Russian exit from trade may be a copper and palladium lining for Africa.   

11 March 2022: There might be a silver lining ( metaphorically and literally) in the whole Russia-Ukraine conflict. On the periphery we know that skyrocketing prices of wheat, fertilizer and oil and rising inflation is bad news for the country. But, with Russia locked out of most of the global trade, Africa can tap into some real opportunity here- to fulfil the world’d metal needs.   

For now the surge in prices of commodities ranging from palladium and gold to nickel and copper will buoy the budgets of mining-dependent countries such as Zimbabwe and Namibia. South Africa could see an extension of the $12 billion tax windfall in the current budget year that was driven by soaring commodity prices. 

Since the west has imposed sanctions on Russia, Palladium has soared by a fifth while gold has reached to a whopping $2,000 an ounce and copper and nickel have beaten records.

If Russia remains locked out of production for a long time, the demand would need to be fulfilled somehow, and as a result mines would be pressured to produce at maximum capacity and proposed expansions will get the go-ahead. First in line to benefit from this would be Zamibia and Democratic Republic of Congo, where a number of copper projects are just kicking their heels for an investment.

First Quantum will soon decide whether to proceed with a $1 billion expansion of the Kansanshi mine and to develop the Enterprise nickel operation. In Congo, mines owned by Ivanhoe and China Molybdenum could get a kick.

Nevertheless, the biggest beneficiary might be South Africa, owing to their 39% of their palladium supply used auto-catalysts to cut pollution from cars while Russia accounts for about 38% of world palladium supply.

“African exporters could benefit from new market opportunities,” according to Callee Davis, an economist at Oxford Economics Africa. The collapse in trade between Russia and the countries that have sanctioned it “creates a void.”

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