Russian Ukraine War Impacts Mining Supply Chains

SPECIAL FOCUS

Russian Ukraine War Impacts Mining Supply Chains

russiA invAded ukrAine on feBruAry 24, 2022, mArking A critical turning point in the Russia-Ukraine war, which began in 2014. Price increases in numerous metals, including gold, due to its status as a safe haven, and nickel, due to supply concerns, have impacted global commodities markets.

In March, shares of many Russian and Ukrainian mining businesses, including ALROSA, Evraz, Ferrexpo, and Polymetal International, were slashed on the stock exchange. As the war broke out, the Ruble plummeted against the US dollar.

In retaliation, Japan, the EU, the United Kingdom, and the United States have imposed sanctions on Russia. However, mining operations appear to be unaffected so far. Both Polymetal and Kinross reported that their activities are unaffected and are operating normally.

"Approximately 98 percent of the workforce of Kinross' Russian companies are Russian natives, and given the ice road supply season, its operations have a full year of supplies on hand," Kinross said. It also refines gold produced in Russia on its own soil. "Contingency planning has been undertaken proactively to ensure company continuity," according to Polymetal. "This includes the selection of essential equipment suppliers, liquidity management, loan portfolio diversification, and ensuring sales channels." The company's output forecast for the year has been confirmed.

However, because Russia is one of the top three producers of diamonds, gold, platinum group metals (PGMs), and nickel, there is projected to be a substantial impact on the mining industry's supply chain. It is also a significant supplier of seaborne and met coal, iron ore, and aluminum to European markets. Coal, iron ore, and uranium supplies are all expected to be disrupted in Ukraine. Arcelor Mittal, for example, has shut down underground iron ore mines in Ukraine and slowed production at the Kryvyi Rih steel mill. stock constraints in Russia and Ukraine, Japan's Nippon Steel is searching for alternative feedstock sources in Brazil and Australia. Ferrexpo also declared Force Majeure because of fears about the Pivdennyi port terminal's temporary stoppage following the Russian invasion.

In anticipation of supply interruptions, India, which is the world's largest diamond cutting and polishing hub, has reduced production activity in the Indian state of Gujarat. Concerns about increased production costs and rising raw diamond prices are currently plaguing the diamond business.

A protester sits on a monument in Kyiv during clashes with riot police in February 2014. Louisa Gouliamaki/AFP/Getty