International Sponsors of War: Rockwool’s products used in the construction and repair of Russian Navy ships

13.11.2023

A leading Danish manufacturer of mineral wool products was added today to the list of international sponsors of war. After Russia's full-scale invasion of Ukraine, the company made a clear decision to remain in the Russian market. Through intermediaries, the Danish manufacturer continues to supply its construction materials to various state institutions, including the Russian Ministry of Defense. Rockwool sees no contradiction between “standing side by side with the Ukrainian people” and supplying the aggressor state’s war machine. The company's products are used for insulation, soundproofing and fire protection. They can be found in a variety of buildings and structures, as well as industrial equipment and even shipbuilding. Rockwool products have been used in the construction and repair of ships of the Russian Navy: The Black Sea Fleet in Sevastopol, the Baltic Fleet, the Northern Fleet in Murmansk, and the Pacific Fleet. Information on such contracts is available from 2014 to 2021. In the years since the annexation of Crimea, Rockwool has supplied insulation materials to at least for 31 ships and submarines in the Russian Navy, including cruisers, destroyers, nuclear submarines, frigates, amphibious assault ships, minesweepers and reconnaissance ships. At least 52 contracts worth more than 329 million rubles between Rockwool distributors and the Russian Ministry of Defense were identified. Rockwool has been operating in Russia since 1995 and owns four plants (Balashikha, Moscow Region; Vyborg, Leningrad Region; Troitsk, Chelyabinsk region; and Alabuga, Republic of Tatarstan). The company employs 1,200 people in Russia, accounting for about 10% of the company's workforce globally. Rockwool is represented in Russia by 4 legal entities.

“Rockwool LLC,” which in 2022 generated $313 million in revenue, $58.3 million in net profit and paid $13.9 million in profit tax to the Russian budget.
"Rockwool-Volga LLC,” which in 2022 generated $54.2 million in revenue, $8 million in net profit and paid $857,000 in profit tax to the aggressor's budget.
"Rockwool-North LLC,” which in 2022 made $58.5 million in revenue, $6.8 million in net profit and paid $1.4 million in profit tax to the Russian Federation's budget.
"Rockwool-Ural LLC,” which in 2022 $25.7 million in revenue, $1 million in net profit, paying $785,000 in profit tax to the Russian Federation's budget.

While these companies did not officially engage in direct deliveries of their products under state Russian contracts, in 2023 such deliveries were carried out by other intermediary enterprises. Among the customers of Rockwool's products one can see the following state agencies: - The Federal State Unitary Enterprise "Center for Financial and Legal Support" of the Office of the President of the Russian Federation. - The Joint-Stock Company "Center for the Operation of Ground-Based Space Infrastructure," which has been under US sanctions since June 2023. - The Federal Budgetary Institution "Main Center for Administrative and Economic Support of the Ministry of Internal Affairs of the Russian Federation." - The Federal State Institution "Military Unit 52581." - The Joint-Stock Company "KrymKhleb." In March 2022, Rockwool announced that it would continue to operate in Russia. The NACP is the body responsible for promoting the development of a compliance system in the private sector. During compliance procedures, counterparties are subject to integrity checks, including compliance with socially responsible business practices in accordance with OECD standards. The list of "International Sponsors of War" on the War and Sanctions portal is a powerful reputational tool for achieving integrity of supply chains in the international dimension, withdrawal of international business from Russia, and thus reducing the financial and technological capacity of the terrorist country to kill Ukrainians. One of the platform's "levers of pressure" is cooperation with the World-Check database, which is used by banks and insurance companies to assess risks. That is why for global companies, the consequences of being on the list are worse than continuing to do business with the aggressor country.