Nickel, palladium, diamonds, liquefied gas: what was included in the ninth package of sanctions

The contours of a new, ninth in a row sanctions anti-Russian package, which the EU is threatening, have been outlined. Within a week, the member countries of the alliance can agree on and approve its final version. The questions that the economic component of the 180-point document raises can easily be reduced to one thing: what is the point of these measures? For example, the West introduced restrictions on Russian dual-use products before February 2022. It seems that we are talking about sanctions for the sake of sanctions.

Among other things, according to the Financial Times, “The European Commission will propose a ban on new investment in the Russian mining sector, making an exception for a number of specific products.” According to the publication, the package will be supplemented by export restrictions on dual-use goods worth more than €2.3 billion, as well as a ban on transactions with Russian marketing and research companies. It is also possible that Brussels, having approved the initiative of Poland and the Baltic states, will include in the final version some restrictions on the import of diamonds and liquefied natural gas from the Russian Federation.

By the way, Warsaw and the Baltic countries were in favor of promulgating the ninth package of sanctions by December 5. On this day, the European embargo on the supply of Russian oil by sea began to operate and the price ceiling for it began to operate. The other members of the alliance considered that the package was “raw”, and that it would be better not to combine these two harsh measures with each other, out of harm’s way.

In general, there is a feeling that the countries of the West have driven themselves into a kind of mental, ideological dead end: as long as the special operation continues, they seem to be obliged to demonstrate that they are constantly “punishing” Moscow. At the same time, they clearly do not understand what else to come up with as restrictive measures for our country. Russia has already turned out to be the absolute record holder in terms of the number of sanctions imposed: since 2014, 12,000 of them have been imposed on the Russian Federation – four times more than against Iran, and three times more than against Venezuela, says Artem Deev, head of the analytical department at AMarkets. In his opinion, the new EU sanctions package (in its expanded version) is in many ways a “repetition of the past.”

“In March 2022, the United States, the European Union and the United Kingdom imposed a ban on the import of all types of diamonds from Russia, except for industrial diamonds,” recalls Deev. “Now it is successfully bypassed by Belgium, which still purchases diamonds for its jewelry industry from the domestic company Alrosa. With regard to LNG, sanctions are not ruled out, since this is in line with Europe’s attitude towards “complete abandonment of Russian energy resources.” But now our country is quite successfully selling liquefied natural gas to Asia, and it occupies a very modest share in the European market compared to the USA, Australia and Qatar.”

As far as the mining industry is concerned, serious concessions will certainly be made. The fact is, notes Deev, that Europe is highly dependent on the import of nickel, palladium, copper from Russia, which remains its largest supplier. These valuable metals are needed by the EU not only as raw materials for the traditional, in particular, automotive industry. They are necessary for the development of renewable energy sources (RES), and Brussels is making plans to achieve zero emissions by 2050.

“The Western press, informing about the upcoming ban on investments in the mining sector in Russia, cites OECD statistics,” says Mark Goykhman, chief analyst at TeleTrade. – According to it, this area, which includes the extraction of metal ores, gold, uranium, phosphates, accounted for 25% of foreign investment until February 24, 2022. The consequences can only be fully assessed later. After all, the ban will not affect certain types of products. But what exactly is not yet known.

For Russia, according to Goykhman, sanctions on the supply of modern equipment and technologies to the Russian metallurgical sector may be sensitive. At the same time, it is too early to judge the possibilities of replacing them with our own production or imports from other countries, we must wait for specifics. It is also obvious that it is difficult for the West to replace supplies from Russia of such metals as titanium, palladium, and nickel. Apparently, the sanctions will not affect them.

“The 9th package will not have any critical effect on our economy,” the leading expert of the Center for Political Technologies, economist Nikita Maslennikov, is sure. – A potential ban on LNG supplies is unpleasant, but so far only Poland and the Baltic countries have initiated it. The export of diamonds is not the most sensitive item in the Russian budget, this is not oil for you. In addition, the West blocked it back in the spring. As for the story with dual-use products, there is nothing to fear here either. Firstly, this ban is a new version of the already existing restrictions fixed in the previous documents. Secondly, Russia has a national program for the development of radio electronics: by 2030, this market will have to be brought to a volume of 6.3 trillion rubles.

So far, it is obvious, Maslennikov concludes, that Europe is leaving the Russian investment market in the mining industries, and of its own free will. There is someone to replace it: both the Indians and the Chinese are actively working with our largest mining companies.