MOSCOW, Sept 12 (Askume) – Russian officials and managers were worried by President Vladimir Putin’s sudden threat to restrict exports of strategic goods in response to Western sanctions , and wondered whether the move would hurt Russia more than it would have done despite Western sanctions.
Putin made the proposal 23 minutes into a regular government meeting on Wednesday and asked Prime Minister Mikhail Mishustin to come up with ideas that would not harm Russia’s interests.
However, many Russian commodities, such as oil, natural gas, nickel, titanium, gold and diamonds, are already subject to varying degrees of voluntary or mandatory import restrictions, or even sanctions, imposed by the West.
Russian government officials and company executives were stunned.
“Everybody is shocked,” said a source at one of the affected companies, speaking on condition of anonymity because of the president’s sensitivity to criticism. “This move was really unexpected.”
“It’s like shooting yourself in the foot,” another company source said.
Putin said cutting uranium, nickel and titanium exports would reduce foreign exchange earnings of Russia’s biggest companies, including state-owned industrial conglomerate Rostec, state nuclear monopoly Rosatom and the biggest nickel refiner Nornickel.
Both companies, which together employ around 1 million people, have seen their revenues hit by Western sanctions.
Nornickel ‘s (GMKN.MM) first-half profit fell 22% as it tried to shift exports to Asia. It described the combination of low nickel prices and Western sanctions as a “perfect storm”.
Global nickel prices rose after Putin’s remarks, but remain well below historical highs due to ample supply.
An anonymous Russian government source said any sanctions should not include so-called “friendly” countries, including Russia’s main trading partner, China.
Uranium sanctions could hurt the West
Sources stressed that it will take some time for the government to prepare the plan and the President’s order has not yet reached the government.
Another source close to the government said Putin had “asked to draw up a plan, not to implement it”.
Russia’s major commodity producers declined to comment.
As the confrontation between Russia and the West over the war in Ukraine reaches a new level , Russia considers how to respond to Western attempts to use Western weapons on Russian soil to destroy Ukraine.
Putin said the measures would not be limited to uranium, nickel and titanium if Russia went ahead. He said Russia had 22% of the world’s natural gas reserves, 23% of gold and 55% of diamonds.
Uranium is probably the one commodity that would be really hurt by sanctions on the West.
Last year, 27% of the enriched uranium supplied to US commercial nuclear reactors came from Russia. Although the United States theoretically bans fuel imports from Russia, it has granted an exemption until 2027 as it expands its enrichment facilities.
However, Europe has largely weaned itself off its previous dependence on Russian gas. G7 and EU sanctions on imports of Russian-origin diamonds have forced Moscow to buy diamonds from its own sanctions-hit producer ALRS.MM. All major Russian gold producers have been hit by Western sanctions.
Meanwhile, Russia’s largest titanium sponge producer VSMPO-AVISMA (partly owned by Rostec) is working to find alternatives to titanium concentrate from Ukraine, with which Russia is at war.
Putin himself stressed that sanctions would not be imposed “tomorrow” and that the sanctions should not harm Russia’s interests.
On Friday, Kremlin spokesman Dmitry Peskov insisted the idea was hypothetical.
“There is no concrete information yet, it is a proposal to consider without harming ourselves and compromising our interests,” he said. “They (the government) will consider it,” he said.
