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bne August 2024 Companies & Markets I 7
China used to be Russia’s biggest competitor in the metallurgy business. Now it is both its biggest partner and market. / bne IntelliNews
system than to watch from the outside as you get, so to speak, squeezed out.”
Despite lacking expertise in battery production, Nornickel and Russian nuclear giant Rosatom plan to develop one of Russia’s largest lithium deposits through their joint venture, Polar Lithium, expected to launch by 2026. With China holding 72% of global lithium refining capacity, Polar Lithium will likely supply the Chinese market predominantly.
“As Beijing’s competition with Washington over critical minerals intensifies, China and Russia are partnering on global metals exploration,” said Spivak.
In mid-2023, Rosatom and the Chinese investment group CITIC Guoan won a tender to develop lithium deposits in Bolivia (home to the world’s largest lithium reserves), beating a US bid backed by billionaire Bill Gates’s Breakthrough Energy Ventures. Rosatom and CITIC Guoan plan to invest
over $1.4bn in the project, which envisages the construction of two lithium carbonate technology plants. Despite the concerns of US officials, this development marks another milestone in the integration of Bolivia’s mineral resources into China’s battery production supply chains.
The US and UK bans on Russian metals imports may enhance the role of the Shanghai Futures Exchange (SHFE) in setting international benchmarks and promoting yuan-denominated metals trading. As the London Metal Exchange and the Chicago Mercantile Exchange are barred from accepting Russian metals, SHFE remains the only major exchange accessible. This is a significant loss for London, which, as
of April 2024, held substantial Russian-origin stocks: 50% of copper, 33% of nickel and 89% of primary aluminium.
While London and Washington have refrained from directly sanctioning Russia’s main metals producers, such a step could limit further integration of China and Russia’s metals supply chains, as Chinese firms would fear Western secondary sanctions.
Rusal experienced the direct impact of US sanctions in 2018 when its then-majority shareholder Oleg Deripaska was targeted, causing global aluminium market volatility and driving prices up 30%. The sanctions were lifted ten months later after Deripaska reduced his stake in Rusal. To hedge against new sanctions, Potanin's plan to relocate Nornickel's copper production to China aims to mitigate potential Western sanctions impacts.
“Amid the war in Ukraine and the intensifying US-Chinese technological competition, China and Russia have been developing a more economically interdependent relationship, albeit an asymmetrical one that largely favours Beijing. Moscow’s deeper integration into China’s metals value chain is yet another sign of growing Chinese influence over Russian industries that extends from consumer electronics and appliances to metals and hydrocarbons,” says Spivak.
Russian exports of diamonds to Hong Kong up 18-fold in 5M24
bne IntelliNews
In the first five months of the year, imports of Russian diamonds to Hong Kong increased 18-fold year on year, according to data from Hong Kong's Statistics Bureau published on its official website on June 30.
Hong Kong has dramatically stepped its imports of diamonds from Russia, purchasing $657.3mn worth of Russian diamonds in the first five months of 2024.
In the period from January to May 2024, Hong Kong's imports of Russian diamonds soared from $36.5mn a year earlier to $657.3mn. As a result, Russia has become the third-largest supplier of diamonds to Hong Kong, with its share of total diamond imports rising to 12% from just 1% in 2023.
India remains the leading supplier of diamonds to Hong Kong, with imports valued at $2.9bn, followed by Israel with
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