Top 5 trends in Russian mining industry
Increase in foreign equipment supplies, redirection of trade to the East, maintenance of geologic exploration volumes, focus on digitalization and ESG — let us discuss current trends in the Russian mining industry in 2023.
Shift to New Export Markets
In the current environment, Russian mining companies have quite successfully reoriented their trade to Asian countries. For instance, the Arab Emirates, China and Turkiye are the main buyers of Russian gold right now. Reuters reports that 99.8 % of gold exports from February 2022 to March 2023 went to these countries. China and India are actively purchasing Russian coal. About 60 million tonnes of coal were sent to China in 2022, exceeding the 2021 figures by 11 %. India imported 17 million tonnes, showing a 148 % increase vs. 2021. In January through April of this year, China, India and Turkiye remained the main buyers of coal.
Russian metalworkers also strive to grow exports in the eastern direction. To do so, in February 2022 the Russian Steel Association was planning to address the government to obtain guarantees for export of 8–9 million tonnes of steel along the Eastern route. In this regard, the issue of transport logistics remains quite relevant, as it hinders the reorientation of trade to the East. ‘Albeit growing, the Eastern vector is restricted by a bottleneck in the form of railways. The Northern Sea Route cannot be expanded quickly, it will take time’, shares his opinion Anatoly Nikitin, Executive Director of the “Russian Miners” Non-Profit Association.
Equipment and Machinery — Growing Imports from Partner Countries
For many years, the mining equipment and technology sector has been highly dependent on imports. In the last year and a half, the equipment import vector shifted from the West to the East. Chinese companies are actively expanding their presence on the Russian market, and figures for 2022 confirm that. For instance, the SANY company manufacturing bulldozers and excavators has increased its supply to Russia tenfold, and XCMG company — threefold. In the heavy truck segment, Chinese manufacturers have increased their share from 10 to 40 %. New products, such as excavators and hydrostatic bulldozers manufactured by Shantui, have appeared on the Russian market.
Manufacturers from Belarus and Korea have also increased their supplies. BelAZ has increased its sales of mine dump trucks to Russia to $804.8 million USD. The Korean Hyundai and Doosan have sold 39 and 41 % more excavators in January through September 2022 year-on-year. As for equipment imports, a certain dependence on foreign supplies will remain in the segment of underground drilling and load-haul-dump machinery, light dump trucks and crushing equipment.
One of the main current issues is the deficit of sophisticated equipment, consumables and spare parts acknowledged by many market players. As of the beginning of 2023, the Russian mining industry needed 19 thousand individual equipment items and accessories. This list was compiled in 2022 by the Ministry of Industry and Trade and the Ministry of Energy based on requisitions of mining companies. Maintenance of imported equipment also remains a thorny issue, especially in case of equipment of Western origin.
Geologic Exploration — Maintaining Volumes at Previous Year’s Level
As of now, the volumes of geologic exploration in Russia remain at the level of 2022. This trend applies both to oil industry and solid minerals mining. Last year, mining companies invested 470 billion roubles into geologic exploration. This is 20 billion more than in 2021. At the St. Petersburg International Economic Forum in 2023, the head of the Federal Agency for Subsoil Use Evgeny Petrov suggested that this year the investments into geologic exploration of solid minerals may increase by 25 % versus the previous year, i. e. by 15.8 billion roubles. One of the factors influencing the potential increase may be the remoteness of areas where the exploration is to take place.
Far East and the Arctic are becoming a major attraction point for investments not only into exploration, but also into the mining industry as a whole. Mining projects in the region have already received more than 2 trillion roubles in investments. As of now, more than 140 mining and metallurgy projects are being implemented. Anatoly Bobrakov, Deputy Head of the Ministry for Development of Russian Far East, named the following five ore mining and processing plants as the key projects in the region: Baimsky, Malmyzhsky, Inaglinsky, Denisovsky and Ozerny. He also noted that Udokan mining and metallurgy company has an important project.
Focus on Digitalization
“Digitalization and automation” is the path taken by leading mining companies. In 2021, the cost of implementation and operation of digital technologies in the mining industry amounted to 80.1 billion roubles. This is almost twice as high as in 2019 (48.1 billion). In April 2023, the Tekhnologiya Doveriya company presented the results of survey conducted across mining companies. As the study shows, 63 % of companies believe that IT projects will allow for significant reduction of costs in the next 5 years. 93 % of respondents defined the priority digital technologies as machine learning, big data and their analytics, and artificial intelligence technologies.
The course towards digitalization taken by the Russian mining companies can further be confirmed by the results of another survey, conducted by the Yakov and Partners company together with the Tsifra Group of Companies. The study results were presented at the MiningWorld Russia 2023 Exhibition during the Mining Leaders forum. The survey results show that in 2022–2023 75 % of respondents maintained or increased their digitalization budgets. Note that the majority (70 %) invest in production, and only 30 % of respondents implement solutions in the area of industrial safety and environment protection. One of the key issues is the lack of qualified personnel for digitalization projects, which was acknowledged by two-thirds of the respondents.
ESG Still Relevant
In the environment of the fourth energy transition, leading Russian mining and metallurgy companies continue working in line with the ESG strategy. The companies strive to reduce impact on the environment and achieve carbon neutrality. Major companies in the industry consider compliance with ESG principles a global competitive advantage, and continue publishing their sustainability reports.
ESG compliance can be seen in the example of certain companies. For instance, a major Russian producer of nickel and palladium has started supplying carbon-neutral nickel. One of the major aluminium producers has begun production upgrades to achieve its net zero emissions target. Other companies are working on assessment on climate risks, furnace gas recovery, etc. Major programs supported on the federal level are being implemented, such as the “Clean Coal — Green Kuzbass” science and engineering initiative. It has already shown positive results in the areas of wastewater treatment, recovery of coal from concentration plant tailings, explosive operations, etc.
MiningWorld Russia — Major Platform for Presentation of Mining Machinery, Services and Equipment
The 27th International Exhibition of Machines and Equipment for Mining, Processing and Transportation of Minerals took place in 2023. 368 companies from 16 countries presented their products in the exhibition area of 16 thousand square metres. 8,299 unique visitors were there to study their offers — mining industry professionals from 75 regions of Russia and 31 countries of the world. Of those, 4,890 people visited the Exhibition for the first time.
As before, the specialists pursued specific goals at the Exhibition, for instance, 71 % of the visitors were looking for new suppliers and business partners. The procurement budget of almost half of the visitors (47 %) amounted to more than 50 million roubles — those were top managers and specialists of mining companies, concentration plants and wholesale trading companies.
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Sources: Spec-technika.ru, Eprussia.ru, Eastrussia.ru, TAdviser.ru, Kommersant, RBC, Reuters, Vedomosti