This study documents the impact of sanctions on Russian aluminium imports for EU industry, competitiveness and consumers.

The EU is planning to ban Russian aluminium despite the fact this will have a huge negative impact on the European Union. The pain will be felt in Europe – rather than in Russia – through price rises for companies and consumers, huge numbers of threatened jobs, and reduced competitiveness for EU manufacturers. Furthermore, Europe’s self-harm will play into the hands of its Chinese competitors.

A 20-30% price surge is likely once Russian volumes are removed and alternative suppliers charge premiums. Immediately, a range of sectors from automotive and aerospace to packaging and construction would absorb the brunt of these increases, potentially reducing industrial output and costing thousands of jobs if firms cannot pass along higher prices.

Europe’s sanctions represent the wrong step, at the wrong time, in the wrong direction. In parallel, the European Commission is set to launch an investigation into the aluminium market to protect the European market against likely cheap imports following the imposition of tariffs in the U.S. The current mess is a result of layer upon layer of bad decisions and bad policy from Brussels.

Regardless of the new investigation, the sanctions are a self-defeating mistake and amount to little more than virtue signaling at the expense of the broader strategic interests of the EU. As such, aluminium imports should be removed from the EU sanctions package on account of the negative and unproportionate impact that the ban has on European industry, SMEs and consumers across the EU.

Germany:

· Major impact on the automotive sector (Volkswagen, BMW, Mercedes) through increased production costs, resulting in lower profit margins and/or higher prices

· Germany’s reduced domestic aluminium production is now too low (a result of high energy costs) to mitigate impacts

· Additional pressure on machinery and electrical industries that use aluminium for equipment and cables, eroding Germany's export competitiveness

France:

· The aviation sector (Airbus, Dassault) will be heavily affected, requiring new supply contracts and higher costs for aviation-quality aluminium

· Largest European aluminium smelter (Dunkirk) has reduced production due to energy costs, limiting domestic supply options

· Automotive (Peugeot, Renault) and packaging sectors face increased costs, with pass through to consumer prices

Italy:

· Broad manufacturing base affected, particularly auto (Stellantis), packaging, and construction sectors

· Italy’s large number of SMEs in metalworking will be vulnerable as they are less able to absorb price increases

· Italy’s historical reliance on Russian raw materials will disrupt supply chains for downstream fabricators unless alternatives are found

Austria:

· Specialised aluminium products industry (e.g., AMAG) faces higher costs for primary aluminium

· Integration with German auto supply chain exposes Austrian suppliers to same challenges as German manufacturers

· Lacks large primary smelting capacity, making it fully exposed to global aluminium price increases

Hungary:

· Auto sector orientation (Audi, Mercedes-Benz, Suzuki) is particularly vulnerable, especially Audi's Győr facility

· Zero significant primary aluminium production makes the country entirely dependent on imports

· Government likely to push for gradual implementation of sanctions due to economic concerns

Sweden:

· Kubal plant in Sundsvall - Sweden’s only aluminium smelter - is threatened by cost pressures, with flow-on effects

· A total of 500 direct and 5,000 indirect jobs will be impacted

· A number of Swedish sectors will be affected: Automotive (Volvo, Scania, Koenigsegg): Aerospace/Defence (Saab); Packaging (Tetra Pak); Machinery & Manufacturing (Sandvik, Atlas Copco)

Slovakia:

· Extremely vulnerable due to recent closure of its only primary aluminium smelter (Slovalco) in 2022

· Now imports 100% of aluminium needs, directly impacting its significant auto industry (Volkswagen, Kia, Jaguar Land Rover, PSA)

· More severe economic impact likely due to the combination of zero domestic production and high reliance on automotive manufacturing

The overarching objective of the European Union’s Green Deal is to accelerate the push towards Net Zero, reduce climate change and prevent the destruction of the environment globally. Its leaders are striving to make Europe the first climate-neutral continent and position Europe as a global leader in fulfilling this environmental mission. 

Sadly, the Green Deal is currently failing in this goal since the EU has adopted the wrong strategy to achieve this objective. At the same time trade barriers are being erected while potential trading partners are being ignored and antagonised.

This paper argues that the EU would instead be better served leading by example, rather than diktat. Building a global consensus would also be more powerful and sustainable. This would include establishing a dialogue and engaging countries in the regulatory and standard-setting process. Going further, this should cover the recognition of global norms and underline that countries have differentiated levels of responsibility in reaching the overall objective.