Ukraine’s Titanium Industry Moves Towards Privatization with $95.6 Million UMCC Sale

UMCC

In a major step in Ukraine's titanium sector privatization, the State Property Fund of Ukraine auctioned United Mining and Chemicals Company (UMCC) for 3.94 billion UAH (approximately $95.6 million). Tsemin Ukraine acquired UMCC, pending approval from Ukraine's Cabinet of Ministers. This sale is part of Ukraine’s broader effort to privatize key titanium assets, aiming to enhance the sector’s productivity and independence amid ongoing economic challenges.

The sale agreement stipulates that Tsemin Ukraine must maintain UMCC’s operations, invest a minimum of 400 million UAH in technical modernization, and resolve any outstanding debts, including wages. As one of the world’s largest titanium producers, UMCC manages the Irshansk and Vilnohirsk Mining and Processing Plants, producing over 500,000 metric tonnes annually. The company has recently strengthened its European market position by resuming ilmenite concentrate shipments, contributing to a more stable supply of titanium materials within the continent.

VSMPO Titan and ZTMC Also Slated for Privatization

Alongside UMCC, Ukraine is preparing to privatize additional titanium-related assets, including VSMPO Titan Ukraine and the Zaporizhzhia Titanium-Magnesium Combine (ZTMC). VSMPO Titan Ukraine, which specializes in seamless titanium pipes, was seized from Russian oligarch Mikhail Shelkov in 2023. Meanwhile, ZTMC, under state control since 2020 after the government took it from Group DF owned by Dmitry Firtash, is positioned for new investment and modernization through privatization efforts.

The State Property Fund is also evaluating options for the Zaporizhzhia Titanium Institute after an initial auction failed to secure a buyer. This focus on privatizing titanium assets underscores Ukraine’s commitment to revitalize and safeguard its strategic metal production industry amid heightened demand and geopolitical pressures.

Velta Secures $2M Loan from Traxys to Restart Titanium Production

Velta Titanium Mining

Financing Enables Modernisation of Ukraine’s Birzulivske Ilmenite Deposit

Velta secures $2M loan from Traxys to carry out capital repairs and restart production at its Birzulivske titanium deposit in Ukraine. The Luxembourg-based trading company provided pre-export financing to help modernise Velta’s operations, which had paused from 2022 to 2024 due to the redirection of funds to wartime support efforts. The financing will enhance production efficiency and stability at the Kirovohrad-based site.

Velta’s CEO Andriy Brodsky confirmed that the company will use the funding to establish its own energy system. This will lower power costs and improve reliability for future operations. The Birzulivske deposit contains 3 million tonnes of ilmenite, making it a strategic source of titanium feedstock. Meanwhile, Velta is preparing to develop its second site, the Likarivske deposit, which contains an additional 2.6 million tonnes and is now in final design stages.

Traxys has a longstanding relationship with Velta. In 2020, the companies signed a five-year, $100 million titanium supply agreement that was fully executed. Traxys supplies titanium raw materials to titanium dioxide producers in North America. Therefore, the fact that Velta secures $2M loan from Traxys signals continued confidence in Ukrainian titanium’s role in global critical mineral supply chains.

The Metalnomist Commentary

This renewed funding reflects investor confidence in Ukraine’s long-term titanium capacity. Velta’s dual-deposit strategy, coupled with energy independence, may help position it as a resilient titanium supplier despite ongoing geopolitical risks.

China Raises Overseas Titanium Sponge Supply Amid Oversupply Pressure

China Titanium Sponge

Chinese Titanium Sponge Exports Surge in Response to Oversupply

Chinese titanium sponge producers are rapidly increasing exports to manage growing domestic oversupply. China has dominated global titanium sponge production since 2020, driven by aggressive capacity expansion and high revenues. In 2023, China’s top nine producers delivered 247,400t, a 13.5pc rise year-on-year, marking the ninth straight annual increase.

Export Volumes Climb as Global Buyers Shift from Ukraine and Japan

China exported 1,079t of titanium sponge in January–February 2025, up 29pc year-on-year, customs data shows. Demand rose sharply after Ukraine’s Zaporozhe plant shut down and Japanese suppliers diverted output to Europe and the U.S. South Korea, Japan, and the U.S. became China’s top three buyers in 2024, collectively absorbing over 3,800t.

