Bombardier also granted exemption from Canadian sanctions on Russian titanium

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Aircraft manufacturer Bombardier Inc. says it too has been granted an exemption from Canadian sanctions targeting Russian titanium that could interfere with its business in Canada.

Based in Montreal, Bombardier is the second aerospace company to be identified as having obtained a waiver from Canadian sanctions targeting Russian titanium maker VSMPO-AVISMA Corp., one of the world’s largest producers of the rare metal. Airbus was the first.

Bombardier chief executive officer Eric Martel told media Thursday that his company received an exemption from the sanctions because some of the aerospace company’s suppliers buy the metal. A strategic metal prized for its strength relative to its weight, titanium is used mainly in aircraft engines and landing gear for large planes.

One day earlier, news broke that Europe’s Airbus, which has aircraft manufacturing and sales facilities in Canada, had received an exemption from Ottawa’s sanctions on VSMPO-AVISMA.

Two government sources told The Globe and Mail Wednesday that such sanction exemption permits are temporary and it is hoped Airbus would wean itself off Russian-sourced titanium. One had also said that the French government, which owns part of Airbus, had lobbied Canada to grant a waiver on Russian titanium.

The Official Opposition and the Ukrainian Canadian Congress both criticized the sanctions exemptions on Thursday.

The reason for Ottawa’s about-face on Russian titanium is the concern that the sanctions could hurt aerospace employment in Canada, the government sources said Thursday.

One said that the department of Global Affairs did not anticipate the consequences of putting sanctions on VSMPO-AVISMA for aerospace companies in Canada. The supply chain for aerospace parts is complex, they said, and aerospace companies couldn’t always be certain if somewhere in the production cycle titanium sourced from Russia was used.

One government source said other smaller companies besides Bombardier and Airbus have also received an exemption from the titanium sanctions but they declined to identify them.

The Globe is not identifying the sources, who were not authorized to publicly discuss the matter.

Canada has steadily been ramping up sanctions on Russian officials, oligarchs and companies in response to Moscow’s all-out military assault on Ukraine that began in February, 2022. The war has killed more than 10,000 civilians and wounded more than 18,500 according to a United Nations monitoring body. Millions of Ukrainians have been forced to flee their homes, often for other countries, and Russia’s war has caused hundreds of billions of dollars of damage to Ukraine.

Canada first announced sanctions on Russia’s VSMPO-AVISMA in February. William Pellerin, a partner with McMillan LLP’s international trade group, said that to his knowledge no other Western country has applied full sanctions on VSMPO-AVISMA, although some measures by the United States affect exports to the Russian company.

Mr. Pellerin said that while imports of titanium from VSMPO-AVISMA were banned as of February, what likely exacerbated the matter is sanctions guidance issued by the Department of Global Affairs in March meant to help people understand how measures apply. The implications from this government guidance, when applied to VSMPO, would be that importing parts or aircraft containing this Russian titanium would run afoul of the sanctions, he said.

Individual waivers from sanctions are rare, Mr. Pellerin noted.

The “willingness to provide these sanctions waivers to individual companies suggests that Global Affairs Canada may not have fully understood the ramifications of its recently issued sanctions guidance,” he said. “The effects of this guidance are particularly severe given the government’s prior decision to act in a manner that is different from our allies and to sanction VSMPO-AVISMA, one of the world’s leading titanium suppliers.”

The Ukrainian Canadian Congress (UCC) condemned the waiver Thursday. “There is no point in issuing sanctions and then granting wide-ranging exemptions to those sanctions,” UCC CEO Ihor Michalchyshyn said in a statement.

“The Canadian government is, in effect, sending a message to Russia that the Canadian government will cave to corporate pressure,” he said.

“Russia’s genocidal war of aggression against Ukraine is in its third year. That Canadian companies still do business with Russia, thereby funding Russia’s war machine and providing Russia the means with which to murder Ukrainians, is appalling.”

The Kremlin said on Thursday that Canada’s decision to grant Airbus a waiver for titanium showed that European companies would struggle to remain competitive if they stopped using Russian products.

Conservative international trade critic Kyle Seeback said the waiver runs contrary to Prime Minister Justin Trudeau’s tough talk on Ukraine.

“Russia will now use the profits from these titanium sales to fund its war against the people of Ukraine,” he said in a statement.

He criticized Mr. Trudeau for alleged failures on Ukraine, including allowing Russia to circumvent Canadian sanctions to obtain more than 190,000 electric detonators in 2022, according to research released last year by Brussels-headquartered Open Dialogue Foundation.

Mr. Seeback also cited the Liberal government’s much criticized decision to allow natural-gas turbines for a Russian pipeline to be repaired in Canada and sent back – a decision Ottawa reversed in December, 2022.

The Ukrainian embassy did not immediately respond to requests for comment Thursday.

The Department of Global Affairs declined to comment, citing commercial confidentiality. The department “respects privacy and commercial confidentiality and cannot comment on whether applications have been made, or whether permits have been granted,” spokesman John Babcock said in a statement.

With reports from Reuters