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Germany Says It Won't Stop Buying Russian Energy Despite Moscow’s War in Ukraine

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Germany Says It Won't Stop Buying Russian Energy Despite Moscow’s War in Ukraine​

By Bojan Pancevski, Wall Street Journal, March 7, 2022

Germany will continue to buy natural gas, oil and coal from Russia despite Vladimir Putin’s aggression against Ukraine, the government in Berlin said Monday.
Germany and Europe are too dependent on Russian energy imports for power, heating and industrial production to be able to cut trade links with Moscow in the short term, Chancellor Olaf Scholz said in a statement.
“Europe’s supply of energy for heating, for mobility, for electricity generation and for the industry can’t be secured otherwise at the moment,” Mr. Scholz said. Russian energy, he added, was essential for the daily lives of citizens.
Berlin has vowed to urgently diversify Germany's supplies of energy--and gas in particular--following Moscow's invasion of Ukraine but experts have warned it would struggle in the short term because of the limited availability of such resources and the time needed to adapt the country's energy infrastructure.
The statement comes as Russian forces have been indiscriminately bombarding Ukraine's cities, including residential areas and groups of people trying to flee the fighting, causing widespread civilian casualties.
Germany, the world’s biggest buyer of Russian gas, gets over half of its gas, about a third of its coal and a quarter of its oil from Russia, according to official figures.
This is why energy trade is exempt from the sanctions Western countries imposed on Russia following its attack on Ukraine, Mr. Scholz said.
“We made a conscious decision to continue the activities of companies dealing with energy supplies from Russia,” he said.
 

Germany Says It Won't Stop Buying Russian Energy Despite Moscow’s War in Ukraine​

By Bojan Pancevski, Wall Street Journal, March 7, 2022

Germany will continue to buy natural gas, oil and coal from Russia despite Vladimir Putin’s aggression against Ukraine, the government in Berlin said Monday.
Germany and Europe are too dependent on Russian energy imports for power, heating and industrial production to be able to cut trade links with Moscow in the short term, Chancellor Olaf Scholz said in a statement.
“Europe’s supply of energy for heating, for mobility, for electricity generation and for the industry can’t be secured otherwise at the moment,” Mr. Scholz said. Russian energy, he added, was essential for the daily lives of citizens.
Berlin has vowed to urgently diversify Germany's supplies of energy--and gas in particular--following Moscow's invasion of Ukraine but experts have warned it would struggle in the short term because of the limited availability of such resources and the time needed to adapt the country's energy infrastructure.
The statement comes as Russian forces have been indiscriminately bombarding Ukraine's cities, including residential areas and groups of people trying to flee the fighting, causing widespread civilian casualties.
Germany, the world’s biggest buyer of Russian gas, gets over half of its gas, about a third of its coal and a quarter of its oil from Russia, according to official figures.
This is why energy trade is exempt from the sanctions Western countries imposed on Russia following its attack on Ukraine, Mr. Scholz said.
“We made a conscious decision to continue the activities of companies dealing with energy supplies from Russia,” he said.
Can you imagine the public outrage in Germany if they did? Look how much we Americans are bitching about higher gas prices. Germany's would probably be more than twice what we are paying, so understandable although disappointing.
 
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Can you imagine the public outrage in Germany if they did? Look how much we Americans are bitching about higher gas prices. Germany's would probably be more than twice what we are paying, so understandable although disappointing.
Actually, we face a similar quandry regarding some key metals needed from Russia for electric vehicle and semiconductor production.

This Russian Metals Giant Might Be Too Big to Sanction​

Norilsk Nickel is a key supplier of nickel and palladium, two metals that are key for electric-vehicle batteries and semiconductors​

By Alistair MacDonald Wall Street Journal Updated March 7, 2022 8:13 am E

From its base at a former Arctic gulag, Russia’s MMC Norilsk Nickel PJSC digs up a large portion of two metals that are essential to greener transport and computer chips.
So far the U.S. and its allies haven’t sanctioned the company, or its oligarch chief executive, underscoring the dilemma some analysts say governments face in seeking to punish Russia without hurting their own access to key commodities.
The mining company is responsible for about 5% of the world’s annual production of nickel, a key component of electric-vehicle batteries, and some 40% of its palladium, which goes into catalytic converters and semiconductors. Nornickel, as the company is known, also supplies energy transition metals such as cobalt and copper.
The price of those metals has jumped since Russia invaded Ukraine amid concerns that Western sanctions or logistical difficulties stemming from the conflict could choke supplies. On Monday, the price of nickel jumped almost 40% on the London Metals Exchange and is up 93% so far this year. Palladium is up around 73% year to date.

