The
European Commission is proposing a ban on new mining investments in Russia,
among its proposed further economic measures against the country’s energy and
mining sector as part of a ninth package of sanctions. The new sanctions are
aimed at further eroding Russia’s economy and its ability to finance its war
against Ukraine.
Details
of the proposed ban on new investments in the Russian mining sector are few,
but according to a report by the UK’s Financial
Times, the ban will have exceptions for some specific products.
Russia’s vast mining sector, which is a producer of gold, iron ore, uranium, phosphates, and potash, among others, accounted for a quarter of foreign investments into the country before the Ukraine war, according to the Paris-based OECD, as cited by Bloomberg.
Russian fertilizer companies EuroChem Group AG, Acron Group, and potash producer Uralkali PJSC all have greenfield and/or major mining expansion projects under development.
This latest package of sanctions is currently under discussion with Member States, with the Commission aiming to reach an agreement by the end of next week, according to the Financial Times, citing unnamed sources with knowledge of the discussions.
Among the other proposed measures, the Commission is proposing to add almost 200 additional individuals and entities to its sanctions list, as well as sanctions against three additional Russian banks, including a full transaction ban on the Russian Regional Development Bank, according to a Dec. 7 statement by Commission President Ursula Von der Leyen.
Other
proposals include new export controls and restrictions, particularly for
dual-use goods, and cutting access to Russia’s access to all sorts of drones
and unmanned aerial vehicles.
The
Commission is also targeting what it describes as “the Russian propaganda
machine” by proposing to take four additional channels off air and all
other distribution platforms.
The
package of sanctions being proposed could be amended, and would need to be
agreed unanimously by all 27 European Union (EU) states before adoption.
The
latest sanctions package comes on top of the full EU import ban on Russian
seaborne oil that came into force this week (GM Oct. 7, p. 1), as well as the global price cap on Russian crude
oil just agreed between the G7.
The cap
has been set at a maximum price of $60 per barrel for crude oil and is
adjustable in future in order to respond to market developments. The price cap
for Russian crude oil came into force from Dec. 5. A price cap for Russian
refined oil products – which has still to be finalized – will come into force
on Feb. 5, 2023.
Meanwhile,
the EU on Dec. 6 considered the latest proposal for a lower natural gas price
cap of €220 (approximately $230.8 at current exchange rates) per megawatt-hour
(MWh), down €54 on the earlier proposal of a maximum threshold of €275 per MWh
(GM Dec. 2, p. 34 ).
Member
State energy ministers have so far failed to agree a cap on gas prices aimed at
helping offset the ongoing energy crunch in Europe, rejecting the earlier
proposals.
At
least 15 of the EU’s 27 Member States want some kind of workable ceiling on
wholesale gas prices, but a handful of countries – notably Germany – are
opposed to any price cap, arguing it could make it harder to secure gas
supplies.
Some of
the bloc’s other countries, including Poland, Belgium, and Italy, see a price
cap as a way of protecting their economies from price energy shocks.
The Commission is due to meet on Dec. 13 in the hope of resolving the Member State differences and reaching an agreement.
The
price cap plan, if adopted, would begin in January and would run alongside a
voluntary initiative for EU Member States to cut their natural gas use by 15%
over the northern hemisphere winter.
European
gas prices have been rising again over the past couple of weeks. The Dutch TTF –
the European benchmark – front-month gas (currently January 2023) closed at
€138.5 per MWh on Dec. 8, down from its Nov. 30 close of €146.395, but up from
the €97.855 per MWh close on Nov. 11.
