FACE claims EU’s sanction on Russian aluminium will backfire on the domestic economy

The Federation of Aluminium Consumers in Europe (FACE) is of the opinion that the European Union's twelfth package of sanctions on Russian aluminium will harm Europe's economy more than Russia's.

In response to the report last week that European Union (EU) countries are contemplating imposing new sanctions on Russia, banning aluminium product imports, FACE said that the European Commission added aluminium to the 12th package of sanctions without considering the possible consequences.

FACE's Secretary General, Dr Mario Conserva, commented: "Adding aluminium products to the twelfth sanctions package proposal is not a great demonstration that the EU has a strategic compass: it will not help accelerate the end of the war in Ukraine, it will further redirect Russian low carbon supplies, that we so badly need, to China and other competitors, and it will deepen market anxiety and therefore contribute to price rises that will put hundreds EU companies at risk of closure."

Russia is a major producer of aluminium and a crucial supplier to the European market. The list of aluminium products that the Commission has proposed for the sanction includes wire rods, foil and extrusions. These products are exported in minimal volume by Russia to the European Union but represent a significant share of EU imports, especially wire rods that accounted for 17 per cent of the total aluminium imports in Q1 2023. So, banning these products will affect European SMEs, FACE claims.

FACE stated, "But this almost symbolic (and therefore senseless) list will, if approved, have a perverse effect: it will continue to feed market anxiety and uncertainty. People keep wondering "what's next?", and this instability contributes to keeping an upwards pressure on prices, which is terrible for the SMEs of this very low margin industry; and it is a bonanza for those whose market capitalisation and bonuses are linked to sales prices and who happen to be the fierce advocates of trade restrictions and sanctions."

Earlier, putting bans on industrial products often caused supply disruptions of critical raw materials inputs in Europe, resulting in businesses becoming unviable and leading to either production close or cut. European industrialists are less happy with the decision to impose extreme sanctions on Russia to limit the Kremlin's income.

FACE also said, "Sanctions are a kind of economic tactical nuclear bomb and therefore should be handled with extreme care, especially avoiding that the radiation – the unintended consequences – come back to hurt us and for a very long time."

FACE, thus urges the European Union member countries and the Commission to carefully evaluate the possible impacts of the sanction before imposing it on Russian aluminium products.