In mid-April 2024, the United States and the United Kingdom jointly announced a ban on imports of Russian aluminum, copper, and nickel. These three metals are critical for producing a wide range of goods from beverage cans to semiconductors and electric vehicles (EV). Isolated by the ban, Russian metals producers are likely to respond by exporting more to China—meaning China will continue transitioning from primary competitor to principal client.

Russia has been redirecting metals to China since the full-scale invasion of Ukraine in February 2022 and the resulting Western sanctions. Russia’s top aluminum producer Rusal has said that its year-on-year revenues from exports to China almost doubled in 2023 (despite sizable domestic aluminum production in China and international competition between Rusal and Chinese companies). Meanwhile, Nornickel, Russia’s leading producer of nickel and copper, saw revenue from exports to China grow 74.2 percent in 2023 (revenue from exports to North America fell 30 percent in the same period). In a recent interview, Nornickel head Vladimir Potanin said China will soon account for over half of the company’s sales.

Chinese data confirms this shift. Russia’s share of Chinese copper imports rose from 1.8 percent in 2022 to 10.4 percent in 2023, making Beijing one of the top three importers of Russian copper. Russia accounted for 25.7 percent of China’s aluminum imports in 2023, up from 12 percent in 2021. While Russia’s share of Chinese nickel imports remained a modest 3 percent in 2023 (despite Beijing’s dependency on imports for the commodity), that figure was up from just 0.56 percent in 2021.

At the same time as increasing exports to China, Russian metals producers have been integrating with Chinese value chains. Rusal, for example, bought a 30 percent stake in Chinese alumina producer Hebei Wenfeng New Materials for $267 million in 2023. One of the Russian metals producers most affected by the war in Ukraine, Rusal has lost access to about 40 percent of its alumina supplies since the start of the fighting: Australia imposed a ban on alumina exports to Russia, and the company was obliged to shut down its alumina refinery in the Ukrainian city of Mykolaiv (Kyiv completed the nationalization of the refinery in 2023).

In April 2024, Nornickel’s Potanin announced plans to relocate copper production to China by 2027 and form a local joint venture, though he did not specify any possible partners. Such a tie-up likely means Potanin wants to tap into lithium-ion battery production using Chinese technologies. In the current climate, Beijing is Nornickel’s main hope for gaining a foothold in battery production, especially after Nornickel’s cooperation with the German firm BASF to create a battery materials factory in Finland fell through in 2022. When asked about the risks of Nornickel’s growing dependency on China, Potanin said: “It is better to be inside the system than to watch from the outside as you get, so to speak, squeezed out.”

Despite lacking the know-how for battery production, Nornickel and the mining division of Russian nuclear giant Rosatom have announced plans to develop one of Russia’s largest lithium deposits. Lithium is a key component for EV batteries. Their joint venture, Polar Lithium, is expected to launch by 2026. Russia has about 1 million tons of lithium reserves (about the same as the United States), but active discussions about tapping this “new oil” only began after the start of the war. Given the restrictions on Russian exports and the fact that China accounts for 72 percent of global lithium refining capacity, Polar Lithium will likely primarily supply the Chinese market.

As Beijing’s competition with Washington over critical minerals intensifies, China and Russia are partnering on global metals exploration. In mid-2023, Rosatom and the Chinese investment group CITIC Guoan won a tender to develop lithium deposits in Bolivia (home to the world’s largest lithium reserves), beating a U.S. bid backed by billionaire Bill Gates’s Breakthrough Energy Ventures. Rosatom and CITIC Guoan plan to invest over $1.4 billion in the project, which envisages the construction of two lithium carbonate technology plants. Despite the concerns of U.S. officials, this development marks another milestone in the integration of Bolivia’s mineral resources into China’s battery production supply chains.

It’s likely that the U.S. and UK bans on Russian metals imports will enhance the role of the Shanghai Futures Exchange (SHFE), particularly when it comes to setting international benchmarks and promoting yuan-denominated metals trading. As the London Metal Exchange and the Chicago Mercantile Exchange are prohibited from accepting Russian metals, SHFE is the sole major exchange that remains accessible. This is a particularly significant loss for London: as of April 2024, Russian-origin copper, nickel, and primary aluminum accounted for 50 percent, 33 percent, and 89 percent of its stocks, respectively.

While London and Washington have stopped short of directly sanctioning Russia’s main metals producers, such a step could actually serve to limit the further integration of China and Russia’s metals supply chains, as Chinese firms would be wary of being targeted by Western secondary sanctions.

Rusal experienced the direct impact of international sanctions in 2018, when its then majority shareholder Oleg Deripaska was targeted by U.S. sanctions. That caused unprecedented volatility on global aluminum markets, driving prices up 30 percent in a matter of days. Ten months later, once Deripaska had reduced his stake in Rusal from 70 percent to 45 percent, the sanctions against Rusal were lifted. Fear of a possible repeat scenario means that Russian metals producers are hedging against new sanctions. For example, Potanin’s April 2024 announcement that Nornickel will relocate copper production to China was designed to ensure that any Western sanctions against the company or its products will not be disastrous.

Amid the war in Ukraine and the intensifying U.S.-Chinese technological competition, China and Russia have been developing a more economically interdependent relationship, albeit an asymmetrical one that largely favors Beijing. Moscow’s deeper integration into China’s metals value chain is yet another sign of growing Chinese influence over Russian industries that extends from consumer electronics and appliances to metals and hydrocarbons.

The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official policy or position of any other organization or institution with whom the author may be affiliated.