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The Impact of the Ukraine War on Global Mining
Release time:
2022-07-16
Source:
On February 25, 2022, the escalation of the Russia-Ukraine crisis sent shockwaves through global markets, leaving global stock markets and commodity markets in turmoil. Experts say this will have a lasting impact on commodities, energy policy, and the energy transition.
From natural gas, coal, petroleum, iron ore, aluminum, platinum-group metals, and zinc, to copper, lead, petrochemical products, and fertilizers, The international market is highly dependent on certain Russian commodities, especially energy and mineral resources. Russia is one of the world’s leading producers and exporters of crude oil, as well as the globe’s largest exporter of natural gas, holding the world’s largest reserves of natural gas. In 2021, Russia produced 534 million tons of crude oil, accounting for 12% of global crude oil production—second only to the United States, placing it second worldwide. In terms of crude oil exports, Russia ranks second only to Saudi Arabia. Many major international oil and gas companies, utility firms, and mining companies have invested in Russia.
▲ Europe’s Dependence on Imports of Russian Goods and Their Monetary Value (2021); Sources: Wood Mackenzie, Gazprom, GTT, and others.
According to MINING.COM, a mining website based in Canada, Wood Mackenzie’s global team recently conducted a detailed analysis of the risks and potential impacts of the Russia-Ukraine war on commodity markets—particularly those for mineral products—as well as on the global economy. Below are their key insights.
Natural gas
Natural gas
Russia’s natural gas reserves account for 19.8% of the global total. In 2020, Russia exported 199.9 billion cubic meters of natural gas, representing 16.2% of the world’s total natural gas exports. Natural gas from Russia accounts for more than 40% of Europe’s natural gas imports and 30% of Europe’s total natural gas demand. Russia’s exports of energy products, such as natural gas, to Europe are irreplaceable for the EU, and EU countries are even more dependent on Russia. Although Germany has suspended the approval process for Nord Stream 2, EU countries have been mired in a severe energy crisis since last year. The situation in Ukraine has put pressure on Europe’s natural gas market, and McKenzie’s team believes that this market has already experienced the most serious crisis in its history. Pipeline gas imported from Russia accounts for 38% of the EU’s demand, making sanctions against Russian pipelines increasingly daunting. If the EU were to completely halt all trade in Russian natural gas, the long-term consequences would be even more severe.
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