Russia: Europe imports €13 billion of ‘critical’ metals in sanctions blindspot Analysis by Investigate Europe

Despite a raft of sanctions now in place against Moscow, the critical raw materials trade remains exempt and EU purchases persist.

Investigate Europe analysis finds that European companies continue to pour billions into mining firms linked to the Kremlin.

Since Russia’s invasion of Ukraine in February 2022, the 27 EU countries have adopted 11 sanction packages, targeting raw materials including oil, coal, steel and timber. But minerals that the EU considers as "critical" raw materials – 34 in total – still flow freely from Russia to Europe in vast quantities, providing crucial funds to state enterprises and oligarch-owned businesses.

While some of its western allies have targeted Russia's mining sector – the UK recently banned Russian copper, aluminium and nickel – the EU has continued its imports. Airbus and other European companies are still buying titanium, nickel, and other commodities from firms close to the Kremlin more than a year after the invasion, Investigate Europe can reveal.

Between March 2022 and July this year, Europe imported €13.7 billion worth of critical raw materials from Russia, data from Eurostat and the EU’s Joint Research Centre shows. More than €3.7 billion arrived between January and July 2023, including €1.2 billion of nickel. The European Policy Centre estimates that up to 90 per cent of some types of nickel used in Europe come from Russian suppliers.

Analysis of Russian customs data shows that Vsmpo-Avisma, the world's largest titanium producer, sold at least $308 million of titanium into the EU via its German and UK branches between February 2022 and July 2023. It is part-owned by Russia's national defence conglomerate, Rostec. The two companies share the same chairman: Sergei Chemezov, a close Putin ally. The pair were KGB officers in East Germany in the 1980s.

Aluminium giant Rusal also uses tax havens to funnel minerals to Europe, where it owns the EU's largest alumina refinery in Ireland and a smelter in Sweden. Its Jersey and Swiss-based trading houses brought at least $2.6 billion of aluminium into the bloc in the 16 months following the invasion of Ukraine. In August 2023, Rusal said Europe still accounted for a third of its revenues. Rusal's main shareholder is oligarch Oleg Deripaska, sanctioned by the EU and its Western partners.

Since the start of the war, other European buyers of Russian metals have included Germany's GGP Metal Powder ($66 million of copper), French arms maker Safran ($25 million of titanium) and Greece's Elval Halcor ($13 million of aluminium). Dutch logistics firm C. Steinweg also handled at least $100 million of various critical metals on behalf of its customers.

The European Commission won’t publicly comment on whether or not it has proposed a ban on critical raw materials. One reason could be that “sanctions are carefully designed to hit their targets while preserving EU interests,“ an EU source told IE.

Weaning the EU off Russia's critical and strategic materials will be difficult. Replacing suppliers and forging new international partnerships is an arduous process. Finding a raw material, such as titanium or copper, with a similar quality and price to those from Russia is also a challenge.

Imposing tariffs or severing ties too quickly could lead to a global price surge which would harm European buyers while benefiting Moscow. A ban could also prompt India, Iran, and China to intensify purchases, further depleting critical raw material resources for EU industries.

The High Representative of the Union for Foreign Affairs and Security Policy is expected to propose a 12th package of sanctions in the coming weeks, which will be then discussed by member states. Brussels hopes the package will renew pressure on the Russian economy and sap its fighting strength on the battlefields of Ukraine. Restrictions on critical raw materials do not seem to be on the table.