Cost of critical metals for building submarines soars during Ukraine crisis

The Bystrinsky Mining and Concentrating Plant is the largest completely new project in the Russian metallurgical industry. WIKIPEDIA / Andrey Kuzmin

WASHINGTON, DC – Availability of raw materials and components was a topic of conversation at yesterday’s Submarine Industrial Base Council Congressional Breakfast in Washington, DC.

Participants noted that the impact of the pandemic on the supply chain has made just-in-time deliveries virtually impossible. In the case of specialist steel mills, the availability and prices of raw materials such as nickel, particularly critical for the high quality steel used in the construction of submarines, have been particularly troublesome.

The London Metal Exchange, one of the oldest commodity exchanges, had to suspend nickel trading due to high activity and concern over Russia’s invasion of Ukraine. Nickel is an essential ingredient in heavy vehicle batteries, stainless steel and other alloys and is vital for many defense industry products.

Nickel is already in short supply, with available stocks on the LME having been halved since October. LME nickel prices more than doubled on Tuesday, March 8, to over $100,000 a ton. The market panic caused the LME to temporarily stop displaying ore prices. Other exchanges have seen similar activity.

Russia is a major supplier of nickel – around 10% of global production – and Russian company Nordickel is the world’s largest supplier of battery-grade nickel, supplying 5-20% of the global supply.

Prices for other commodities like copper, tin, lead and zinc are also higher this week

LME hopes to reopen nickel trading soon. LME’s website currently states that the exchange “continues to work on developments in the nickel situation, with the aim of ensuring that it is able to reopen the market, with trading continuing in an orderly fashion, within an appropriate period”.

“Current events are unprecedented,” the LME said in a notice to members.

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