The invasion of Ukraine by Russia and the resulting economic sanctions highlight Europe’s dependence on its neighbor Russia, particularly in terms of minerals. Russia is indeed one of the largest exporters of mineral raw materials in the world.
While Europe is heavily dependent on Russia for its gas and oil supplies, it is also so for its imports of metals. Nickel, aluminium, palladium, titanium… Resources of primary importance for industry, in particular for the production of lithium-ion batteries or solar panels. Although we do not produce – or very little – on European soil, the rise in mineral prices will have ultimately impact on their development. “If the prices of raw materials increase, the installation prices of these technologies will increase, as well as the final price of the energy produced”, explains Raphaël Danino-Perraud, PhD in resource economics and associate researcher at the French Institute of International Relations (Ifri).
But beyond the energy transition, “Many industries will be affected by the surge in mineral prices: automotive, construction, aeronautics, rail, defence, telecoms…” Sectors highly dependent on Russia, a major metal producer. For example, the country is the second largest aluminum supplier, behind China, supplying nearly 10% of world production.
Titanium: prices up 60%
Russian production of titanium sponge – a derivative of the metal – of aeronautical quality is of prime importance: French companies such as Safran and Airbus obtain their supplies mainly from VSMPO-Avisma, a Russian industrialist and world leader in the sector. The CEO of Safran, Olivier Andriès, assures that his group has stocks until the fall by having bought existing reserves, in particular in Germany, from distributors. For the long term, it will be a question of diversifying the suppliers: “In the coming weeks, we will accelerate alternative sources”, he thus declared. The American Boeing, for its part, decided to break with this long-standing partner as a form of sanction after the invasion of Ukraine by Russia. “Boeing will redirect some of its supplies to Japan. But the archipelago will not be able to replace all Russian supplies,” precise Raphael Danino-Perraud. Similarly, South Africa has declared that it wants to increase its production of platinoids, this group of metals which includes platinum, necessary for the manufacture of catalytic converters (which aim to reduce the harmfulness of exhaust gases). A welcome decision but which will not completely compensate for Russian production, which provides 40% of the world’s platinum.
Since the start of the conflict, the production of aircraft-grade titanium sponge has gone from $8,000 per ton to $17,000. The price of ferrotitanium, an alloy of iron and titanium essential for the automotive and steel industries, has increased by 60%. In addition, Russian production of titanium comes from Ukraine: manufacturers extract it then export it to Russia where it is refined. A transport between the two countries which was obviously interrupted with the conflict: “With the war, the whole titanium chain is disrupted”, says Raphaël Danino-Perraud.
Same thing with aluminum and nickel. The Russian group Rusal is the second largest industrial aluminum producer in the world and Russia supplies 80% of France’s alumina needs. In 2019, the country was also the third largest producer of nickel, behind Indonesia and the Philippines, and second for refined nickel, behind China. If there is no shortage of metals in the immediate future, the risks concern the transport of Russian production: the maritime, road, air and rail freight networks are already under tension, temporary shortages to come are to be feared. .
What solutions?
So should we source elsewhere to get Europe out of its dependence on Russia? Not that easy. “In the short term, there is no solution. Russia was already considered a diversification market vis-à-vis the China», emphasizes Raphaël Danino-Perraud. To develop resilience strategies, should mines be reopened in Europe? “There would be plenty to do, but we don’t know our soil: the last French exploration campaign dates back to the 1980s. And the mine has a very bad image, notes Raphaël Danino-Perraud. However, with mines on our territory or through financial participation in international mining projects, we retain the advantage of being able to control part of the production. If recycling is also an essential mechanism to limit the consumption of virgin minerals, it remains insufficient. “It takes a certain amount of time for the product in use to arrive for recycling”, and therefore so that the metals can be recovered and reused after their manufacture.
The will of European sanctions on raw materials vis-à-vis Russia? “Difficult to set up, for Raphael Danino-Perraud. There are not many sources of diversification outside of Russia, particularly in mineral commodities. Addictions were known, but little was done to reduce them. Unprepared and uncontrolled sanctions would weaken European industry even more. It is now a question of preparing the after.” Finally, the Covid crisis and the war in Ukraine remind Europe of the urgency of diversifying its sources of supply of raw materials. To finally assert its sovereignty?