Business Monitor International


Russia Mining Report

Published 26 September 2014

  • 101 pages
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  • Includes 3 free updated quarterly reports
 
$1,295.00
Russia Mining Report

BMI View:   Mineral production growth is set for solid performance in Russia over the coming years. Growth rates for coal and gold will remain more robust than for PGMs and iron ore. Despite our modestly positive outlook, the sector will struggle to come to terms with lower global mineral prices. Moreover, foreign investors will struggle to establish a foothold due to restrictive regulations.  

We believe Russia's mining industry is set to experience solid, but not rapid, growth over the coming years. While Russia is home to rich deposits of resources including coal, iron ore, gold and platinum, a mining boom is unlikely to catch up with the country anytime soon. Apart from a myriad of bureaucratic hurdles, the escalation of cash costs and softening of commodity prices will see a growing number of miners scaling back their ambitions over the coming quarters. Still, some major projects are set to come online, for example the Natalka gold mine under development by Polyus Gold, is set to come online in 2015.

Solid Growth Outlook
Russia - Select Mining Production (% chg y-o-y)

Coal To Outperform

We believe Russia's coal mining industry holds great promise for rapid growth over the long term. President Vladimir Putin plans to spend an estimated USD123bn developing the country's coal reserves, alongside major investment into logistics and engineering capacities. Furthermore, we believe Russian coal miners will benefit from rising coal demand from Asia and a handful of infrastructure projects are underway to facilitate greater coal trade flows.

Crucially, the Russian government will continue to maintain a strong influence on the mining industry. For instance, 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...

Table of Contents

BMI Industry View
7
SWOT
9
Industry Forecast
11
Coal: Modest Expansion, Shifting To The East
11
Modernisation Of Coal Sector
13
Exports Shifting From Europe To Asia
14
Constrained By Infrastructure
15
Table: Russia - Distance From Coal Production Area To Shipping Seaport
16
Better Economics For Coking
17
Table: Coal Production Forecast (Russia 2010-2018)
19
Gold: No Golden Years In Sight
20
Polyus Gold Takes Charge
21
Table: Gold Production Forecast (Russia 2010-2018)
22
Iron Ore: Challenges Ahead
22
A Hard Blow To Miners If Crimea Crisis Escalates
24
Infrastructure Developments A Boon
25
Table: Iron Ore Production (Russia, 2010-2018)
25
Nickel: Subdued Growth, Risks Lurk
25
Risk To Outlook
27
Table: Nickel Mine Production (Russia, 2010-2018)
28
Palladium: Little Optimism As Norilsk Cuts
28
Table: Palladium Production (Russia 2010-2018)
31
Platinum: Struggling To Head Higher
32
Table: Russia - Largest Platinum Projects
33
Table: Platinum Production (Russia 2010-2018)
34
Industry Risk Reward Ratings
35
Risk/Reward Ratings
35
Kazakhstan On Top; Russia Not Far Behind
36
Table: Mining Risk/Reward Ratings
37
Germany & Ukraine: Key Changers On Last Quarter
37
Weak Commodity Prices Weigh On Rewards Across The Board
38
Risk/Reward Ratings
38
Rewards
38
Industry Rewards
38
Country Rewards
38
Risks
39
Industry Risks
39
Country Risks
39
Regulatory Development
40
Foreign Investors To Find Little Success
40
Tax Regime
41
Corruption To Remain Key Concern
42
Table: Europe - Mining Regulatory Outlook
42
Table: Political Overview
43
Commodities Forecast
45
Commodity Strategy
45
Ferrous Metals:
45
Iron Ore: Price Slump Overdone, Stabilisation In Sight
45
Steel: Price Forecast Revised Up
46
Non-Ferrous Metals:
48
Aluminium: Recent Break Signals Multi-Month Strength
48
Copper: Subdued Prices Into Q314
49
Lead: Prices To Strengthen As Deficit Deepens
50
Nickel: H214 Rally Unlikely
51
Tin: More Resilient Than Other Metals
52
Zinc: Sustained Break Unlikely
54
Table: Select Commodities - Performance & BMI Forecasts
55
Competitive Landscape
57
Key Players
57
Table: Russia - Key Financial Data For Select Mining Companies
58
Company Profile
59
Norilsk Nickel
59
Company Overview
60
Company Strategy
61
Table: Norilsk Nickel - Key Financial Data
62
Polyus Gold
64
Table: Polyus Gold - Financial Data
65
SUEK
67
Regional Overview
70
Europe Overview
70
1
70
2
72
3
74
Table: Europe: Mining Regulatory Outlook
74
4
75
5
76
Global Industry Overview
77
Challenges
77
Table: Mining - Select M&A Deals
81
Cause For Optimism
84
Methodology
91
Industry Forecast Methodology
91
Sources
92
Risk/Reward Rating Methodology
93
Table: Weighting Of Indicators
95

The Russia Mining Report has been researched at source and features Business Monitor International (BMI)'s mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.

BMI's Russia Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in Russia.

Key Benefits

  • Use BMI's independent industry forecasts on Russia to test other views - a key input for successful budgeting and planning in this mining market.
  • Target business opportunities and risks in Russia's mining sector through our reviews of latest mining industry trends, regulatory changes and major deals, projects and investments in Russia.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity), Key Projects Tables and Competitive Landscape Tables.

Coverage

BMI Industry View

Summary of BMI's key forecasts and industry analysis, covering mining reserves, supply, demand and prices, plus analysis of landmark company developments and key changes in the regulatory environment.

Business Environment Rankings

BMI's Mining Business Environment Rankings provide a country-comparative Risk-Reward Rankings index aimed at investors (mining companies and support service providers) in the regional mining market. The rankings methodology makes sophisticated use of over 40 industry, economic and demographic data points and is part of BMI's integrated Country Risk-Industry rankings products.

Key Projects

Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.

BMI Industry Forecasts

Historic data series (2009-2012) and forecasts to end-2018 for all key industry and economic indicators (see list below), supported by explicit assumptions, plus analysis of key downside risks to the main forecast. Indicators include:

  • Mining Industry: Industry size (US$mn), real growth (%), % of GDP, employment ('000), workforce as % of total workforce, average wage (US$).
  • Output:Production volumes ('000 tonnes, carats etc.) for all major metals, minerals, ores and gems mined in each state, including bauxite, copper, gold, coal, lead, silver, tin, titanium, uranium, zinc etc.
  • Exports: Value of exports (US$mn) for all major metals, minerals, ores and gems mined in each state .
  • Commodity Markets: Global demand, supply, stocks and benchmark prices (US$) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.

BMI Macroeconomic Forecasts

BMI forecasts to end-2018 for all headline macroeconomic indicators, including real GDP growth (%), inflation (%), fiscal balance (% of GDP), trade balance (US$bn), current account (US$bn) and external debt (US$bn).

Competitive Landscape Tables & Analysis

Comparative company analyses and tables detailing by US$ sales, % share of total sales, number of employees, year established, market cap/NAV, ownership structure, production and % market share.

Company Profiles

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI's industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc