The United States and its G7 partners have imposed more than 300 economic sanctions against Russia in the past year and the current year. At first, Washington and Brussels pushed the idea of the restrictions as the embodiment of a strategy to cripple Moscow’s most important export. However, Western sanctions have backfired as Russian companies redistribute trade flows from the West to Asia.
The latest example of reorganizing and reorienting global supply chains has been demonstrated by Russia’s largest mining company MMC Norilsk Nickel. Bloomberg reports that for the first quarter of 2023, the manufacturer said nearly 45% of all revenue came from exports to Asia. The company has traditionally marketed its products in Europe, which until recently was its biggest customer. But now that figure has dropped to 24%. Asia’s revenue share has increased from 27% in 2021 to 31% in 2022 and 45% this year (data not final).
Norilsk Nickel controls around 7% of the world’s nickel production and 40% of palladium. The United States and Britain have imposed sanctions on the main shareholder and chairman of Norilsk Nickel, Vladimir Potanin. But no sanctions were imposed directly on the mining company. However, the company faces challenges such as shipping, insurance and logistics when exporting products to Western countries, which is one of the main reasons why the mining company has easily found new customers in Asia.
The Ukrainian conflict obviously went beyond the borders of the post-Soviet republic or even of Europe. It affects global supply chains of all commodities. Recently, the path of least resistance to the internationalization of the yuan has passed through Moscow, not London or Singapore. Norilsk Nickel was no exception and profitably refocused on Asia and Chinese currency.
He increased exports to China. Prices for important metals are now set in Shanghai, indicating that the conflict is indeed redrawing the map of global commodity trade and shifting more power to China, experts say.
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