Despite the rally in metals prices, Nornickel’s share price—like that of other Russian commodity companies—has dropped, and is down 17% so far this year. The fall is likely to be more severe, given trading in Moscow listed stocks was suspended several days ago as they began to plummet. On Saturday, Fitch Ratings downgraded Nornickel’s debt to junk, reflecting the tougher environment in Russia and weakened financial flexibility of its commodity companies.
Several Western companies say they are looking to diversify their supply away from Nornickel. That mirrors a trend across several commodities, including oil and steel, as Western buyers steer clear of Russian suppliers amid concerns they could be hit by sanctions or simply have problems getting products out of the country.
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Norilsk has gained a reputation as being one of the world’s dirtiest cities due to pollution related to mining and refineries.​

PHOTO: TATYANA MAKEYEVA/REUTERS

A spokesman for Nornickel said the miner is committed to fulfilling its obligations to customers, partners and employees. Chie Executive Vladimir Potanin, who also holds a 31% stake in the company, declined to be interviewed.
Western sanctions in response to the current conflict have so far largely avoided companies that provide the West with oil, gas and other key commodities.
Few companies are as pivotal in large commodity markets as Nornickel, particularly for palladium.
“If we have sanctions and we can’t access that palladium, you have to expect disruption globally,” said Gabriele Randlshofer, managing director of the International Platinum Group Metals Association, a trade group whose members include buyers and suppliers of palladium.
“At the moment all companies are looking at [who supplies them], they have to,” she said.


Sanctions Begin to Weigh on Russia’s Banks, Currency and Economy

Sanctions Begin to Weigh on Russia’s Banks, Currency and Economy

Since Russia invaded Ukraine at the end of February, the U.S. and allied countries have imposed heavy sanctions on Russia. WSJ’s Shelby Holliday dives into how these sanctions are affecting everyone from President Vladimir Putin to everyday Russian citizens. Photo: Pavel Golovkin/Associated Press
Among the companies looking for alternative supplies of nickel is Outokumpu Oyj, one of the world’s largest stainless steel manufacturers. The Finnish company said around 6% to 7% of its nickel comes from Nornickel, with the rest coming from recycled steel. “Given the situation in Ukraine, we are looking for alternatives for Russian supply for nickel,” a spokeswoman said.
Germany’s BASF SE, meanwhile, said it would fulfill existing contracts with Nornickel but not pursue any new business with the Russian company. The chemicals giant described Nornickel as an important supplier of nickel and cobalt for its production of cathode materials as well as a source of palladium and platinum.
On Friday, British steel executive Peter Davies received an email from a Polish steel mill he is invested in, saying that they were unable to buy nickel amid problems related to the conflict in Ukraine.
“Expect an earthquake in [the] steel industry,” the mill said, according to a copy of that email.
Reverberations are being felt across industries that have typically relied on Russian commodities.
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Norilsk Nickel is responsible for about 5% of the world’s annual production of nickel and about 40% of its palladium.​

Refiners have balked at buying Russian oil, according to traders and oil executives. Swedish refiner Preem AB and Finland’s Neste Oyj, for instance, say they have halted purchases of Russian oil and plan to replace it with crude from Northern Europe.
Severstal PAO, one of Russia’s largest steel companies, struggled to sell its steel as soon as Moscow’s forces crossed into Ukraine, according to a person familiar with the matter, who said would-be buyers were concerned about possible sanctions. In Severstal’s case they did come, with the European Union sanctioning its majority owner Alexey Mordashov on Monday.
The market prices for metals Nornickel produces reflect similar concerns, analysts say.
“It’s helping to make the markets twitchy, everyone is looking at it and saying if we are taking out (Nornickel’s) nickel from the market that is significant,” said Andrew Mitchell, director of nickel research at energy consulting firm Wood Mackenzie.
Nornickel’s production is important, analysts say, because demand for nickel is forecast to grow strongly amid the growing popularity of electric vehicles. Nickel had the biggest supply deficit of any base metal last year relative to market size, at about 6%, according to analysts at BMO.
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Vladimir Potanin, the owner of MMC Norilsk Nickel, was key to bringing the 2014 Winter Olympics to Russia.​

