Russian lead producers are facing closure

The plants producing lead in Russia faced the threat of production stoppage. Instead of a possible shortage of this metal, which business warned about at the beginning of 2022, the new reality turned into overcrowded warehouses, a halt in export supplies and a sharp drop in domestic demand. The capacities of a number of companies have already been reduced by a third, and the prospects for development look extremely vague.

On January 17, companies working with lead-acid batteries that have expired (the so-called OSKAB) appealed to the Government of the Russian Federation, the Federation Council and the Ministry of Industry and Trade. Then the business was worried that the new work rules introduced in Russia from March 2022 would lead to interruptions in the supply of recyclables to factories. The legislation (Federal Law No. 89 "On Production and Consumption Waste) assumed the transfer of the functions of working with toxic waste to a single operator represented by the Federal State Unitary Enterprise (FSUE "Federal Environmental Operator").

However, for several dozen companies working with lead (Riaztsvetmet, Ekorusmetall, Fregat, Agropribor, UMMC, etc.), the authorities' decision to introduce one-time export licenses proved to be an obstacle. Metal producers must issue them in the period from May 16 to November 15. However, in fact, none of the firms has received a license from the Ministry of Industry and Trade.

The representatives of the Russian ministry themselves declare plans to reorient exports from the West to the East, without specifying a reasonable time frame for such diversification.

According to the Kommersant newspaper, about 200 thousand tons of lead are produced annually in Russia. At the same time, more than 50% of products were traditionally exported abroad. For example, in 2021, 127.3 thousand tons were sold to foreigners. The revenue from this amounted to about $260 million. The largest buyer of lead in Russia was Switzerland, which bought up to 23% of all metal exported abroad. Singapore, Germany and Turkey also actively bought Russian lead. The share of these countries in the total volume was 12%, 10.5% and 7.6%, respectively.

By introducing export licensing, the Ministry of Industry and Trade hoped to prevent a shortage of metal in Russia under sanctions. After all, there are no enterprises producing "primary" lead in the country. All products are the result of recycling, in which 95% of the share is occupied by old batteries.

However, in March, the shipment of metal to the EU countries was suspended. The company was forced to do this by difficulties with interbank settlements and logistical problems. From July 10, the supply of lead to the European Union will be impossible for legal reasons (the fifth package of EU sanctions against the Russian Federation). In Russia, only in May 2022, the demand for new cars collapsed by 83.5%, and factories suspended production due to the lack of necessary components.

As a result, lead was also not in demand on the domestic market.

An option to solve the problem, according to experts, could be the purchase of metal by the state as a reserve. This would allow Russia to exchange lead for equipment in the future, trading with "friendly" countries. In addition, it would be advisable to initiate a program in the country to develop its own production of batteries, given the dependence of the Russian economy on their import. According to data for 2021, it amounted to more than $594 million.