The United States has requested the Group of Seven (G-7) allies to deliberate on imposing sanctions on Russian palladium and titanium, as part of efforts to exert pressure on President Vladimir Putin’s regime. This proposal was put forth by the Biden administration officials during a meeting of G-7 deputy finance ministers in Washington. The objective is to explore new avenues to constrain Putin’s military activities, especially following the invasion of Ukraine by Russian forces nearly three years ago.

Palladium, a crucial component in computer chips and catalytic converters, and titanium, widely used in various industries from aviation to medical implants, are the focal points of this sanction consideration. However, a significant hurdle lies in the fact that European countries heavily rely on these metals and have previously shown reluctance to target them with sanctions. For such measures to be implemented, consensus from G-7 members like Germany, France, and Italy, as well as the approval of the other 24 European Union nations, would be essential.

While the U.S. has already imposed sanctions on Russian titanium, these metals play vital roles in the production of catalytic converters, semiconductors, and aircraft. Western governments have been cautious about disrupting the global markets and their own supply chains by severing ties with Russian metal supplies. The U.S. Treasury Department refrained from providing any comments on this matter.

The dilemma surrounding metal sanctions on Russia has been a longstanding issue for Western nations. The price of palladium surged by up to 12% in December amid speculations that it might be the next target for restrictions following the UK’s sanctions on specific Russian metals. Earlier this year, both the U.S. and UK imposed limitations on the trading of Russian aluminum, copper, and nickel.

Considering sanctions on titanium would serve as a retaliatory response to Putin’s recent suggestion of potentially restricting exports of commodities like nickel, titanium, and uranium in response to Western sanctions. Notably, Russia remains a significant supplier of palladium, with Norilsk Nickel, a Russian company, contributing approximately 40% of the global output, making it challenging to swiftly replace this supply source.

For the European Union, the reliance on Russian sources for both palladium and titanium, especially in aviation applications, is critical. Putin’s contemplation of limiting titanium exports could lead to price hikes and adversely impact European aircraft manufacturers such as Airbus. This move underscores the intricate geopolitical and economic dynamics at play in the global metal market landscape.