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Russian gas and oil are by far the most important goods that Moscow sells to Germany. But other important raw materials are also in the spotlight.
Almost the entire debate over Germany’s economic ties with Russia, since the beginning of Russian aggression in Ukraine, has focused on gas and oil. Rightly so, because Germany buys more oil and gas from Russia than any other European country, which represents a very serious source of profits for Russia. But many German companies also import other goods and raw materials from Russia, especially raw materials such as nickel, palladium, copper and chromium.
Nickel is used in the production of steel, but it is also an important component for lithium-ion batteries which are needed for electric cars. Palladium is also vital to carmakers, as it is an important component in the production of catalytic converters, which clean the smoke of gasoline vehicles and hybrid vehicles.
In 2020, Russia was Germany’s largest supplier of crude nickel, accounting for 39% of the country’s supply, according to data from the MIT Economic Complexity Observatory.
About 25% of palladium and between 15% and 20% of heavy metals, chromium and cadmium, which are used in a variety of industrial fields, also come to Germany from Russia. Russia also imports 11% of refined copper, as it did in 2020, as well as 10.9% of platinum and 8.5% of iron ore.
The importance of nickel
A recent study by the German Institute of Economics (IW) identified some raw materials imported from Russia that would be difficult to replace for Germany.
Nickel is especially important. Germany’s second largest import partner for crude nickel in 2020 was the Netherlands with 29%. But Russia is the market leader. The demand for pure nickel has increased especially after the increase in the production of electric vehicles.
Prices of first-class nickel have doubled over the past two years. While Russian aggression in Ukraine has added to fears that Moscow could impose an export ban. In early March prices reached record levels. Nickel prices have risen 400% in 2022 alone.
Export and import
Uncertainty over Russian raw materials will continue to shake the market. Some analysts predict that the nickel crisis alone will add at least $ 1,000 (919 euros) in the cost of a new electric car to consumers. But it is not just carmakers that are affected. And because of this, in 2018, the German chemical giant BASF, joined forces with Russia’s Norilsk Nickel, the world’s largest producer of refined nickel.
Although Moscow did not place materials such as nickel on its export ban list in March, there is a possibility that sanctions from Moscow or Brussels could end the flow of such raw materials to Europe.
Nickel production in Norilsk, Russia
On Friday, the EU announced a ban on imports of several Russian products including coal, aviary, wood, rubber, cement and vodka. However, nickel and other goods exported in bulk to countries such as Germany were left out of the list.
But even if the sale of Russian nickel to Europe is not legally banned, pressure on German companies to sever business ties with Russia continues to grow in virtually every sector. Many experts and business leaders have argued that Germany’s economic development in recent decades has been built largely on the basis of cheap energy supplies from Russia. While the serious debates about the complete ban on the import of Russian energy show that now everything is on the table and that everything is being treated as an opportunity to respond to Russian aggression./DW
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