Russian Metals Sector May Be A Target For Future U.S. Sanctions

Former U.S. government sources told S&P Global Market Intelligence that if President Vladimir Putin intensifies a developing conflict with the West via military action, the Russian metals industry may be a target for future U.S. sanctions.

As part of a slew of sanctions in response to Russia’s attempts to sway the 2020 presidential election, its decision to amass troops along its border with Ukraine, and an alleged global cyber espionage campaign, the Biden administration expelled ten Russian diplomats from the United States on April 15.
So, Russia said it would withdraw its soldiers from Ukraine’s border and attended a global climate change conference organized by the White House after the sanctions were imposed on the country. It then deployed naval vessels to the Black Sea for a military exercise. It announced that some areas would be off-limits to international warships for some time as a result. While Russia’s material capabilities are dwindling compared to other big powers, the Office of the Director of National Intelligence concluded in April that the country would remain a disruptive force for most or all of the next two decades. Russian energy and mineral resources were cited as benefits in the international arena.

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According to analysts, Russian mining firms may be one of the first targets of fresh sanctions if tensions rise to armed confrontation between the two countries. Russia is the world’s largest diamond producer and exporter and a significant supplier of battery metals, gold, steel, and coal. O’Toole’s analysis, sanctions are most likely to be aimed against diamond company PJSC Alrosa, one of the world’s biggest diamond producers, and steelmaker Evraz PLC. 2017 saw the appointment of former Kremlin state intelligence center chief Sergey Ivanov Jr. as the new head of Alrosa. Part of Evraz is controlled by Roman Abramovich, Russia’s richest billionaire, who denied strong connections to Vladimir Putin’s regime.
Before this, the Trump administration sanctioned two large Russian mining companies to connect to Russian billionaire Oleg Deripaska in 2018. Sanctions were removed after both companies agreed to the corporate reorganization, and Deripaska allegedly sold his stakes in both to a third party.
Because Rusal and En+ are intertwined in global supply networks, the United States was also under pressure to remove sanctions on them. During the Bush administration, Heather Conley, a former State Department official, stated that some reluctance for future sanctions against specific targets that wind up inadvertently having some rippling effects on the world markets. Conley said of the experience, which educated government officials overseeing the “oligarchic tentacles” of key Russian sectors like mining. Energy, minerals, and financial sectors could be targeted next if Russian military tensions rose due to additional Russian military operations. Even when the Biden administration imposed sanctions on Russia, the MSCI Russia Index, which measures the country’s economic health, hardly changed direction.