Tariffs and Caution Temper U.S. and Japanese Import Growth

U.S. imports dropped 35pc in early 2025 due to new Trump-era tariffs, despite 2024 volumes surging nearly 8-fold. Japan doubled its imports to 1,162t last year, likely for quality testing and low-cost applications, not aerospace-grade use. Meanwhile, Japanese producers remain dominant domestically with a 65,000 t/yr capacity and cautious optimism about competition.

The Metalnomist Commentary

China’s titanium sponge industry now walks a fine line between growing export momentum and long-term structural oversupply. While quality improvements have opened doors to Japan and the U.S., geopolitical barriers like tariffs and technical certification hurdles will continue to shape the pace of China's global expansion. Still, the supply shift signals a major realignment in the global titanium value chain.

India's Manganese Alloy Imports Surge, Prompting EU Trade Protection Measures

Manganese Alloy

Rising Indian Imports Disrupt European Manganese Market

India's manganese alloy exports to Europe have surged, reshaping market dynamics and triggering a safeguard investigation by the European Commission. In January-November 2020, India accounted for only 3% of EU ferro-manganese imports, but by 2024, this share skyrocketed to 28%, totaling 104,376 metric tons.

The silico-manganese market also saw a dramatic shift. India’s share of EU silico-manganese imports grew from 10% in 2020 to 29% in 2024, reaching 164,722 metric tons. Other countries, including Georgia and Zambia, also expanded their presence, filling gaps left by Ukraine’s production collapse due to conflict with Russia.

European Producers Struggle to Compete

European manganese alloy producers have faced declining exports amid India's rising market share. France, Slovakia, and Spain saw major drops in silico-manganese exports between 2020 and 2024. France’s exports fell 64%, while Slovakia and Spain recorded declines of 35% and 11%, respectively.

Similarly, EU ferro-manganese exports have weakened. France's shipments fell 28%, while Slovakia’s exports dropped 47%. These declines stem not only from rising Indian competition but also from weaker demand in the EU stainless steel industry.

EU Commission Launches Safeguard Investigation

To protect European manganese and silicon-alloy producers, the European Commission initiated a safeguard investigation on December 19, 2024. Possible outcomes include higher customs duties or import quotas.

European buyers have increased their purchases of Indian manganese alloys in anticipation of potential restrictions, driving Indian manganese alloy prices higher in January. Meanwhile, Norwegian producers, who supply 40% of ferro-manganese and 35% of silico-manganese to Europe, are expected to receive exemptions from trade measures.

China’s Titanium Sponge Exports Surge While Imports Decline in 2023

Titanium Sponge

China’s Titanium sponge exports saw a significant increase during January-September 2023, driven by heightened demand from countries like the United States, Japan, and South Korea amid the ongoing Russia-Ukraine conflict. However, imports into China decreased due to ample domestic availability and declining local prices, which remained highly competitive compared to international markets.

Export Trends: Rising Demand from the U.S. and Japan

During the first nine months of 2023, China exported 4,362 tons of Titanium sponge, reflecting a 24% increase compared to the 3,516 tons shipped during the same period in 2022, according to customs data. This surge was largely fueled by reduced global spot supplies following the start of the Russia-Ukraine conflict in February 2022. Russia and Ukraine are significant producers of Titanium sponge, alongside other nations such as Kazakhstan, Saudi Arabia, and Japan.

In September 2023, exports totaled 567 tons, a 38% rise from the 411 tons shipped in September 2022. However, this was a 24% decline from the 744 tons exported in August. Key export destinations included Japan (224 tons), the United States (100 tons), and Sweden (60 tons). A notable contract by a Yunnan-based producer to supply 1,000 tons of 99.7% sponge to a U.S. buyer, with shipments scheduled for May 2025, highlights China’s growing footprint in the global Titanium sponge market.

Import Decline: Sufficient Domestic Supply and Competitive Pricing

China’s Titanium sponge imports fell by 25%, with only 100.4 tons brought in during January-September 2023, compared to 133.7 tons in the same period in 2022. The decline is attributed to adequate domestic availability and weaker prices in the local market. The average price for 99.7% grade Titanium sponge in China during the period was ¥50,712 per ton (approximately $7.10 per kg), significantly lower than the European average of $11.45 per kg.

