Airbus takes big reputational risk on Russian titanium

As Ukraine’s President Volodymyr Zelenskyy urges the European Union to stop buying Russian oil and other core exports, Netherlands-based aerospace group Airbus has called on the EU not to ban imports of titanium from Russia.

Titanium is a critical element in the aerospace manufacturing process. Russia exports an estimated 45% of all titanium used by the sector worldwide, while the world’s largest supplier of the commodity is VSMPO-AVISMA. This firm is owned by Russian state corporation Rostec, its defence conglomerate.

In early March, Airbus rival Boeing said it had stopped buying titanium from Russia despite only recently agreeing a new contract with VSMPO-AVISMA.

“We have suspended purchasing titanium from Russia. Our inventory and diversity of titanium sources provide sufficient supply for airplane production,” Boeing told Reuters in an emailed statement.

Airbus said at the end of last month that it was seeking to reduce its reliance on Russian titanium. But the group’s chief executive Guillaume Faury said during the group’s annual general meeting this week that placing sanctions on the strategic metal would damage aerospace while barely hurting Russia’s economy, according to Brussels-based news service Euractiv.

Widening the action taken after Russia’s invasion of Ukraine to include a ban on importing titanium, which is used in planes and jet engines, would “not be appropriate”, Faury reportedly told shareholders.

The level of sanctions placed on Russia following its invasion of Ukraine is becoming an increasingly hot political potato, as politicians and business leaders grapple with moral and economic contradictions.

Ukraine’s President Zelenskyy again called on western governments to impose stronger economic sanctions on Russia earlier this week, in an address to the Lithuanian parliament.

Germany’s President Frank-Walter Steinmeier was told this week he is not welcome in Ukraine, because of his soft stance on Russian sanctions and support for the Nord Stream 2 gas pipeline.

On Friday, the EU announced a fifth set of sanctions on Russia, including an import ban on all forms of Russian coal. This affects one fourth of all Russian coal exports, amounting to about €8bn loss of revenue per year for Russia.

The EU also said it would consider tougher sanctions on Russia. “The [European] Commission (EC) and the EEA are working on additional proposals for possible sanctions, including on oil imports, and are reflecting on some of the ideas presented by member states, such as taxes or specific payments channels, such as an escrow account,” said the EC.

But so far titanium remains off the list, and Airbus currently does not believe that tougher sanctions are needed.

“Airbus is applying and will continue to apply the sanctions fully,” a company spokesperson told Euractiv.

“Sanctions on Russian titanium would hardly harm Russia because they only account for a small part of export revenues there. But they would massively damage the entire aerospace industry across Europe,” they added.