Mining to Russia
Trends and opportunities
Russia remains one of the largest producers of mining commodities in the
world. The country has a huge geographic area rich with mineral resources.
According to the United States Geological Survey (USGS), Russia was ranked
among the world leading producers of commodities including bauxite, coal,
copper, diamond, gold, iron ore, lead, nickel, PGM, potash, silver, uranium
Russia is the largest miner of diamonds and palladium and the second
largest miner of platinum and nickel. Fitch Solutions forecasts that Russia
will remain one of the world’s largest producers of base and industrial
metals (Source: Russia Mining Report 2019).
With 157 bln tonnes of coal deposits, Russia holds the second-largest
recoverable coal reserves in the world. The Russian state will spend an
estimated US$123 bln (around A$ 181.2 bln) to develop the coal industry up
to 2030 (Fitch Solutions, Russia Mining Report 4Q2019).
Russian mining companies are on the edge of developing new excellent
deposits. In 2017 Polyus Gold acquired a license for Sukhoi Log deposit
development with an estimated reserve of 63 million ounces of gold, where
additional exploration works are under way at present. Baikal Mining
Company, Metalloinvest subsidiary, is proceeding with the design
documentation development phase of Udokan project with JORK-compliant
reserves of 26.7 million tonnes of copper.
The mining industry plays an important role in Russia’s national economy.
In 2018, the Russian mining industry grew by 3.48% and contributed 11.54%
to nation GDP (www.finam.ru). The sector
is highly consolidated. The Strategic Investments Law, which regulates
access of foreign investors to the mining industry, gives privileges to
Russian companies that play key roles in the sector and restricts foreign
firms from developing large, or ‘strategic’ deposits. At the same time, the
gold mining industry has integrated more in the global economy and attracts
both Russian and international miners. A number of smaller international
companies are also producing nickel, silver and coal in Russia.
Approximately 20,000 deposits have been discovered in Russia and over
one-third of these deposits are in the development or production stages.
The eastern part of Russia (Siberia and the Russian Far East) house the
bulk of Russia’s mineral deposits. Many of the resources are still untapped
and require modern technologies and investment for exploration and
development. The presence of Russian mining companies in this area is
strong despite the harsh climatic conditions. Some projects are being
developed with participation by international mining companies. These
include Kinross gold mining projects in Chukotka and Yakutia, Highland Gold
projects in Khabarovsk region and London-listed Petropavlovsk has gold and
iron ore projects in Amur region.
According to the Engineering and Mining Journal, Russia presents one of the
greatest remaining opportunities in the mining industry worldwide. With
generally a favorable forecast for mining sector development, Russian
mining companies are focused on optimising the existing operations,
increasing efficiency while preparing for future growth. The mining sector
looks for cooperation with international companies to access to new
products and technologies to improve productivity, increase safety and
reduce their environmental impact, providing opportunities for Australian
companies. Russia imports between $2.8-$3 bln worth of mineral extraction
and mining equipment per annum.
- mapping, airborne surveying, prospecting, exploration drilling services
EPC/EPCM contractors for the mining projects of one - five million tons
of ore per year
mining optimisation consulting services
mining training services
mining and processing equipment and technologies
maintenance and repair services for mining equipment
IT, geological data analysis and data modelling
engineering, project management, risk analysis and other consulting
mine safety, audit and environmental services
ore processing and screening
geotechnical and construction services.
Russian Mining Customer Profile
Australian mining equipment, technology and services (METS) companies have
a good reputation within the Russian mining community. Australian products
are considered to be of high quality and the best international standards.
A number of Australian METS companies have established offices or appointed
distributors in Russia.
The high cost of commercial credits in the market and limited access to
international banking by Russian mining companies make finance options and
cost-competitiveness crucial for competing effectively in Russia.
Many international suppliers to the mining industry are active within the
country. Traditionally, most equipment and services are bought from the
European Union, United States and Canada. As Chinese investments to the
industry grows, so too does the share of Chinese suppliers to the mining
Tariffs, regulations and customs
In recent years, there has been substantial progress in the adoption of
common international rules to product standards and certification
procedures. However, Russia still has a complicated system of certification
and all products imported into the country must meet Russian standards.
Australian exporters are recommended to work with reliable partners and
consulting companies on registration and certification issues.
On 1 January 2015, Russia along with Belarus, Kazakhstan, Armenia and
Kyrgyzstan established the Eurasian Economic Union (EEU) introducing a
common economic space containing more than 180 million people. The EEU has
removed trade and economic barriers and formalised the free movement of
goods, capital, services and people, including the unified customs rules
and common certificates/declarations of conformity for all EEU members.
The resources/METS sector is not directly impacted by sanctions. Detailed
information on Australian sanctions imposed against Russia is available on
Mining products are subject to the following CU technical regulations:
- CU TR 010/2011 - Safety of machinery
CU TR 012/2011 - Safety of equipment in explosion hazardous environments
CU TR 019/2011 - Safety of personal protective equipment (PPE).
Marketing your products and services
Russian territory is vast and divided by eleven time zones which can make
some international companies prefer to enter the market on a regional
basis. It is common for new companies entering the Russian landscape to
first establish a presence in Moscow and St. Petersburg before moving into
other regions where the targeted industry is the most developed. These are
Kuzbas basin and East Siberia for coal industry, Sakhalin for oil and gas,
Far East and Siberia for mining.
One of the major competitive advantage for Australian suppliers to mining
companies can be the ability to provide after-sales service, training, and
customer support. It is particularly important in remote areas where mining
The most common entry strategy for Australian METS companies in Russia is
to appoint an agent or select a well-established local distributor. Usually
a company needs a number of distributors to effectively service the clients
in different regions. Typically, distributors supply products to the
clients and provide logistical support, warehousing, product certification
and customs clearance.
Under Russian regulations, representative offices of international
companies cannot be involved in commercial activities. The advantage of
establishing representative office in the country is to strengthen control
over distributors and product promotion.
Registration of a wholly owned subsidiary in Russia is possible. The
federal and local government provide support to international companies
establishing manufacturing facilities in Russia, particularly in fast track
development areas in the Russian Far East and other special economic zones.
Links and industry contacts
Government, business and trade resources for Russia
The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:
- develop international markets
- win productive foreign direct investment
- promote international education
- strengthen Australia's tourism industry
- seek consular and passport services.
Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.
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