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In recent years, geopolitical tensions have radically transformed the European Union’s (EU) approach to primary aluminium imports from Russia.
Although there are currently no formal sanctions on Russian aluminium, with the exception of the previous ban on the import of aluminium wire, tubes and foil, the reality of self-sanctions by European importers and the indirect effects of secondary sanctions have profoundly changed the market dynamics.
The Role of the United States and the United Kingdom
Recent actions by the US and UK governments have had a significant impact on the EU’s stance on Russian aluminium imports. In April 2024, both nations took decisive action, leading the London Metal Exchange (LME) and the Chicago Metals Exchange (CME) to exclude Russian aluminium from their trading systems.
This exclusion marks a broader trend towards Russia’s economic isolation and highlights the growing influence of international pressures on trading practices.
The Collapse of Russian Aluminium Imports into the EU
The consequences of these measures are clearly visible in the statistics. The share of Russian aluminium in total EU imports has dropped dramatically, from 18% in 2021 to around 8-9% in 2023.
In terms of quantity, Russian aluminium imports to the EU dropped to 512,122 tonnes, reflecting a significant reduction in Moscow’s presence in the European market. This drop in imports is part of a broader picture of shrinking EU-Russia trade relations, further aggravated by the economic sanctions already in place.
Russia vs. the World – EU aluminium imports, 2019-2023 (in 000 t)
Political Pressure and Lobbies
The EU is now facing increasing demands from pressure groups, industry lobbies and politicians from various member states to introduce sanctions on Russian aluminium in the next sanctions package.
However, the Union is at a moment of strong internal division on this issue. Countries such as Poland, Latvia, Lithuania and Estonia actively push for tougher sanctions, while large industrial nations such as France, Germany and Italy take a more cautious approach.
The latter recognise the strategic value of Russian aluminium, as its production, through the use of hydropower, helps to keep the overall environmental impact of aluminium used in the EU low.
Economic Impact of Sanctions on Aluminium
A possible imposition of sanctions on Russian aluminium could have significant economic consequences for the EU. It would increase aluminium prices, which would have a negative impact on many industries that are heavily dependent on this metal.
Small and medium-sized enterprises (SMEs), which account for 70% of the sector’s turnover and 92% of employment, would be particularly vulnerable. Rising costs and supply difficulties would push many of these companies to turn to suppliers of more carbon-intensive aluminium from countries such as China and India, whose production plants use energy from fossil sources such as coal.
LME Aluminium – 3 month $/ton daily
Climate Targets at Risk
Aluminium produced in Russia has a relatively low carbon footprint, around 2.1 tonnes of CO2 per tonne of aluminium, due to the use of hydropower. In comparison, aluminium from China and India can have a carbon footprint of between 15 and 20 tonnes per tonne, well above the global average of 15 tonnes.
In the context of the EU’s Green Deal and zero net emissions targets, the removal of a major source of carbon-neutral aluminium could make it even more difficult to achieve these ambitious goals.
The Carbon Border Adjustment Mechanism (CBAM), to be fully implemented in 2026, could also paradoxically penalise carbon-intensive aluminium imports, thus prompting the EU to consider a possible trade-off between environmental and geopolitical sustainability.
Impact of Russia and the Global Market
Should the EU introduce sanctions on Russian primary aluminium, this is unlikely to significantly affect the Russian economy or Moscow’s aluminium sector. The largest aluminium producer, RUSAL, has already reallocated a large part of its exports to China, with a threefold increase in shipments over the past three years.
Moreover, cooperation between Russia and China in the alumina and aluminium sector is growing, providing Moscow with stable demand despite tensions with the West.
On the energy side, EU sanctions on aluminium will have minimal effects on energy use in Russia, as production is heavily based on hydroelectric sources. Although the global aluminium sector has seen a decline in profitability, Russia’s tax revenues from aluminium production remain relatively modest.
In fact, any price increase due to sanctions could even benefit Russian producers by increasing overall revenue.
Replacing Russian Aluminium: A Challenge for the EU
Replacing Russian aluminium, which accounts for over 500,000 tonnes of low-carbon annual supply, will be a significant challenge for European consumers. Difficulties in sourcing sustainable alternatives in the short term, coupled with geopolitical tensions complicating transport routes, exacerbate the situation.
Therefore, the EU is likely to be forced to import aluminium from countries with a greater climate impact.
Geopolitical Factors: Trade Routes and the Role of China
Geopolitical factors are having an increasing impact on global supply chains. Disruptions in the Red Sea and other critical areas are forcing exporters to find alternative, longer and more expensive routes to the European market.
This increases costs for European aluminium consumers, especially since the EU is dependent on imports for about 90 per cent of its primary aluminium needs.
At the same time, China could take advantage of the increased availability of environmentally friendly Russian aluminium to consolidate its carbon reduction targets and increase global exports of aluminium products, including those destined for the EU.