Domestic Market Stability Amid Thinner Margins

Despite rising exports, China’s domestic Titanium sponge market remains stable, though profit margins have thinned, with some producers operating at a loss. Prices for 99.7% grade sponge as of early November were assessed at ¥43,000-44,000 per ton ex-works, the lowest levels since February 2016. Similarly, 99.6% grade sponge was priced at ¥42,000-43,000 per ton ex-works.

Producers in regions such as Panzhihua have also shifted focus to export markets, including India and Europe, to compensate for declining domestic profitability. Notably, the continued suspension of production by Ukraine’s Zaporozhe Titanium and Magnesium (ZTMC) since February 2022 has further solidified China’s position as a key supplier to international markets.

Outlook: Competitive Advantage Amid Global Supply Constraints

China’s robust export growth underscores its critical role in the global Titanium sponge market, especially in light of supply disruptions caused by geopolitical factors. Competitive pricing and stable domestic production ensure that China remains a leading supplier, even as other producers face challenges in meeting global demand.

Ukraine Reboots Silico-Manganese Exports in Q2 2024

Resumption After Halt

Ukraine resumed its silico-manganese exports in the second quarter of 2024, following a significant halt in the first quarter due to the closure of the Ukrainian ferro-alloy supply chain caused by ongoing conflict. This halt at the end of 2023 led to zero exports during the initial months of 2024.

Gradual Increase in Export Volumes

According to Ukrainian export data, the country’s silico-manganese exports surged from zero in Q1 to 22,081 tons in Q2. The rise was gradual, with April exports at 206 tons, May at 4,877 tons, and June seeing a substantial increase to 16,998 tons. Despite this rebound, exports remain significantly lower compared to previous operational levels, with Q2 exports down 83% year-on-year.

Challenges Ahead

Ukraine’s ferro-alloy industry, traditionally a significant European producer, is dominated by five major companies, including two manganese ore producers and three ferro-alloy plants. By the end of 2023, all five had ceased operations, leading to a sharp drop in exports. The Nikopol Ferro-alloy Plant and Zaporizhzhia Ferro-alloy Plant, part of the Privat Group, have capacities of 1.2 million tons per year and 400,000 tons per year, respectively. Although exports are resuming, traders do not expect a significant short-term impact on silico-manganese prices due to the limited quantities involved. The industry will continue to face pressure from high energy costs and a shortage of skilled labor due to the ongoing conflict with Russia.

Enduring Reliance Amid Sanctions: Europe’s Russian Titanium Dilemma

VSMPO Titanium

Introduction: A Supply Chain Unbroken in Wartime

Despite sweeping economic sanctions imposed by the West following Russia’s invasion of Ukraine in February 2022, one supply chain has proved remarkably resilient: Russian titanium sponge. Europe’s quandary over this advanced material—indispensable to aerospace, defense, and medical-device manufacturing—has only deepened.

Russia’s Command of Titanium

Russia ranks among the world’s largest titanium producers. VSMPO-AVISMA, the country’s flagship producer, accounts for 90% of Russia’s titanium output and exports to some 50 countries. The company is estimated to control up to 30% of the global titanium market and nearly half of aerospace-grade supply.

Russia’s dominance rests on abundant raw-material reserves and comparatively low energy costs. Because titanium smelting is energy-intensive, commercial viability depends on cheap power and gas—conditions Russia has historically met.

Airbus A380

Trade that Continues Despite Sanctions

On 7 March 2022, Boeing announced it would halt purchases of Russian titanium used in aircraft manufacturing. Rolls-Royce and Boeing subsequently suspended procurement from VSMPO-AVISMA indefinitely.

Europe, however, charted a different course. Airbus urged the European Union to keep Russian titanium outside future sanctions packages. As Airbus chief executive Guillaume Faury argued, titanium represents a small share of Russia’s total exports, so sanctions would inflict little pain on Moscow while dealing a heavy blow to Europe’s aerospace industry.

Today, Airbus still sources roughly half of its titanium from VSMPO-AVISMA. Boeing, by contrast, once relied on Russia for about one-third of its titanium but has since stopped buying Russian material.

The Limits—and Exceptions—of EU Sanctions

Notably, while the EU has restricted imports of Russian steel and coal, titanium has not been sanctioned. The metal remains a strategic material used in fuselages, turbine blades, satellites, and other critical systems.

Dependence on Russian metals endures in other segments as well. From March to June 2022, combined EU-US imports of Russian aluminum and nickel rose to $1.98 billion—more than 70% above the prior-year period.

