Airbus Calls on West to Avoid Sanctions on Russian Titanium

“We think sanctioning titanium from Russia would be sanctioning ourselves,” Airbus Chief Executive

Guillaume Faury

said over the weekend. Russian titanium sales are “one of the few areas of business where it is in the interest of no party to disrupt the current situation,” he told reporters at an aviation gathering in Doha, Qatar.

Titanium has so far been kept off the EU and U.S. sanction lists, but many buyers have reduced their exposure to Russian sources and have found alternative suppliers for a number of reasons, including the difficulty of making payments into Russia.

Airbus isn’t the only Western company still buying titanium but is among the biggest Western aerospace firms still doing so, demonstrating the challenges in quickly replacing Russian supply chains. Airbus’s reliance on Russia exposes it to the risk of new sanctions imposed by either Europe or the U.S., or export restrictions from Russia. It is also subject to reputational risk amid rising public pressure on companies to withdraw financial support for the Russian economy.

Airbus gets its Russia-sourced titanium from VSMPO-Avisma PJSC.  VSMPO is part-owned by Russian defense firm Rostec, which manufactures arms for the Russian military. The company is headed by sanctioned oligarch

Sergey Chemezov,

identified as one of President

Vladimir Putin’s

known close associates. Rostec is subject to some sanctions, too, but VSMPO sales of titanium aren’t. Rostec and VSMPO didn’t respond to requests for comment.

Airbus rival

Boeing Co.

, which before the war purchased about one third of its titanium from Russia, said at the onset of the invasion of Ukraine that it would suspend its titanium joint venture in Russia and halt purchases of the metal from there. Chief Executive

David Calhoun

said in April it was “in the spirit of doing the right thing.”

Raytheon Technologies Corp.

, which owns engine maker Pratt & Whitney, has halted its $50 million annual spending on Russian titanium and said that would lead to some delivery delays this year.

General Electric Co.

’s aviation business had already turned to other supplies after Russia’s annexation of Crimea in 2014, reducing its exposure to Russian titanium to two parts, or about 1% of its total titanium use. The unit has over a year’s supply in storage, the company said.

Part of the challenge for Airbus is the lengthy certification procedure for bringing on new suppliers and components, a process that can take between 18 and 24 months, according to Pascal Fabre, a managing director at AlixPartners.

“There is a heavy dependency on one specific supplier,” Mr. Fabre said. “It’s very difficult to radically change the setup.”

Titanium has become an increasingly important material in aircraft production because of its high strength-to-weight ratio and resilience against corrosion. While it is mined the world over, production of titanium sponge, the unfinished raw material, is centered in key areas such as Japan, China and Russia. About 13% of it comes from the latter, according to the U.S. Geological Survey.

The market for titanium is relatively small compared with other metallurgical goods. Russia’s titanium exports amounted to $415 million in 2020, compared with $16 billion for iron and steel, according to Trade Data Monitor.

Even so, the EU has been weighing whether to impose sanctions on the material. In comments in late April, EU trade commissioner

Valdis Dombrovskis

said the bloc needed to look for new suppliers for raw materials used by aerospace manufacturers, including titanium, palladium and nickel.

Airbus is preparing to bring online secondary sources of titanium, a process that it laid the groundwork for in the wake of the Crimea annexation, Mr. Faury said. He said Airbus had about six to 12 months worth of titanium stored at the outset of Russia’s invasion of Ukraine in February this year. Airbus has said it is looking for new titanium sources in the U.S. and Asia.

—Andrew Tangel and Doug Cameron contributed to this article.

Write to Benjamin Katz at [email protected]

“We think sanctioning titanium from Russia would be sanctioning ourselves,” Airbus Chief Executive

Guillaume Faury

said over the weekend. Russian titanium sales are “one of the few areas of business where it is in the interest of no party to disrupt the current situation,” he told reporters at an aviation gathering in Doha, Qatar.

Titanium has so far been kept off the EU and U.S. sanction lists, but many buyers have reduced their exposure to Russian sources and have found alternative suppliers for a number of reasons, including the difficulty of making payments into Russia.

Airbus isn’t the only Western company still buying titanium but is among the biggest Western aerospace firms still doing so, demonstrating the challenges in quickly replacing Russian supply chains. Airbus’s reliance on Russia exposes it to the risk of new sanctions imposed by either Europe or the U.S., or export restrictions from Russia. It is also subject to reputational risk amid rising public pressure on companies to withdraw financial support for the Russian economy.

Airbus gets its Russia-sourced titanium from VSMPO-Avisma PJSC.  VSMPO is part-owned by Russian defense firm Rostec, which manufactures arms for the Russian military. The company is headed by sanctioned oligarch

Sergey Chemezov,

identified as one of President

Vladimir Putin’s

known close associates. Rostec is subject to some sanctions, too, but VSMPO sales of titanium aren’t. Rostec and VSMPO didn’t respond to requests for comment.

Airbus rival

Boeing Co.

, which before the war purchased about one third of its titanium from Russia, said at the onset of the invasion of Ukraine that it would suspend its titanium joint venture in Russia and halt purchases of the metal from there. Chief Executive

David Calhoun

said in April it was “in the spirit of doing the right thing.”

Raytheon Technologies Corp.

, which owns engine maker Pratt & Whitney, has halted its $50 million annual spending on Russian titanium and said that would lead to some delivery delays this year.

General Electric Co.

’s aviation business had already turned to other supplies after Russia’s annexation of Crimea in 2014, reducing its exposure to Russian titanium to two parts, or about 1% of its total titanium use. The unit has over a year’s supply in storage, the company said.

Part of the challenge for Airbus is the lengthy certification procedure for bringing on new suppliers and components, a process that can take between 18 and 24 months, according to Pascal Fabre, a managing director at AlixPartners.

“There is a heavy dependency on one specific supplier,” Mr. Fabre said. “It’s very difficult to radically change the setup.”

Titanium has become an increasingly important material in aircraft production because of its high strength-to-weight ratio and resilience against corrosion. While it is mined the world over, production of titanium sponge, the unfinished raw material, is centered in key areas such as Japan, China and Russia. About 13% of it comes from the latter, according to the U.S. Geological Survey.

The market for titanium is relatively small compared with other metallurgical goods. Russia’s titanium exports amounted to $415 million in 2020, compared with $16 billion for iron and steel, according to Trade Data Monitor.

Even so, the EU has been weighing whether to impose sanctions on the material. In comments in late April, EU trade commissioner

Valdis Dombrovskis

said the bloc needed to look for new suppliers for raw materials used by aerospace manufacturers, including titanium, palladium and nickel.

Airbus is preparing to bring online secondary sources of titanium, a process that it laid the groundwork for in the wake of the Crimea annexation, Mr. Faury said. He said Airbus had about six to 12 months worth of titanium stored at the outset of Russia’s invasion of Ukraine in February this year. Airbus has said it is looking for new titanium sources in the U.S. and Asia.

—Andrew Tangel and Doug Cameron contributed to this article.

Write to Benjamin Katz at [email protected]