The West is trying to avoid imposing sanctions on Russian companies that supply commodities important to their industries, from oil and gas, to basic commodities such as minerals.
Russia’s Norilsk Nickel PJSC (MMC) Norilsk Nickel PJSC controls the production of a large part of the two metals needed for green transformation, computer chip production and the steel industry.
So far, the United States and its allies have not imposed sanctions on the company called Nornickel, or its CEO, Vladimir Potanin, who served as the former deputy prime minister under Russian President Boris Yeltsin, which highlights the dilemma in imposing sanctions on Russia, while not harming the arrival of the West. to basic commodities.
The mining company is responsible for about 5% of the annual global production of nickel, a major component of the industry Electric car batteriesAnd about 40% of palladium is used in catalytic converters and semiconductors. The company also extracts energy conductor minerals such as cobalt and copper, according to the Wall Street Journal, which was reviewed by Al Arabiya.net.
The price of these minerals has jumped since Russia’s invasion of Ukraine amid fears that Western sanctions or logistical difficulties stemming from the conflict could choke supplies. Nickel traded at its highest level in a decade, on Friday, up 37% so far this year. The level of palladium has risen by 57% so far.
Despite the surge in metal prices, Nornickel’s share price has fallen like those of other Russian commodity companies – down 17% so far this year.
On Saturday, credit rating agency Fitch downgraded Nornickel’s debt rating to junk, reflecting Russia’s tougher environment and weaker financial resilience of its commodity companies.
For their part, many Western companies said they are looking to diversify their supply away from Nornickel, reversing the trend in many commodities, including oil and steel, as Western buyers are turning away from Russian suppliers amid fears of sanctions or difficulties for companies. Russian exports of its products from the country.
This comes as a Nornickel spokesperson pledged the company’s fulfillment of its commitments to customers, partners and employees.
So far, Western sanctions in response to the current conflict have bypassed companies that supply the West with oil, gas, and other basic commodities.
“If we have sanctions and we don’t have access to that palladium, you have to expect global disruption,” said Gabrielle Randleshofer, managing director of the International Platinum Group Metal Association.
Among the companies looking for an alternative supply of nickel is Outokumpu Oyj, one of the world’s largest stainless steel manufacturers. The Finnish company said about 6% to 7% of the nickel used in its plants comes from Nornickel, with the rest coming from recycled steel.
Meanwhile, Germany’s BASF SE said it would honor existing contracts with Nornickel but would not pursue any new business with the Russian company, describing chemical giant Nornickel as a significant supplier of nickel and cobalt for its production of cathode materials as well as an exporter of palladium and platinum.
For his part, said Andrew Mitchell, director of nickel research at energy consultancy Wood Mackenzie, that the imposition of sanctions is helping to further turmoil markets.
Analysts see the importance of Nornickel, with the demand for nickel growing strongly amid the growing popularity of electric cars, especially after the industry faced a shortfall in meeting demand by about 6%, according to analysts at BMO.
The company mines in one of the northernmost cities in the world, Norilsk, a former military colony.
Norilsk has also gained a reputation as one of the dirtiest cities in the world, due to the city’s heavy pollution and oil spills, due to the proliferation of mining operations and oil refineries.
The area also provides the company with some of the world’s best mineral deposits, mined up to 5,000 feet under permafrost.