The Nornickel company, led by the billionaire Vladimir Potanin, almost entirely controls nickel production in Russia, which is the world's third-largest producer. The ores containing copper-nickel sulphides, from which nickel, copper, cobalt and platinum are extracted through industrial processing, are found in huge quantities in the subsoil of the Taymyr Peninsula, where the city of Norilsk, the main headquarter of Nornickel, is located.

Approximately 50% of the world's nickel resources are available in the mining sites of the Taymyr Peninsula and, to a lesser extent, those of the Kola Peninsula. Russia could obtain around 22 million tonnes of nickel from these resources, making it a major player in the world metal trade. Currently, Russia is one of the main mining countries, producing about 10% of the world's total nickel. Furthermore, the underground resources yet to be exploited will only further strengthen its position.

Despite Russia's significant wealth and power derived from its underground resources, the ongoing Western sanctions continue to impact the country's economy, as we have already had the chance to see. While the impact of the sanctions may not have been as severe as their promoters intended, they are still taking their toll: Nornickel, the largest nickel producer in the world, has seen its revenue drop by as much as 20% compared to the pre-2022 period due to these sanctions.

Nickel is a crucial metal used in the manufacturing of numerous products. Its primary use is in alloying with other metals, particularly stainless steel, which is highly resistant to heat and fracture. But apart from industrial processes, nickel is essential in the production of the batteries that power electric and hybrid cars. Given the world's push towards renewable energy and the ongoing energy transition, the need for such batteries is more pressing than ever, particularly in the European Union.

As a result of the sanctions and the changing dynamics in Western relations with Russia, the country, once deeply economically intertwined with Europe, is now redirecting its focus towards the East, particularly the People's Republic of China, in both political and economic domains. This shift is well demonstrated by Nornickel's decision to relocate a significant portion of its production to China, taking advantage of the new opportunities presented by the Northern Sea Route.

This move underscores the challenges that Russia is facing, as it struggles to remain competitive in the face of sanctions and a weakened global market position. China, on the other hand, has emerged relatively stronger, with its goods being “harder to hit with sanctions” than those produced in Russia. The fact that a major player like Nornickel is forced to relocate its assets and resources overseas to maintain profitability is indicative of Russia's dependence on its natural resources and sensitivity to external pressures.

Tommaso Bontempi

Holds a Master's degree in Comparative International Relations from Ca' Foscari University of Venice, Italy. The author is passionate about everything related to Eastern Europe, be it history, culture or languages. His life takes place between Italy and Russia, while the Arctic holds a dear place in his heart.

Also read the publication:
The Lithium Race In the Arctic Is Almost a Reality