Russian metal giant escapes sanctions

So far, the US and its allies have not imposed sanctions on Russia’s MMC Norilsk Nickel.

The miner is responsible for about 5% of the world’s annual production of nickel, a component of electric vehicle batteries, and about 40% of palladium, which goes into catalytic converters and semiconductors.

The price of these metals has soared since Russia invaded Ukraine amid concerns that Western sanctions or logistical difficulties stemming from the conflict could choke off supplies.

On Friday, nickel traded at its highest level in a decade and is up 37% so far this year. Palladium has increased by about 57% for the year.

Despite soaring metal prices, Nornickel’s share price — like that of other Russian commodity companies — has fallen by 17% so far this year.

The drop is likely to be more severe as trading in Moscow-listed shares was suspended several days ago when they began to plummet.

Several Western companies say they are looking to diversify their offerings outside of Nornickel.

This reflects a trend in a number of commodities, including oil and steel, as Western buyers shun Russian suppliers amid concerns they could be hit by sanctions or simply have trouble getting goods out of the country.

Western sanctions in response to the current conflict have largely shunned companies that supply the West with oil, gas and other important commodities.

Few companies are as important in large commodity markets as Nornickel, particularly for palladium.

“If we have sanctions and we can’t access that palladium, you should expect a disruption globally,” said Gabriele Randlshofer, managing director of the International Platinum Group Metals Association, a trade group whose members include palladium buyers and suppliers.