About two weeks after Russia invaded Ukraine, a metal that plays a key role in batteries for electric vehicles, or EVs, was thrust suddenly into the spotlight. On March 8, the price of nickel doubled within hours on the London Metal Exchange, prompting the world’s leading metals market to shut down trading for the material. The price spike occurred amidst fears that nickel from Russia, the world’s third-largest producer of the metal, would soon become “untouchable due to sanctions risk,” as one group of analysts put it.
More than a month later, the hypothetical sanctions that helped fuel metals market chaos have yet to materialize. And an emerging supply chain that connects Russian nickel with the European EV market — most notably through a partnership between mining giant Nornickel and German chemical company BASF — remains intact for now. But the war in Ukraine, and Russia’s totalitarian crackdown on dissenting voices, have major implications for that supply chain as well as an Indigenous-led movement for environmental justice that targets Nornickel’s polluting practices.
For the European EV industry, the situation raises difficult ethical questions and highlights the competing demands of geopolitical, social, and environmental responsibility in a time of war. In recent weeks, Germany has come under growing pressure to sever more of its economic ties with Russia in order to punish Putin for his brutal war in Ukraine. But if the nation were to ban imports on Russian nickel, an industry that is essential to Europe meeting its climate goals, it would have to scramble to secure new sources of a critical raw material. At the same time, Russian Indigenous activists fear they would lose one of the few levers they have for holding Nornickel accountable: its relationships with Western companies.
“We’re in a situation of contradictory demands,” said Tilman Massa, a member of the Association of Ethical Shareholders Germany, an NGO that campaigns for environmental protection and human rights due diligence at German corporations. On the one hand, Massa says, companies are facing intense public pressure to cut ties to Russian business. “On the other hand, we now have leverage to increase the pressure on Nornickel to improve the situation on the ground.”
Nornickel, the world’s largest producer of the high-grade nickel needed for EVs, isn’t a huge player in Europe’s battery supply chain today. But it is expected to become one in the future thanks to a strategic partnership with BASF that the companies announced in 2018. Through that partnership, Nornickel will supply both high-grade nickel and cobalt from its metal refinery in Harjavalta, Finland, to BASF’s nearby battery materials plant, which is scheduled to come online this year. According to Caspar Rawles, an analyst at the battery market research firm Benchmark Mineral Intelligence, BASF is expected to represent nearly 20 percent of Europe’s battery cathode production capacity by 2025, with raw materials supplied by Nornickel.
The EV industry needs nickel and cobalt to create the long-lasting, high-performance batteries Western consumers increasingly demand. Nickel, in particular, is essential for boosting the energy storage capacity of batteries, extending an EV’s range. As a result, the world’s appetite for the metal is expected to skyrocket in the coming decades: According to the International Energy Agency, producing enough batteries for EVs and energy storage to limit global warming to 2 degrees Celsius could cause global nickel demand to rise 21-fold by 2040.
But Europe, a leading consumer of these batteries, doesn’t have many local nickel suppliers.
“The dilemma that European battery and EV makers face is: do they want to use the Nornickel-BASF nickel supply chain, or to rely for the bulk of nickel imports from Indonesia and China,” Benchmark CEO Simon Moores wrote in an email to Grist. The latter options, Moores notes, raise serious environmental and social concerns for the EV industry: nickel mining in Indonesia has been tied to severe deforestation, while China is currently under intense scrutiny for alleged human rights violations in its renewable energy supply chains.
BASF acknowledged this dilemma in a statement to Grist. “If we were to end our collaboration with Nornickel on nickel supply, an important value chain for the European production of batteries for electric vehicles would be interrupted,” BASF told Grist in an emailed statement. “[T]here are currently no alternatives for locally sourced nickel in Europe.”
But nickel mining in Russia isn’t free of environmental or human rights concerns. Nornickel’s production sites and refineries in the Russian Arctic are a major source of regional air pollution; a 2017 NASA article described a “man-made volcano” of sulfur dioxide lingering over the industrial city of Norilsk, where company facilities are located. Indigenous people living in the shadow of Nornickel say that the mining giant’s activities have poisoned their land and water, making it impossible for them to fish and hunt reindeer in their traditional territories.
