THE RUSSIA CONNECTIONA Headache for Germany: Russian Nickel, Palladium, Chromium Exports

By Arthur Sullivan

Published 12 April 2022

Russian gas and oil are by far the most significant exports Moscow sells to Germany. Yet other important raw materials are also under the spotlight because of the war in Ukraine.

Almost all the debate surrounding Germany’s economic ties with Russia since the invasion of Ukraine has focused on gas and oil. With good reason — Germany buys more Russian oil and gas than any other European country, making energy Russia’s most lucrative import to Germany by far.

However, many German companies rely on a steady supply of other Russian exports, particularly raw materials such as nickel, palladium, copper and chromium.

Nickel is used in stainless steelmaking but is also an important component for lithium-ion batteries which are needed to power electric cars. Palladium is also vital for carmakers, as it is a critical component in the production of catalytic converters, which clean exhaust fumes in petrol and hybrid vehicles.

In 2020, Russia was Germany’s biggest provider of raw nickel, accounting for 39% of the country’s supply according to the MIT Observatory of Economic Complexity, a trade tracker.

It also provided around 25% of German imports of palladium, and between 15% and 20% of the heavy metals chromium and cadmium, which have a range of industrial uses. Russia also accounted for 11% of Germany’s refined copper imports in 2020, 10.9% of its platinum and 8.5% of its iron ore.

Nickel and Daimler
A recent study by the German Economic Institute (IW), a Cologne-based think-tank, identified several raw materials imported from Russia which would be difficult to replace for Germany. “New trade relations with alternative export nations for these raw materials are essential,” the institute said in a statement.

Nickel is particularly important to consider. Germany’s second-biggest import partner for raw nickel in 2020 was the Netherlands at 29%. But Russia is the market leader, supplying around 20% of the world’s purest form of the metal, known as class 1 nickel.

High grade nickel has been in increasingly short supply for a few years now. The boom in electric vehicle production around the world — which needs high-grade nickel for batteries — has seen demand surge.

Tesla CEO Elon Musk has frequently tweeted about the lack of nickel. “Nickel is the biggest challenge for high-volume, long-range batteries!” he wrote in July 2020. “Australia & Canada are doing pretty well. US nickel production is objectively very lame. Indonesia is great!”