Washington and Brussels have generally refrained from designating industrial metals as sanction targets. Europe continues to import large volumes of Russian natural gas, and Russia supplies about 40% of global palladium—vital for semiconductors—implicating everything from automobiles to smartphones.

CBAM

CBAM: A New Variable

The EU’s Carbon Border Adjustment Mechanism (CBAM), introduced in October 2023, adds another layer of complexity. CBAM initially covers cement, electricity, fertilizers, iron and steel, aluminum, hydrogen, and certain downstream products in steel and aluminum. After a transition phase through 2025, full implementation begins in 2026, imposing carbon costs on imports equivalent to those borne by EU producers.

While fertilizers, cement, hydrogen, and non-exported electricity may see limited near-term impact, aluminum stands out as a key target sector. Most exports to the EU beyond steel and aluminum are not yet covered, though the European Commission has signaled possible expansion to high-leakage categories such as organic chemicals and plastics.

Russia is structurally disadvantaged under CBAM. Steel production in Russia, Ukraine, and Türkiye tends to be more carbon-intensive, implying higher embedded-carbon costs at the border.

Ambiguities in Sanctions and Industry’s Dilemma

The United States placed VSMPO-AVISMA on its “military end-user” list, restricting access to advanced technologies, but stopped short of a direct ban on titanium sales—an acknowledgment of global industry’s reliance on the material.

Indeed, during the early stages of the war, VSMPO-AVISMA avoided sweeping US and European sanctions. Although Washington temporarily listed the company in December 2020, the measure was later rescinded.

Recent moves, however, suggest a tightening environment. In April 2024, a joint US-UK action prompted the CME and LME to prohibit trade in newly produced Russian aluminum, copper, and nickel dated after 13 April—an effort widely read as constraining Russia’s influence in metals markets.

Ukraine Titanium Mine

Ukraine: A Viable Alternative?

Against this backdrop, Ukraine has emerged as a potential alternative. Until 2020, the country supplied 90% of Russia’s ilmenite—the feedstock for titanium sponge. With that supply chain severed by war, Ukrainian resources could help challenge Russia’s dominance.

US companies have begun talks with Kyiv on a joint venture anchored by the Zaporizhzhia Titanium-Magnesium Plant (ZTMP). Such partnerships could forge a new titanium hub in Eastern Europe, strengthening Ukraine’s economic footing for decades.

The risks are significant. Ongoing conflict and occupation threaten both Donbas deposits and the ZTMP facilities, which remain exposed to shelling and sabotage.

Aviation’s Growth—and Its Dilemma

The aerospace-titanium market was valued at roughly $100 million in 2022 and is projected to grow at a CAGR exceeding 5% from 2023 to 2032—reflecting the rebound in air travel and a pipeline of commercial aircraft programs.

Despite supply-chain turbulence from war, energy constraints, and labor shortages, passenger traffic continues to recover, lifting titanium demand. In October 2022, Airbus announced plans to deliver more than one aircraft per week to India, persisting with expansion despite engine-supply challenges and domestic carrier capacity constraints—developments that further complicate titanium sourcing.

The Reality of Diversification

Boeing reportedly began diversifying away from Russian titanium after the 2014 annexation of Crimea. Airbus, by contrast, remains heavily reliant on Russian supply.

Globally, China produced around 100,000 t of titanium in 2013—twice the combined output of Russia and Japan at the time—making it the world’s largest producer. Japan ranked third, with Osaka Titanium Technologies standing as the world’s second-largest producer of titanium sponge.

The Metalnomist Commentary: An Unfinished Dilemma

Europe’s struggle over Russian titanium sponge epitomizes the knotty realities of modern supply chains. Between economic sanctions and security imperatives, between industrial competitiveness and moral principle, Europe has yet to find a definitive answer.

With CBAM’s full force arriving in 2026, higher carbon-cost pass-throughs on Russian metals seem likely, intensifying pressure to rewire supply. Yet, as Airbus’s position illustrates, displacing Russian titanium in the short term remains daunting.

The gap between industrial necessity and political sanction endures—witness VSMPO-AVISMA’s August 2025 statement that it stands ready to resume cooperation with Boeing. For now, Europe must navigate this dilemma with prudence: balancing sanction principles, industrial realities, and emergent environmental rules—while accelerating the use of recycled titanium wherever feasible.