Scoop: Russia sanctions threaten Commonwealth's supply chain

International sanctions and calls for corporate divestment of Russian assets threaten to disrupt the supply chain of Commonwealth Fusion Systems, Axios has learned.

Why it matters: CFS raised $1.8 billion in Series B funding in December for its unique fusion reactor design, a central ingredient of which is made by SuperOx, a Russian company with production facilities located in Moscow and Japan.

• That round was propelled by a “major advance” announced three months earlier: the creation of "colossally powerful" superconducting magnets that are crucial to containing the fusion reaction in Commonwealth's reactor.
• The breakthrough was making those magnets with high temperature superconducting (HTS) tape — long ribbons of material that together can stretch over 3,000 miles.
• Nuclear fusion promises to unlock zero-emissions electricity, with fewer of the safety or security concerns than traditional nuclear fission.

What's happening: CFS is building HTS tape into as many as 18 magnets, allowing it to achieve a fusion reaction within a far smaller, cheaper structure — and therefore dramatically lower its cost.

• "The first three years of the company was focused on building and proving that this magnet works," CFS spokesperson Kristen Cullen tells Axios. "This magnet essentially unlocks our path to commercial fusion."
• SuperOx, which is based in Moscow, is believed to be a key producer of HTS tape, and Cullen confirms to Axios that SuperOx is a supplier. However, she declined to state how much of the material was supplied by SuperOx alone or how many other companies make the specialized material.

Of note: SuperOx was founded by Russian oil magnate Andrey Vavilov.

• While CFS is "almost entirely funded by private sources," Cullen tells Axios, the company has received taxpayer funding in the form of federal grants "for research in collaboration with national labs."

What they're saying: Even as companies around the world stop doing business with Russian firms, CFS has declined to confirm whether it will stop sourcing the material from SuperOx.

• CFS, though, says it was diversifying its supply of HTS tape before Russia's invasion of Ukraine.
• Cullen acknowledged that the ongoing crisis is accelerating that move. "This has long been a focus of the company, but of course there is now more urgency," she says.

Between the lines: The potential bottleneck in HTS supply exposes the sharp difference in approach by fusion developers.

• CFS says that its fusion reactor will achieve net output — producing more power than it consumes — by 2025, and that that deadline hasn't changed.
• Other developers are relying on more established materials and supply chains. CFS adopted a novel method — one that won over investors last year, but potentially has now exposed the company to a unique vulnerability.

Alan Neuhauser co-authors the Axios Pro Climate deals newsletter. Sign up now.