Nornickel is run by CEO Mr. Potanin, a former Russian deputy prime minister under Boris Yeltsin who helped forge the privatization deals that followed the breakup of the Soviet Union and put much of the country’s vast commodity wealth in the hands of a group of businessmen now dubbed oligarchs. More recently, Mr. Potanin was key to bringing the 2014 Winter Olympics to Russia, an idea which followed a ski trip to Austria with Russian President Vladimir Putin, The Wall Street Journal has previously reported.
Nornickel counts two other well-known oligarchs as investors. The company said that Roman Abramovich owns around 2% of its shares. United Co. Rusal International, which is part-owned by Oleg Deripaska, holds a 26.25% stake.
The company mines in one of the world’s most northern cities, Norilsk—a former penal colony.
Norilsk has also gained a reputation as being one of the planet’s dirtiest cities because of pollution related to mining and refineries. In 2020, almost 45 tons of jet fuel leaked into the ground from a pipeline owned by Nornickel. That followed a spill of 20,000 tons of diesel from a holding tank at one of its other installations the same year.
The area also provides the company with some of the world’s best mineral deposits, which are mined up to 5,000 feet below the permafrost.
“It is still probably the greatest ore body in the world,” said Mr. Mitchell.
—Miho Inada contributed to this article.
Write to Alistair MacDonald at alistair.macdonald@wsj.com
 
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A Nickel for Your Ukraine Thoughts​

The chaos in the metal market is a warning to the climate lobby.​

By The Editorial Board

March 8, 2022 6:50 pm ET

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An employee works at Nadezhda Metallurgical Plant of Nornickel company, the world's leading nickel and palladium producer, in the Arctic city of Norilsk, Russia August 23, 2021.​


Wars rarely go as planned and they invariably have collateral economic damage that surprises the unsuspecting. That’s the story this week in the chaos in the market for nickel, a crucial metal used in electric-vehicle batteries, among other things.
The London Metal Exchange on Tuesday suspended trading in nickel, after the price soared 66% on Monday to more than $100,000 a metric ton. This was the first time the LME suspended trading in a metal since the international tin cartel collapsed in 1985. Russia is a major nickel producer, and traders are concerned about shortages in the metal from U.S. and European sanctions. Short-traders covering their positions also sent prices higher.
Inevitably, such sharp price moves will catch some traders and companies on the wrong side of trades. One of the trampled appears to be Tsingshan Holding Group, a giant Chinese nickel producer. Chinese media reported Tuesday that Tsingshan had paper losses of $8 billion on its nickel contracts. Tsingshan is privately held, and its founder said it has no operational problems. But the firm’s creditors will be watching closely.
The nickel pickle is also a warning to the climate lobby that wants a hell-bent transition to green energy. Electric vehicles rely on metals like nickel and lithium that are mined in countries like Russia and China that don’t share American interests. Russia produces about 7% of the global nickel supply.

If you think the Kremlin holds leverage over Europe for natural gas, imagine the leverage it would have over global EV production. Yet the climateers block U.S. mining for nickel and other minerals at every opportunity. They can’t both restrict U.S. production and have the green future they want, as Europe is discovering after it made itself hostage to Russian energy.

The climate lobby needs to grow up and face the harsh world as it is, not the free-energy fantasy of its dreams.
 
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Electric vehicles rely on metals like nickel and lithium that are mined in countries like Russia and China that don’t share American interests. Russia produces about 7% of the global nickel supply.

Environmentalists on this board going…WTF? What’s nickel, what’s lithium? Then they should be asking what happens in those mines and how is the environment impacted with all of that mining…it’s coal on steroids, because when the above gets in streams…it does have significant impact.


But Brandon runs around saying petroleum is bad! EVs are great for the environment!!🤡
 
Electric vehicles rely on metals like nickel and lithium that are mined in countries like Russia and China that don’t share American interests. Russia produces about 7% of the global nickel supply.

Environmentalists on this board going…WTF? What’s nickel, what’s lithium? Then they should be asking what happens in those mines and how is the environment impacted with all of that mining…it’s coal on steroids, because when the above gets in streams…it does have significant impact.


But Brandon runs around saying petroleum is bad! EVs are great for the environment!!🤡
Do they use solar to process that nickel? haha
 
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