Russia Mining Report Q1 2013
Business Monitor International, January 2013, Pages: 88
We forecast Russia's mining industry value to reach US$161bn by 2017, growing at an annual average rate of 1.5% from 2011 levels. We believe strong growth in 2009 to 2011 will be followed by years of stagnation as palladium and platinum production in the country experience modest growth over the coming years. Nevertheless, we have a positive view on the Russian mining industry given the country's vast unexplored mineral resources. The coal sector is promising as the government plans to invest RUB3.7trn (US$120bn) in the sector between 2012 and 2030.
The government will maintain a strong influence on the industry. For example, total palladium supply from Russia is complicated by palladium sales from government stockpiles, which are very large relative to primary production. Foreign firms are also restricted in investing in the industry. Companies seeking to develop a 'strategic resource', defined as a region with more than 1.6mn ounces of gold and 500kt ('000 tonnes) of copper, must seek permission from a government commission. Diamonds, uranium, cobalt, nickel, lithium, the platinum group metals (PGM), tantalum and niobium cannot be mined by foreign firms. In practice, legal obstacles to foreign investment have prevented large overseas firms from developing exploration projects, and smaller reserves are relatively unattractive given the bureaucratic problems. We expect the regulatory structure to remain favourable to domestic miners with obstacles to foreign investment remaining. Endemic corruption will likely further dissuade foreign investment.
BMI Industry View 7
SWOT 9
Political 11
Economic 12
Business Environment 13
Industry Forecast 14
Coal: Kuzbass To Underpin Production Growth 14
Table: Russia - Coal Production Forecasts 18
Iron Ore: Little Impetus For Output Growth 18
Table: Russia - Largest Iron Ore Projects 20
Table: Russia - Iron Ore Production Forecasts 23
Platinum: Modest Growth In Place 24
Table: Russia - Largest Platinum Projects 25
Table: Russia - Platinum Production Forecasts 27
Palladium: Production To Remain Flat 27
Table: Russia - Largest Palladium Projects 29
Table: Russia - Palladium Production Forecasts (mn ounces, unless stated otherwise) 29
Nickel: Subdued Growth Ahead 29
Table: Russia - Largest Nickel Projects 31
Table: Russia - Nickel Production Forecasts 32
Gold: Regulatory Hurdles To Restrict Growth 32
Table: Russia - Gold Production Forecasts (mn ounces, unless stated otherwise) 34
Industry Risk Reward Ratings 35
Europe Business Environment Analysis 35
Table: Mining Risk/Reward Ratings 36
Mongolia: Greater Government Control Unlikely To Hinder Phenomenal Growth 36
Kazakhstan: Weak Infrastructure Restrains Growth Potential 37
Market Overview 41
Table: Russia - Mining Industry Value & Production Forecasts 42
Regulatory Development 44
Commodities Forecast 45
Monthly Metals Strategy 45
Iron Ore: Holding Up, For Now 46
Steel: Bleak Outlook 48
Aluminium: Major Gains Over 49
Copper: Global Stockpiles Pose Downside Risk 50
Lead: Heading Lower 52
Nickel: No Return To 2012 Highs 54
Tin: Continued Outperformance 55
Zinc: Bounce Is Coming To An End 56
Table: BMI Commodity Price Strategy 57
Table: Select Commodities: Performance & BMI Forecasts 57
Competitive Landscape 58
Table: Russia - Largest Mining Projects 58
Table: Russia - Largest Listed Mining Companies 59
Company Profile 60
Norilsk Nickel 60
Table: Norilsk Nickel - Financial Data 63
SUEK 65
Table: SUEK - Financial Results 68
Polymetal International 69
Table: Polymetal - Financial Results 72
Regional Overview 74
Europe: Mining Sector Outlook 74
Table: Major Nordic Mining Projects 77
Table: Key Gold Projects In Eastern Europe 78
Global Industry Overview 79
Global Mining Outlook 79
1 Winners & Losers In 2013 79
Table: Recent Tax Increases 80
2 China Slowdown To Weigh On Mining Equities 80
3 Capex At Risk As Prices Head Lower 82
4 Africa To Continue Attracting Chinese Attention 84
5 Changing Global Coal Trade Dynamics 85
Methodology 87
Company Profile
Norilsk Nickel
SUEK
Polymetal International
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