Putin Mulls Uranium, Nickel and Titanium Export Limits in Response to Western Sanctions

Russia's role in uranium, nickel and titanium mining

Russia’s role in uranium production is particularly noteworthy, as the country is the sixth largest producer of the material and accounts for 44 percent of the world’s uranium enrichment capacity.

Reuters notes that many western nuclear reactors rely heavily on Russian-enriched uranium, while in 2023 Russia was a major uranium supplier to the US and China, along with South Korea, France, Kazakhstan and Germany.

The US has taken steps toward reducing its reliance on Russian uranium. In May, President Joe Biden signed into law a bill banning enriched uranium imports from Russia. While the restrictions went into effect in mid-August, waivers will allow for continued imports from reactors through 2027 under certain conditions.

Nickel, another strategic material mentioned by Putin in his comments, is an important component in the production of batteries and alloys used in industries ranging from aerospace to defense.

Russia is home to Norilsk Nickel (MCX:GMKN), which is the world's biggest producer of Class 1 nickel, as well as the top miner of palladium and a producer of other metals. As Reuters points out, more than a fifth of the nickel stored in warehouses registered with the London Metal Exchange comes from Russia.

Citi analyst Arkady Gevorkyan told Reuters that while the west is planning to expand its capacity for uranium enrichment, it could take at least three years to achieve this, leaving a gap in supply in the interim. This could be partially filled with imports of low-enriched uranium from China, but that isn't seen as an ideal solution.

Putin's words sent London Metal Exchange nickel prices up, while shares of uranium companies such as NexGen Energy (TSX:NXE,NYSE:NXE), Cameco (TSX:CCO,NYSE:CCJ) and Denison Mines (TSX:DML,NYSEAMERICAN:DNN) were also on the rise. Uranium companies have been under pressure in recent months on lower prices.

For its part, titanium is critical for industrial applications, particularly in the aerospace sector. Russia is the world’s third largest producer of titanium sponge, which is used to manufacture titanium metal.

Before the conflict with Ukraine began, Russia was a key titanium source for companies like Boeing (NYSE:BA) and Airbus (EPA:AIR). Boeing has since halted purchases of Russian titanium, while Airbus continues to source the metal under a waiver provided by Canada, which has imposed sanctions on Russia’s largest titanium sponge producer.