Russia’s world leader in titanium production is in trouble because of the war

The world's largest titanium producer, the Russian company VSMPO-Avisma, has encountered problems in finding raw materials for its production due to Ukrainian actions. The company is urgently looking for alternatives to import supplies and is considering the possibility of developing a large Russian field, which was explored back in 1959. It is reported by RBC with reference to the press service of Rosnedra.

The need to develop our own field arose due to the collapse in the supply of raw materials from Ukraine, as well as the risks caused by supplies from other countries: the USA, Australia, Norway, Mozambique, Kazakhstan and Vietnam. Since the Soviet times, Ukraine has accounted for the bulk of supplies, in 2020 it was estimated at 80%, or 166.9 thousand tons of titanium ores and concentrates. However, already in 2021, the share of Ukraine fell to 46%, and in 2022, due to the war, deliveries fell to almost zero.

Currently, Vietnam is the main supplier of titanium ore for the Russian company, but the company does not want to increase its dependence on the Asian country due to high logistics costs. African deliveries, in addition to logistical difficulties, have political risks, according to the company. The annual demand for titanium ore for VSMPO-Avisma is estimated at 120,000 tons.

Due to difficulties with imports, the company wanted to return to the development of the Central titanium-zirconium deposit in the Tambov region. The development of the deposit was planned to start back in Soviet times, then in the late 90s, the last attempt was made by Norilsk Nickel in 2006-2008, however, due to too high costs, the company refused the license. To develop the field, Norilsk Nickel created a special company, Titan; after the refusal of the license, it was bought out by the Tambov Region Development Corporation.

In 2011, the development license was bought by VSMPO-Avisma, the company estimated the cost of developing the field at $300-600 million. “We have a license, work is already being done there. While we are engaged in experimental design. Unfortunately, the development of a deposit is a very capital-intensive undertaking,” said the then head of the company, Mikhail Voevodin.

However, the company did not want to develop the deposit, because the purchased license included not only titanium, but also other natural resources in which it was not interested (the license prohibited mining only titanium). Moreover, it was unrealistic to quickly start production on an industrial scale, the company estimated that it would be able to launch acceptable capacities only after 3–5 years from the moment the investment began. As a result, in 2019 the license was again sold to the administration of the Tambov region.

The company is considered the world leader in the production of titanium structures. Its key partners are the world's leading aircraft manufacturers: Boeing, Airbus, Embraer, Rolls-Royce and Safran Aircraft Engines. The company estimates its market share in titanium rolled products at about 25%. The dependence of major foreign partners on VSMPO-Avisma products is so high that they even asked Western governments not to put the company on the sanctions list. Nevertheless, after US sanctions against the head of Rostec, Sergei Chemezov, Boeing abandoned Russian titanium (Rostec owns a stake in VSMPO-Avisma).

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