Bombardier gets federal exemption from sanctions on Russian titanium
Bombardier is now the sec‐ ond large Canadian corpo‐ ration known to have been granted an exemption from federal government sanc‐ tions on Russian titanium.
The Montreal-based air‐ craft manufacturer, along with its European partner Air‐ bus, can continue to use parts containing titanium produced by Russia's VSMPOAVISMA, based in Verkhnyaya Salda.
During a conference call Thursday with reporters fol‐ lowing the release of Bom‐ bardier's quarterly results, CEO Eric Martel disclosed the waiver.
Martel said that while Bombardier does not pur‐ chase Russian titanium di‐ rectly, some of its suppliers use it, so the company needed a sanctions waiver from the federal govern‐ ment.
"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," he said. "But at the same time, we needed to ensure, you know, that we keep running our factories."
News of Ottawa's decision to grant Airbus a waiver drew outrage from Ukraine's am‐ bassador to Canada, who was interviewed by CBC's
Power & Politics night.
Yuliya Kovaliv said allow‐ ing the company a pass to continue to use Russian tita‐ nium - when there are other suppliers elsewhere in the world - serves to feed the Kremlin's war machine.
She said she sought an explanation from Global Af‐ fairs Canada but received none.
Titanium is used in the manufacture of aircraft en‐ gines because of its light weight and strength. Canada's sanctions on Russ‐
Wednesday ian titanium were introduced in February. Canada was the first western nation to target Moscow's exports of the criti‐ cal mineral.
Foreign Affairs Minister Mélanie Joly said maintaining Canadian jobs was the main reason for granting the waiv‐ er.
"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 em‐ ployees in Canada at two manufacturing plants in On‐ tario and Quebec. Bombardi‐ er employs almost 16,000 workers in North America.
Two major military pro‐ curement projects - the ac‐ quisition of both new fixedwing search and rescue planes and new transport and refueling aircraft - could have been affected by the sanctions imposed by Global Affairs. Both aircraft are made by Airbus.
The Department of Na‐ tional Defence was asked to explain exactly how the penalties would have af‐ fected the multi-billion dollar procurement programs if the waivers had not been issued. No one was immediately available to comment.
On the commercial side, Airbus is ramping up produc‐ tion of its A220 passenger aircraft. The A220 program is 75 per cent owned by the aerospace company and 25 per cent owned by the Gov‐ ernment of Québec.
The imposition of the sanctions last winter came as a surprise to the aerospace sector and its implications are just becoming apparent to Canadian industries.
WATCH | See Yuliya Ko‐ valiv's entire interview with Power & Politics:
"VSMPO is one of the largest titanium producers in the world," said William Pel‐ lerin, a partner with McMillan LLP's international trade group. "We certainly did not have advance notice, and I don't think that anyone in the Canadian market had ad‐ vance notice of the possibility that the government would sanction VSMPO."
He said sanctions guid‐ ance issued by the Depart‐ ment of Global Affairs in March further complicated the issue, especially for aerospace industries, be‐ cause it prohibited imports of parts manufactured in oth‐
er 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."