Business Monitor International


Russia Mining Report

Published 26 September 2014

  • 101 pages
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$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
Coal To Outperform
8
SWOT
9
Industry Forecast
11
Coal: Expansion Ahead
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: Natalka To Boost Production
20
Polyus Gold Takes Charge
21
Table: Gold Production Forecast (Russia 2010-2018)
22
Iron Ore: Weak Prices To Disincentivise Production
22
A Hard Blow To Miners If Crimea Crisis Escalates
24
Infrastructure Developments A Boon
24
Table: Iron Ore Production (Russia, 2010-2018)
24
Nickel: Capacity Cutbacks To Constrain Growth
24
Risk To Outlook
27
Table: Nickel Mine Production (Russia, 2010-2018)
27
Palladium: Norilsk Output To Remain Subdued
27
Table: Palladium Production (Russia 2010-2018)
30
Platinum: Weak Growth Story
31
Table: Russia - Largest Platinum Projects
32
Table: Platinum Production (Russia 2010-2018)
33
Industry Risk Reward Ratings
34
Russia Risk/Reward Ratings
34
Rewards
34
Industry Rewards
34
Country Rewards
34
Risks
35
Industry Risks
35
Country Risks
35
Europe Risk/Reward Ratings
36
Downgrades For Coal Producers
37
Subdued Metal Prices Reduce Rewards
37
Table: Europe: Mining Risk/Reward Ratings
38
Regulatory Development
39
Foreign Investors To Find Little Success
39
Tax Regime
40
Corruption To Remain Key Concern
41
Table: Europe: Mining Regulatory Index
41
Table: Political Overview
42
Commodities Forecast
44
Table: BMI Steel Price Forecast
44
Short-Term Outlook
44
Core View
45
Surplus Set To Slim
45
Production: Reining In Growth
46
Consumption: Deceleration Ahead
48
No Respite From Chinese Exports Over Coming Months
50
Arbitrage Set To Grow Between East And West
51
Risks To Price Outlook
52
Table: Steel Data & Forecasts
52
Table: Global Steel Prices By Region & Product, USD/tonne (average)
53
Competitive Landscape
54
Key Players
54
Table: Russia - Key Financial Data For Select Mining Companies
55
Company Profile
56
Polyus Gold
56
Table: Polyus Gold - Financial Data
57
SUEK
59
Norilsk Nickel
62
Company Overview
63
Company Strategy
64
Table: Norilsk Nickel - Key Financial Data
66
Regional Overview
67
Europe Overview
67
Coal Industry Down But Not Out
67
Weak Prices To Hinder Gold Projects
68
Environmental Pressure Mounting
69
Return Of Tin Mining
70
Rare Earth Opportunities Over The Long Term
71
Global Industry Overview
73
Capex Cutbacks To Yield Rewards
73
M&A Activity To Pick Up
74
High Grade Opportunities In Iron Ore
75
Shifting Centre Of Growth For Platinum
76
Chinese & Indian Outbound Mineral Investment To Gather Pace
77
Shake-Up For Global Rare Earths Industry
78
Methodology
80
Industry Forecast Methodology
80
Sources
81
Risk/Reward Rating Methodology
82
Table: Weighting Of Indicators
83

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