Russia Mining Report Q1 2013

  • ID: 2390640
  • January 2013
  • Region: Russia
  • 88 Pages
  • Business Monitor International
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  • Company Profile
  • Norilsk Nickel
  • Polymetal International
  • SUEK
  • MORE

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.

Note: Product cover images may vary from those shown
2 of 4


  • Company Profile
  • Norilsk Nickel
  • Polymetal International
  • SUEK
  • MORE

BMI Industry View 7


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

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

Note: Product cover images may vary from those shown
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Company Profile
Norilsk Nickel
Polymetal International

Note: Product cover images may vary from those shown
4 of 4
Note: Product cover images may vary from those shown


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