The West still needs Russian uranium

The West no longer imports Russian resources? Well, not really. It imports those it cannot find elsewhere, such as uranium and titanium. Now Putin is threatening to ban exports. And that would hit both the West and Russia hard.

"The delivery of a number of goods to us is limited, so we might also be able to think about certain restrictions, say with uranium, titanium and nickel," Russian President Vladimir Putin said in September.

He ordered the Government to review possible export restrictions.

Back in 2022, the Kremlin tried to pressure Europe with gas deliveries. The goal was to undermine Western aid to Ukraine, which is defending itself against a Russian invasion.

The new threats are not in vain, because the United States and Europe import the mentioned raw materials from Russia in large quantities.

What is the role of Russian uranium?

It was no accident that Putin mentioned uranium first. The state concern Rosatom has a 40 percent share of the world market in the trade of enriched uranium. No one offers a product of such quality for new generation reactors.

The American company "Centrus Energy" only started enriching uranium at the end of last year, but the quantities will remain modest for a long time. The main business of the company is the delivery of uranium, which it acquires from Rosatom.

In the total quantity of delivered uranium in the United States, Rosatom participates with more than 20 percent, and in Europe that share is 30 percent.

Rosatom's export business to the United States is two billion dollars a year. This is approximately half of the total exports of the Russian concern. The export business to the European Union amounts to about 500 million dollars.

In addition, Rosatom exports ready-made fuel for reactors of Soviet and Russian production and offers accompanying services.

According to its own data, the concern had a turnover of over four billion dollars last year in Western countries. In the world, the total turnover is worth 16,4 billion US dollars.

How are sanctions circumvented?

Termination of the business relationship would be painful for both parties. That is why until recently Rosatom was one of the few Russian companies that was not under sanctions.

At the same time, it is clear to the West that it must reduce its dependence on imports from Russia. Only Hungarian Prime Minister Viktor Orban sees it differently.

Apart from Rosatom, large quantities of uranium are enriched by two European companies – Urenco and Orano Uran. Both are expanding capacity to increase exports to the US.

Dmitry Gorchakov, an expert on atomic energy at the Belona Foundation, says that if they succeed, the United States could give up imports from Russia in five years, while Europe will need a little longer.

American companies have recently been importing more and more uranium from China. It is likely to be a resale of Russian uranium, as Russian shipments to China have increased significantly since 2022.

This shows that despite the sanctions, Russian raw materials can find their way to the American market.

What about titanium?

Almost the entire exploitation of titanium in Russia is controlled by the company VSMPO-Avisma, based in the Ural city of Verkhnaya Salda. The share in the world production of titanium sponge is 15 percent.

And more than half of the total available amount of titanium sponge in the world is produced in China. A little less than a quarter is produced in Japan. Kazakhstan accounts for ten percent.

VSMPO-Avisma is under American sanctions, but not under European Union sanctions. Before the war, the main customers were the American concern Boeing as well as the European aircraft manufacturer Airbus.

The Americans announced the termination of cooperation immediately after the beginning of the Russian invasion of Ukraine, and the Europeans in December of that year.

Before that, the head of Airbus, Guillaume Fourie, spoke out against the sanctions, because according to him, these would be sanctions that the Europeans would impose on themselves. Complex production processes and supplier dependency networks in the industry do not leave the possibility of changing suppliers overnight.

Both the Americans and the Canadians have foreseen exceptions in their sanctions against the Russian company VSMPO-Avisma. Companies such as the aircraft manufacturers Bombardier and Airbus, as well as numerous suppliers to Boeing, such as the French company Safran or the British Rolls-Royce, profit from this.

All of them continue to source titanium from Russia. Exports to Europe that VSMPO-Avisma had last year amounted to 345 million dollars, while the year before last it was 370 million dollars.

Metals expert Andy Hom says that the United States is finding it easier to reduce its dependence on Russia for titanium because it is developing its capacity faster, but the EU is increasingly looking to the US in this field. And that contradicts the European Union's law on critical raw materials, which was adopted this year. Currently, the EU has no choice.

Who needs Russian nickel?

One of the world's largest producers of nickel is the Russian company Norilsk Nikl. It was not under sanctions for a long time, but the USA and Great Britain introduced restrictions a month ago, while the European Union has not yet done so.

Nevertheless, the war changed the structure of exports. Before the war, more than half of this company's exports went to Europe, and 16 percent to both Americas. 27 percent of production went to Asia.

Last year, exports to Europe fell to 24 percent, and exports to North and South America decreased to ten percent. The share of Asia increased to 54 percent.

This redirection of exports from the West to the East is not the only challenge for the Russian company. There were fluctuations in the price, but today it is lower than before the Russian invasion of Ukraine.

The reason is the unexpected appearance of Indonesia on the nickel market, and that country has much larger reserves of this metal than Russia.

Andy Hom, who also writes for Reuters, says that because of all this, the fate of the Russian company in this area is uncertain. Putin warned his Government not to do anything that would harm Russian companies when reviewing possible restrictions on the export of Russian raw materials.

As for nickel, at least Russia will not be able to use this raw material as a geopolitical weapon.