New Market Research Report: Russia Mining Report Q3 2013

From: Fast Market Research, Inc.
Published: Fri Aug 23 2013


We forecast Russia's mining industry value to reach US$157bn by 2017, growing at an annual average rate of 0.9%. We believe the country's mining industry will experience years of slowing growth as palladium and platinum production undergo modest increases over the coming years. Nevertheless, the coal sector holds much promise over the long term as the government plans to invest RUB3.7trn (US$120bn) in the sector between 2012 and 2030.

We believe the mining industry in Russia is set to experience modest growth over the coming years. In line with the increasingly dour outlook in the global mining industry, there have been few projects and expansion plans announced in the country over recent years. The escalation of cash costs and falling commodities prices will continue to deter domestic miners from expanding output. That said, we note that the coal sector holds much promise over the long term as the Russian government plans to invest RUB3.7trn (US$120bn) in the sector between 2012 and 2030.

Full Report Details at
- http://www.fastmr.com/prod/648383_russia_mining_report_q3_2013.aspx?afid=303

We expect the platinum and palladium sectors to experience modest growth, growing at an annual average rate of 1.2% and 1.3% respectively. Production growth in platinum will be lead by Norilsk Nickel's expansion of the Oktyabrsky mine by 2014.

The government will maintain a strong influence on the mining 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 (thousand 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.

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