In a move to protect Canadian jobs and maintain production, the federal government has granted exemptions from sanctions on Russian titanium to Bombardier and its European partner Airbus. The waivers allow the companies to continue using titanium from Russia’s VSMPO-AVISMA, which is essential for manufacturing aircraft engines. The decision has drawn criticism from Ukraine’s ambassador to Canada, who argues that it supports the Kremlin’s war machine. The government maintains that the exemptions are necessary to safeguard Canadian employment and critical military procurement projects.
Bombardier CEO Eric Martel disclosed the waiver during a conference call with reporters following the release of the company’s quarterly results. He explained that while Bombardier does not purchase Russian titanium directly, some of its suppliers use it, so the company needed a sanctions waiver from the federal government.
“We did work with the government and we did work also with all our supplier base to make sure we were doing the right thing,” Martel said. “But at the same time, we needed to ensure, you know, that we keep running our factories.”
The Canadian sanctions on Russian titanium were introduced in February, making Canada the first western nation to target Moscow’s exports of the critical mineral. Foreign Affairs Minister Mélanie Joly said the government issued the waivers to “protect our jobs here at home.”
“We will always make sure to put maximum pressure on the Russian regime and meanwhile protect our jobs here at home. We can do that together,” she said.
Airbus has over 4,000 employees in Canada at two manufacturing plants in Ontario and Quebec. Bombardier employs almost 16,000 workers in North America. The sanctions could have affected two major military procurement projects: the acquisition of both new fixed-wing search and rescue planes and new transport and refueling aircraft, both of which are made by Airbus.
The Department of National Defence was asked to explain how the sanctions would have affected the multi-billion dollar procurement programs if the waivers had not been issued, but no one was immediately available to comment.
On the commercial side, Airbus is ramping up production of its A220 passenger aircraft, a program that is 75 percent owned by the aerospace company and 25 percent owned by the Government of Quebec.
The aerospace sector was surprised by the imposition of the sanctions last winter, and their implications are just becoming apparent to Canadian industries. William Pellerin, a partner with McMillan LLP’s international trade group, said that VSMPO is one of the largest titanium producers in the world and that the Canadian market did not have advance notice of the possibility of sanctions.
“We certainly did not have advance notice, and I don’t think that anyone in the Canadian market had advance notice of the possibility that the government would sanction VSMPO,” Pellerin said.
He added that sanctions guidance issued by the Department of Global Affairs in March further complicated the issue, especially for aerospace industries, because it prohibited imports of parts manufactured in other countries that contain Russian titanium.
“I am not certain that Global Affairs Canada itself understood the ramifications of its sanctioning of VSMPO and the guidance that was subsequently issued has again compounded the issue and made those sanctions far more comprehensive,” Pellerin said.
“I suspect that when this came to be fully understood, there was a desire to very quickly roll back some of the impacts of that sanctioning, which we’re now seeing through the issuance of these sanctions permits, these waivers.”