After a major oil spill from a tank owned by Nornickel contaminated waterways around Norilsk in 2020, Indigenous activists stepped up their efforts to raise awareness of the mining giant’s impacts. In late 2020 and early 2021, a coalition of activists from Russia and allied international organizations sent letters to BASF airing their grievances about Nornickel and asking the German company to hold it accountable. BASF, activists say, listened to the coalition’s concerns, beginning an “intense and productive dialog” that continued up until the war, according to Pavel Sulyandziga, the president of the Batani Foundation, one of the Russian Indigenous groups in the coalition.
As this activist pressure was mounting, Nornickel reached out to the Initiative for Responsible Mining Assurance, or IRMA, expressing interest in becoming a member. A multi-stakeholder organization that develops environmental and social standards for the mining sector, IRMA offers membership to companies after they conduct a self-assessment of their practices followed by a third-party audit of at least one of their mines within a year.
Indigenous activists were encouraged by these developments — but now they fear Russia’s war is eroding any progress they had made. Since Russia invaded Ukraine, Sulyandziga says the coalition has had no contact with Nornickel.* Meanwhile, Russian media reports and decrees indicate the government is working to relax environmental regulations, including postponing new requirements around emissions monitoring and emissions quotas for polluters, and declaring that negative environmental reviews cannot halt projects.
In March, IRMA formally paused its plans to audit Nornickel this spring. IRMA executive director Aimee Boulanger told Grist that decision was based on the organization’s desire to stay aligned with the message the world was sending about doing business in Russia, as well as concern that people living around Nornickel’s mine sites would be unable to speak with auditors safely.
There are valid reasons for IRMA’s concern. Speaking out about polluting industries in Russia was a risky proposition before the war; in wake of Russia’s recent crackdown on dissent, it has become even more dangerous. Sulyandziga told Grist that criminal cases have recently been filed in Russia “against the very Indigenous communities and representatives who have been in opposition to Nornickel all along” and that police have begun cracking down on those communities by confiscating reindeer meat they sell in order to support themselves.
Reached for comment, Nornickel spokesperson Andrey Kuzmin said that the company “never paused and always remains open for dialogue” with Indigenous communities. Nornickel, Kuzmin added, regularly holds meetings of a council of Indigenous representatives the company set up last year to discuss economic development, educational projects, and more. Critics like Sulyandziga, however, say that this council represents a cynical attempt by Nornickel to buy loyalty by providing support to communities who agree not to speak out against it.
Andrei Danilov, the director of the Sámi Heritage and Development Fund, which represents Sámi people of the Russian Arctic and is a member of the activist coalition, told Grist he hopes that BASF can convince Nornickel to “restart the dialog” with its critics. BASF told Grist that while the company is engaged with Nornickel it plans to remain in touch with Indigenous activists in addition to “encouraging Nornickel to directly engage.” While BASF has stopped pursuing new partnerships with Russian businesses, it will continue to fulfill its contracts with Nornickel “in line with applicable laws, regulations and international rules,” according to the company.
But that could change should Germany or other European countries impose sanctions targeting nickel or metals from Russia.
“It could be any day that Nornickel is on the sanctions list,” said Massa of the Association of Ethical Shareholders Germany. In early April, Nornickel’s billionaire president, Vladimir Potanin, was hit with Western sanctions for the first time.
The conflicting pressures BASF and the European EV industry face with respect to Russian nickel are a microcosm of a challenge the entire world faces as the clean energy transition ramps up: how to balance securing the metals and minerals needed for that transition with the environmental and social harms caused by mining. It’s a difficult enough balancing act in times of peace; as Russia’s war shows, global conflict has the potential to further tip the balance of power away from frontline communities.
That’s why some climate justice advocates are now calling for an entirely new approach that situates mining not as a centerpiece of the energy transition, but a single approach within a broader suite of solutions including increased battery recycling and expanding mass transit to reduce demand for EVs. Where mining does occur, these advocates stress that it needs to be done responsibly and with full buy-in from affected communities.
“I don’t think we know where this [war] is going right now and what that means for the world,” IRMA’s Boulanger told Grist. “But in a time of violence and political crisis, we need environmental and social justice all the more.”
*Correction: This story originally misstated the extent of the activist coalition’s contact with BASF since Russia invaded Ukraine. Pavel Sulyandziga said the coalition has had a small amount of contact with the company.
