Geographically, Russia owns sizeable copper reserves of 61Mt of contained copper, accounting for 7% of the world’s total reserves and ranking fourth largest in the world, behind Chile (200Mt), Peru (87Mt) and Australia (87Mt).

Russia is also the fourth-largest global producer of copper concentrate behind Chile, Peru, and China. It produces approximately 5% of the world’s copper concentrate. Russia’s copper ore and concentrate shipments totalled 577kt in the first 11 months of 2021, of which 485kt (84%) was destined for China. Kazakhstan was the second leading destination for Russian copper ore and concentrate, with 64kt (11%), followed by Bulgaria (22kt, 3.8%) and Uzbekistan and others (6kt, 1%).

Russia is also a major producer and exporter of refined copper. It produces approximately 4% of the world’s refined copper, making it the sixth-largest producer of refined copper globally. Russia’s shipments of refined copper totalled 441kt in the first 11 months of 2021. The largest destination for Russian refined copper exports was China. Russian refined copper exports to China amounted to 155kt (35% of the total exports) in the first 11 months of 2021. The Netherlands was the second leading destination of Russian refined copper with 88kt (20%), followed by Germany (83kt, 19%) and Turkey (46kt, 10%).

Following Russia’s invasion of Ukraine, the US, the UK, the EU and Asian nations have imposed sanctions against the country. Major Russian banks have been denied access to the SWIFT international payments system. An increasing number of countries have banned Russian airlines from accessing their airspace. Other significant existing and proposed measures include freezing assets against Russian banks, introducing export controls on strategic goods and sanctioning some of Russia’s wealthiest individuals, including some top officials.

These countermeasures may result in a short-term decrease in Russia’s copper exports to European areas. Furthermore, logistical disruptions have worsened as shipments are cancelled or rerouted, which may further hamper exports from Russia, Kazakhstan and Uzbekistan to Turkey and other European countries. Russia’s absence could further tighten supply in European areas where supply is already tight. Inventories, which are already at multi-year lows, could fall even lower. The expected declining exports may lead to stock building up in Russia, given the country’s limited domestic consumption. This may, in turn, force Russian producers to curtail their production.

Looking to China, although China is the largest destination for Russian copper, Russia only accounts for a small portion of China’s total imports. In the first 10 months of 2021, China imported 299kt of refined copper and 383kt of copper ore and concentrate from Russia, accounting for 9% and 2% of its total imports, respectively. China is now expected to import more copper from Russia.

From a global perspective, AME expects a limited impact on the global copper supplies from the Russia-Ukraine crisis for now, given Russia’s limited share of global supply. Our supply and demand forecasts remain unchanged at this stage.

We currently forecast that Russia’s copper in concentrate production will increase by 7.6% to 930kt in 2022 before increasing a further 2.0% to 949kt in 2023. Over the medium term (2021-2025), mined production from Russia will grow at a CAGR of 4.7%, higher than the CAGR of 3.2% expected over the long term. These growth forecasts represent multiple large-scale greenfield projects coming online on schedule.

Udokan Copper’s Udokan mine is the largest new project in Russia which is included in AME’s base case supply forecast. Udokan is the largest copper deposit in Russia, with approximately 27Mt of contained copper in Resources expected to sustain operations until 2065. The mine is designed to extract 13.5Mtpa of ore in Stage 1, producing 65ktpa of copper in concentrate and 110ktpa of copper cathode.

The Stage 2 expansion will potentially increase the mine’s capacity to allow it to process 36Mtpa of ore, producing 150ktpa of copper in concentrate and 190ktpa of copper cathode. The start of construction was announced in September 2018, with production expected to commence in 2022.

In addition to the contribution from the Udokan mine, major new capacity contributions are expected in Russia from Russian Copper Company’s Tominsky GOK project and KAZ Minerals’ Baimskaya project.

The Tominsky GOK project is located in the Sosnovsky District of the Chelyabinsk region in Russia. Russian Copper Company launched construction of the RUB65bn (US$1.1bn) project in July 2017. The processing plant at Tominsky consists of two lines, each with capacity of around 14Mtpa. At full production, Tominsky will produce approximately 105ktpa of copper in concentrate over an estimated 24-year mine life.

KAZ Minerals acquired the Baimskaya project, located in the Far East of Russia, for US$900m in 2019. A bankable feasibility study completed in 2021 envisages an open-pit mine with a mine life of 20+ years, producing an average of 300ktpa of copper and 490kozpa of gold during the first 10 full years of operation. The processing plant will have a total ore processing capacity of 70Mtpa from two lines. Production is expected to start up by the end of 2027.

Russia’s refined copper supply is forecast to rise by 12.7% to 1,107kt in 2022, followed by a 5.6% increase in output to 1,1,69kt in 2023. Over the medium term (2021-2025), production from Russia will grow at a CAGR of 3.3%. Over the long term (2026-2040), the country's refined copper supply will grow at a lesser CAGR of 0.5% to reach 1,331kt.

Russia's largest producing refined copper site is the Verkhnyaya Pyshma refinery, owned and operated by the Ural Mining and Metallurgical Company. The refinery is expected to produce 455kt in 2022, flat from 2021, and this level is expected to be sustained over the long term.

The other key producing site in Russia is Norilsk Nickel's Polar Division Copper Plant, a large-scale smelting and refining operation located in Taymyrsky. Polar Division’s production came to 300kt in 2021 and is expected to rise to 350kt by 2023, a level which will be sustained over the long term.