By Eugene Gerden
Global nations are interested in the development of Ukrainian titanium deposits, as the demand for the metal is growing especially after the exodus of Russia from Western markets.
So far, the fight for the rich Ukranian titanium reserves has begun as the High Anti-Corruption Court of Ukraine has nationalized VSMPO TITAN Ukraine LLC, the country’s largest manufacturer of titanium products. According to some analysts, this may create conditions for the beginning of more active development Ukranian titanium projects by Western investors and global mining corporations.
Prior to February 24, 2022, VSMPO TITAN was the largest producer of titanium pipes in the Ukraine and one of the largest in the post-Soviet space. Most of its products were traditionally supplied for the needs of drilling, including deep-sea oil drilling, along with the aerospace industry, shipbuilding and chemical sectors. The company’s pipe plant is located in the city of Nikopol, on the right bank of the Dnieper, just below the city of Energodar, which is now under the control of Russian forces. Since Soviet times, raw materials for the Nikopol plant have come from the Ukranian Volnogorsk mining and processing plant in the Dnepropetrovsk region, as well as from the Irshansky plant near Zhytomyr.
VSMPO TITAN Ukraine enterprise was a 100% subsidiary of the Russian VSMPO-Avisma prior to the conflict between the two countries and the world’s largest manufacturer of titanium products. The Russian titanium giant is based on two industrial sites – in the Sverdlovsk region and in the Perm region. These factories have historically received raw materials from Ukraine with American Boeing and the European Airbus being the end buyers of finished products, deliveries continued even after 2014.
In 2009, VSMPO-Avisma formed a joint venture with Boeing on equal shares – Ural Boeing Manufacturing (Ural Boeing). For this purpose, a special economic zone “Titanium Valley” was even created in the Russian Sverdlovsk region – with a simplified customs and tax regime with the overall cost of about US$150 million.
Still last spring, Boeing Corporation announced that it refused Russian titanium with Airbus following suit shortly after. Russia currently continues to supply its titanium to global markets through intermediaries, as there are no real obstacles for this, since both the United States and Europe decided not to include VSMPO-Avisma in the sanctions lists.
Still, the probability is high that the end of Russian titanium supplies and products will lead to the deepening of shortages of the metal in Western markets already in the middle term.
So far, the US Department of the Interior has classified titanium as one of 35 minerals vital to US economic and national security. However, the US still imports more than 90% of titanium ore for its needs from abroad. The US no longer holds titanium sponge in its National Defense Stockpile, and the last titanium sponge producer in the country closed in 2020.
In this regard, Ukraine with its titanium reserves and one of seven countries in the world which produces titanium sponge, could be considered as one of the potential titanium suppliers to the US and possibly the EU, although it requires tremendous capital investments for the development of Ukranian projects.
Ukraine, from its side, is ready to reorient its titanium supplies to the West, bypassing Russia. For example, the Ukrainian company Velta, which controls titanium deposits in the Kirovograd region, said it intends to build a plant in the Czech Republic and to accelerate the development of domestic projects.
It has been planned that most of the Ukranian production will be carried out on four titanium mining and processing plants, which are located in the Dnepropetrovsk and Zhytomyr regions and include the Zaporozhye titanium and magnesium plant. Together with the Nikopol plant, these assets create a production chain that allows to get not just semi-finished products but finished products from titanium alloys.
In the meantime, Russia is also interested in Ukranian titanium reserves given that its own reserves are limited. According to the Russian Accounts Chamber, 99.9% of raw materials for Russian titanium plants were imported from abroad in 2020. The main supplier was Ukraine with a share of about 80%, as well as Kazakhstan, Chile, China, Mongolia and South Africa.