System Shock: Russia’s War and Global Food, Energy, and Mineral Supply Chains

Russia’s war is devastating the people and economy of Ukraine, but also sending shockwaves through global systems for natural resources like food, oil and natural gas, and critical minerals. Together, Russia and Ukraine—sometimes referred to as the breadbasket of Europe—account for 29% of global wheat exports, 80% of the world’s sunflower oil, and 40% of its barley. Before the war, Russia provided around 10% of the global supply of oil and just last year, 40% of Europe’s gas came from Russia. And while oil dominates the headlines, the disruption of another resource abundant in the region—critical minerals—has implications for how the United States and its allies respond to interrupted supply chains.

While the biggest impacts of the conflict will continue to be felt by Ukrainians and Russians, the secondary effects on global food and energy systems could be substantial. It’s only by looking at these natural resource systems together that we can truly understand the compounding effect of the conflict on global supply chains. In this panel discussion, experts helped unpack these complicated systems and explored how policymakers can respond now to head off the worst future outcomes.

Key Takeaways

• Russia’s war in Ukraine has sent a shockwave across global food, energy, and mineral supply chains. Russia and Ukraine account for 28 percent of wheat exports and are top suppliers of fertilizers and their raw ingredients, like potash and nitrogen. The near-term impacts on availability and price will be felt most acutely in places with narrow margins of error and direct dependencies—places like Libya, Yemen, Bangladesh, Pakistan, and sub-Saharan Africa. But tertiary effects will be felt globally. Long term, purchasing power imbalances combined with the impacts of a changing climate necessitate a shift in decision-making from one focused on efficiency to one focused on resilience.
  
   
• In some respects, current energy trade of Russian oil and gas exports to Europe look startlingly like business as usual. The U.S. oil and gas industry will play an important short-term role in reducing dependence on Russian energy and stabilizing markets and we’re likely to see growth in the U.S. oil and gas markets over the next couple of years. However, energy security and climate security are two sides of the same coin—without attention to one you cannot have long-term stability of the other.
  
   
• Ukraine holds 20 percent of the world’s resources of titanium and has the largest Uranium deposit in Europe. Estimated investments in Ukraine’s mining sector prior to the conflict were projected at $10 billion for 24 projects. The conflict has resulted in standstill investments, reluctance for the reinvestment of capital, and an unclear authority of resources post-conflict. Russia and China are major holders of critical and rare earth minerals. What China does next and how China reacts to the war will be an important long-term global security outcome.

Selected Quotes

Jonathan Elkind looks at the impact of losing Russian natural gas and how Europe will adjust its supply.

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"The U.S. Administration needs to engage in smart and creative diplomacy around the globe."

"We face the reality and responsibility of responding immediately to climate change, but not without making sure we assure the stability of our economy as well."

“In times of crisis, there is an initial effect, the effect of the sanctions, and an aftereffect when the global economy is trying to adjust to the aftermath of the crisis. In this case, the global economy is trying to adjust to the changes in the oil, mineral, and energy supply chains."

Emily King: The minerals found in Ukraine and Russia that are used in our daily lives and how supply chains will adjust now.

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“Twenty percent of the world’s titanium resources are located in Ukraine, which is very important to the aerospace field. Therefore, depending on the outcome of this war, the U.S. and other countries will have to deal with the changes in this supply chain.”

"Russia is a huge exporter of nitrogen and potash fertilizer, which directly affects farmers and the agriculture supply chain depending on the war’s outcome."

"Ukraine and Russia are responsible for 28% of the wheat exports. They are responsible for providing countries such as Bangladesh, Pakistan, Egypt, and Turkey, which are very dependent on agriculture. Right now, we face the issue of those countries not being able to access those resources that are essential to their economy. "

Bram Govaerts: How will the Middle East and North Africa adapt now that the world’s primary wheat producers are at war?

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“What is happening in Ukraine is an example of how disrupted our industries and global chains can be given they are very interconnected. Therefore, we have immediate action to take in order to boost the production of crops with fewer resources available, such as fertilizers. We also need to look at where we are going to be supplied with alternate resources. This shifts our paradigm and forces us to come together to solve these issues at the global level and bring innovation to drive change in order to secure a stable future. "

Sharon Burke: "This is an incredibly dangerous moment."

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“Energy requires water to be produced. Energy is important for agriculture, and agriculture is important for minerals, but it is also important for energy. These are all linked together, and this crisis is going to bring profound shocks to the global economy. We cannot address this energy crisis without addressing the way we govern. An issue with this is that the way we govern usually addresses one issue at a time, one bureau at a time, etc. If we can’t figure out how to govern in these times of complexity, then we cannot understand how to invest our money to address this crisis.”