Putin Calls for Sanctions Revenge, Threatens to Cap Uranium Exports
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Yves here. We had flagged early on that Russia has significant market share in many key commodities and supplies, such as neon, and that Russia could restrict supplies to obtain leverage. In keeping, there was some (depending on the writer) worried or angry commentary on the fact that the US is reliant on Russian uranium at the start of the Special Military Operation. This article recaps a Bloomberg report on some remarks by Putin, which indicate he’s asked his bureaucrats to study the question and see if bans or restrictions on Western buys would be a net plus for Russia. From Bloomberg:
Russian President Vladimir Putin asked the government to consider if it makes sense to limit exports of some commodities like nickel, titanium and uranium in retaliation for western sanctions.
“Russia is the leader in strategic raw materials reserves like uranium, titanium, nickel,” Putin said during the meeting with the government, shown on TV. Since western sanctions limit exports of some Russian commodities like diamonds, “maybe we should also think about restrictions,” he said. Such limits should not harm Russia, he said….
While the London Metal Exchange in April banned delivery of new Russian nickel and aluminum following sanctions imposed by the US and UK, Russia sells most of its output to end users. The US this year also banned imports of Russian uranium and newly produced nickel, copper and aluminum.
“I am not saying that this needs to be done tomorrow, but we could think about certain restrictions on supplies to the foreign market not only of the goods I mentioned, but also of some others,” Putin said.
The US passed legislation that implemented a ban that became effective on August 11, 2024, making the Putin musing look like trying to close the barn door after the horse is in the next county. (As an aside, note the hyperbolic spin in the headline, with Putin signaling that he’s considering the idea and the move depicted as emotional, “revenge,” as opposed to retaliation). But the law has a loophole through which you can drive a truck. From the Department of Energy:
Recognizing that in the near term, implementing the ban could disrupt the operations of nuclear reactors, the law authorizes the Secretary of Energy, in consultation with the Secretary of State and the Secretary of Commerce, to waive the prohibition and permit the import of Russian uranium if an applicant can show that it has no alternative viable source of uranium or that such imports are in the national interest. Any waiver by the Secretary of Energy is subject to annual aggregate limits and will terminate on or before January 1, 2028.
An article at Heritage explained that the real issue is enrichment capacity, and that weaning the US off Russian supplies depends on private investors stepping up and funding the increase of capacity. From Heritage:
The U.S. gets about 19% of its electricity from 93 commercial nuclear power reactors, which are powered by uranium….
Although uranium is an abundant mineral worldwide, the ability to enrich it for use in nuclear power plants is far more limited. Russia controls around 46% of global enrichment capacity, while the U.S. controls only 9.5%.
But America is the largest consumer of fuel-grade uranium, known as low-enriched uranium, or LEU. That means the United States can produce only around 20% of its LEU requirements domestically. The remaining requirements come from enrichment facilities in the United Kingdom, Germany and the Netherlands. Around 25% comes from Russia….
Promptly after the invasion, Mr. Biden stopped oil imports from Russia. Now, Washington has acted to ban uranium imports. The legislation has three key parts. It bans the import of LEU from Russia or any Russian entity, prevents black market imports by banning LEU that “is determined to have been exchanged with, swapped for, or otherwise obtained” to circumvent the ban, and lasts until 2040.
A long-term ban is critical because expanding enrichment is time-consuming and expensive. Investors won’t expand capacity to make up for Russian supply if the ban may be terminated or waived, making low-cost Russian LEU available again to U.S. buyers.
While growing demand for non-Russian uranium fuel had already prompted America’s sole domestically located commercial enricher to expand capacity, a long-term ban on Russian imports is necessary to provide the market certainty required to justify investment in a broader expansion in the sector.
Heritage then calls out two problems with the bill. One is the waiver we flagged, which it contends will undermine certainty about domestic demand. The second is that the authorities need to “get out of the way” and be as permissive as possible as far as approvals for enrichment and uranium mining are concerned.
Even though nuclear power is more important to France’s energy mix than for the US (France exports electricity), it makes much less use of Russian uranium. EDF uses about 8,000 tons of uranium a year, and from what I can tell, only 153 tons comes from Russia. A chart in a 2023 article in Le Monde on France’s uranium sources in Africa doesn’t include Russia as a material source:
Having said that, for reasons of space, your humble blogger will not attempt to profile what countries might be squeezed if Russia restricts exports to Collective West members for some or all of the other commodities where Russia is a major supplier. If Russia does move ahead, one can expect to see analyses using more current data than what we published in 2022.
By Alex Kimani, a veteran finance writer, investor, engineer and researcher for Safehaven.com. Originally published at OilPrice
Russian President Vladimir Putin has asked Moscow to consider limiting exports of some commodities such as uranium, nickel, and titanium in retaliation for Western sanctions, Bloomberg reported on Wednesday.
“Russia is the leader in strategic raw materials reserves like uranium, titanium, nickel,” Putin said during a televised meeting with the government. Since Western sanctions limit exports of some Russian commodities like diamonds, “maybe we should also think about restrictions,” he said, adding that such limits should not harm Russia
The U.S. and its Western allies have imposed numerous sanctions on Russia’s economy as punishment for its war in Ukraine. However, many vital commodities– including nickel, palladium, and uranium– are not under any restrictions and continue to flow to Western nations.
Back in June, the EU approved sanctions on Russian gas, the first time it has done so. According to the Belgian EU presidency, the EU will hit Russia with unprecedented sanctions against its lucrative gas sector–a move that could potentially drain hundreds of millions from Moscow’s war chest.
However, the proposed penalties won’t hit the majority of Russia’s liquid natural gas (LNG) exports to the EU; instead, the sanctions would prevent EU countries from re-exporting Russian LNG after receiving it and also ban EU involvement in upcoming LNG projects in Russia. The sanctions will also prohibit the use of EU ports, finance and services to re-export Russian LNG, essentially meaning that Russia would have to overhaul its LNG export model. Currently, Russia supplies LNG to Asia through Europe, with Belgium, Spain and France being major hubs.
“If they can’t transship in Europe, they might have to take their ice-class tankers on longer journeys,” Laura Page, a gas expert at the Kpler data analytics firm, has told Politico, adding that Russia “may not be able to get out as many loadings from Yamal because their vessels can’t get back as quickly.”
Norway and the U.S. have replaced Russia as Europe’s biggest gas supplier: Last year, Norway supplied 87.8 bcm (billion cubic meters) of gas to Europe, good for 30.3% of total imports while the U.S. supplied 56.2 bcm, accounting for 19.4% of total.