
"Such deals highlight Europe's dependence on vital Russian goods, as well as Turkey's growing role as a transit hub. Some European officials argue that trade with Russia through third countries such as China, the United Arab Emirates (UAE) and Turkey undermines the effectiveness of Western sanctions," the British newspaper stressed.
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| Vsmpo-Avisma - the world's largest titanium producer - sold at least $308 million worth of titanium to the EU through its subsidiaries in Germany and the UK between February 2022 and July 2023. (Source: Getty Images) |
Punishment reduces "weight"
According to Investigate Europe, EU sanctions require consensus among all member states, so the bloc's sanctions packages will have less "weight". In December 2022, the EU issued a ninth package of sanctions, banning new investment in Russia's mining sector and exempting some mining activities for some important raw materials. As a result, European companies are still pouring money into Russian mines for nickel, titanium and other important metals.
The EU’s move away from key Russian raw materials has been a difficult one. The 27-member bloc has struggled to find new partners. Finding raw materials of similar quality and price to those from Russia is also a major challenge.
Investigate Europe found that, unlike gas, the EU cannot impose tariffs immediately or stop importing from Russia too quickly. This could lead to a spike in global prices, hurting European buyers and benefiting Moscow.
Tymofiy Mylovanov, rector of the Kyiv School of Economics, said the ban would be difficult to implement due to challenges in global demand and Europe's dependence on Russia.
The EU is currently trying to reduce its dependence. In March, the European Commission presented the Critical Raw Materials Act (CRMA), a new law aimed at reducing the EU's dependence on third countries for critical raw materials.
The bloc is also expected to propose a 12th package of sanctions against Russia in the coming weeks, which Brussels hopes will put new pressure on the Russian economy. However, restrictions on critical raw materials do not appear to be part of the package.
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