U.S. Expands Sanctions on Russia, Targeting Vanadium Supply Chain

In its continued efforts to limit Russia's revenue from the metals and mining sector, the U.S. government has introduced new sanctions specifically targeting Russia's vanadium supply chain. This latest round of sanctions, announced by the U.S. Office of Foreign Assets Control (OFAC) on Friday, impacts nearly 400 entities across multiple industries, with a particular focus on the operations connected to global steelmaker Evraz Group.

Key Facilities Targeted

The sanctions notably affect several of Evraz's critical vanadium production facilities, including the Kachkanarski Gorno Obogatitelny Kombinat (KGOK), Nizhnetagilski Metallurgicheski Kombinat (NTMK), and Vanadi Tula. These sites are essential to Russia's vanadium production, which plays a crucial role in the manufacture of high-strength steel and various other industrial applications.

Evraz's operations involve mining vanadium-bearing iron ore at KGOK and producing vanadium-rich slag as a by-product at NTMK. The Vanadi Tula facility processes this slag into vanadium pentoxide (V2O5), a key intermediary for producing high-grade ferro-vanadium and vanadium metal, both critical in industrial and aerospace applications.

Uncertain Impact on U.S. Supplies

While these sanctions are designed to disrupt Russia's vanadium supply chain, it remains uncertain how much they will affect domestic U.S. supplies. The U.S. does not directly import vanadium from Russia, and the "significant transformation" rule enforced by U.S. Customs and Border Protection allows foreign producers using Russian materials to export alloys to the U.S., provided these materials undergo substantial processing.

Concerns Over Sanctions Evasion

The OFAC statement also addressed potential concerns about sanctions evasion by Russian entities. The U.S. Treasury Department emphasized its readiness to counter "new evasion channels," which could lead to increased scrutiny over the origin of vanadium products. This is particularly critical for sectors like aerospace, where the integrity of vanadium-aluminum alloys is essential.