Transcript A Case Study on Mineral Development in the

Mineral resources sector of Russian
Far East: results of transformation,
prospects and opportunities for
sustainable development
Natalia Lomakina
Economic Research Institute, Far Eastern Branch,
Russian Academy of Sciences, Khabarovsk, Russia
Far East in the Russian economy
• Unique economic and geographic location: a
“window” from Russia to the dynamically
growing Asia-Pacific region;
• Territory (6.2 mln square km) – 36.4% of Russia;
• Population – 6.5 mln people (4.58% of Russia);
• ~5% of Russian GDP;
• 9 subjects: Republic of Sakha (Yakutia),
Primorsky region, Khabarovsky region,
Kamchatka region, Amur region, Magadan
region, Sakhalin region, Chukotsky automonous
district, Jewish autonomous region.
Contents
1. Far East MRS: current situation and trends
(2005-2010)
2. Conditions and prospects for development
of Far East MRS (2010-2030)
3. Far East mineral resources sector and the
international cooperation.
3
Share of Far East mineral resources
in the national economy (estimates of 2005, %)
Share in Mineral Resources Sector of Russia
Extraction
Known
reserves
Probable
reserves
Diamonds
99.9
80.6
50.0
Gold
40.0
32.9
45.0
Silver
60.0
32.9
85.0
Tin
Tungsten
100.0
67.6
95.2
23.9
100.0
60.0
Lead
60.4
8.3
27.4
Zinc
15.4
3.6
15.9
4
Share of Far East mineral resources
in the national economy (estimates of 2009, %)
Share in Mineral Resources Sector of Russia
Extraction
Known
reserves
Probable
reserves
Diamonds
100,0
81,0
50,0
Gold
50,0
33,0
45,0
Silver
50,0
30,0
85,0
Tin
100,0
92,0
100,0
Tungsten
87,0
23,0
60,0
Lead
63,0
9,0
27,4
Zinc
10,0
3,6
15,9
5
1. Far East mineral resources sector:
current situation and trends (2005-2010)
6
Changes in the Far East Mineral Resources Sector.
Extraction of New Kinds of Mineral Resources.
• Titan-magnetite ores in Amur Region
(deposits: Kuranakhsky, Bolshoi Seiim);
• Nickel and kobalt in Kamchatsky Region(experimentalindustrial extraction from the Shanuch deposit of kobaltcopper-nickel ores);
• Iron ores in Jewish Autonomous Region(Kimkansky and
Sutarsky deposits) and Amur Region (Garinsky deposit).
7
Diamond Extraction in the Russian Federation
(Ministry of Finance data)
Year
Weight,
thousand carats
Cost,
million dollars
Average cost,
dollar/carat
2005
38000
2531
66,61
2006
38361
2575
67,11
2007
38291
2625
68,56
2008
36925
2509
67,95
2009
34759
2340
67,34
8
Changes in the Far East Mineral Resources Sector.
Transition to the Underground Diamond Mining
Method of
extraction
2005
2009
(fact)
2015
2025
Open, %
98
80
35
25
13
65
75
Underground, % 2
9
Gold Extraction in the Main FEFO Gold-Extracting Regions, tons
1991
2000 2005
2006
2007
2008 2009
2009/2008
Russia
133,7 142,7 152,0
147,6
%
144,9 163,9 178,3 108,7
FEFD,
96,2
73,5
79,3
73,6
70,2
89,3
102,4 114,6
Yakutia
32,8
16,1
18,8
19,9
18,9
18,9
18,6
98,4
Khabarovsky
region
Kamchatsky
region
Amur region
7,8
9,2
18,2
15,7
14,8
16,2
14,7
90,7
-
-
0,2
1,4
2,1
1,5
2,3
153,3
10,8
11,8
14,7
14,5
14,7
18,7
21,9
117,1
Magadan
region
30,4
30,0
22,7
17,3
15,3
13,9
13,7
98,5
Chukotsky АD
14,4
6,4
4,7
4,8
4,4
20,1
31,2
155,2
including:
10
Changes in the Far East Mineral Resources Sector.
Transition to the Gold Ore Processing (hard rock mining)
Share of Gold Extraction from National Deposits, %
2001
2005
2006
2007
2008
Russia
43,5
54,5
57,9
59,5
67,0
Republic of Sakha
(Yakutia)
26,0
47,0
49,7
48,5
51,4
Chukotsky АD
17,0
42,9
49,3
56,6
94,2
Khabarovsky region
57,7
69,8
66,0
70,0
72,2
Amur region
23,7
38,9
44,0
49,5
62,0
Magadan region
51,6
46,7
40,0
32,5
29,2
11
The Eastern Regions’ Share in Russia’s Gold Extraction
2001
t
2005
%
2008
t
%
t
2009
%
t
%
Russia
141,5 100
152,1
100
163,9 100
178,3 100
Siberian Federal
District
(4 subjects)
48,0
33,9
57,4
37,7
59,9
36,5
60,8
Far Eastern
Federal District
(6 subjects)
80,0
56,5
79,4
52,2
89,3
54,4
102,4 57,4
Total in Eastern
Regions
128,0 90,4
136,8
89,9
149,2 91,0
163,2 91,5
34,0
12
Share of the Far Eastern Enterprises
in the Precious Metals Extraction
by Large Companies, %
Companies
2005
2006
2007
2008
2009
«Polus Zoloto»
3,2
12,0
11,5
11,6
11,0
OJSC «MNPO
Polimetal»
68,2
59,3
79,3
72,9
64,8
Kinross Gold Corp
-
-
-
100
100
Petropavlovsk Plc
100
100
100
100
100
Highland Gold
Mining Ltd
88,9
73,5
100
100
100
13
Share of Foreign Companies
in the Precious Metals Extraction
in Russia and the Far East, %
Region
2005
2006
2007
2008
2009
Russia
16,8
15,7
15,6
23,0
27,4
Far East,
21,1
21,0
24,0
38,2
46,5
Chukotsky AD
…
…
…
76,6
82,0
Kamchatsky region
…
85,7
90,4
93,3
91,3
Khabarovsky region
27,4
31,8
31,0
31,4
34,6
Amur region
47,6
51,0
57,1
65,2
67,5
including:
14
2. Conditions and prospects
for development
of Far East mineral resources sector
(2010-2030)
15
State Programs
of Russia’s Eastern Regions Development
• Goal: realization of Russia’s national geostrategic interests in the Asia-Pacific region
through development of its eastern regions
• National Programs: The Strategy of Social and
Economic Development of the Far East and
Baikal Area for the Period until 2025; The
Federal Target Program «Social and Economic
Development of the Far East and Trans-Baikal
Area for the Period until 2013»
• Regional Programs: Strategies and Programs
of regional development in the Far East
Federal District and Trans-Baikal Area
16
Prospective role of the Far East mineral sector as
defined in state documents
•
•
•
The State Strategy of the Far East Development until
2025:
«use of natural resources potential is a real competitive
region’s position in the domestic and foreign markets»;
a structural task– modernization and holding the leading
role of mining industry as a specialization core in the Far
East economy
The Federal Target Program for Development of the Far
Eastern Regions until 2013:
«positioning of the Russian Far East economy … is to be
implemented on the basis of natural resources extraction
and processing development and the region’s transit
capacity»
17
The Driving Factors of the Far East’s
Mineral-Resources Sector Development
1. The major international and national
corporations define strategies, quantitative
and qualitative characteristics of the mineral
sector future development
2. The Far East mineral sector further
development cannot be achieved without
considerable technological transformations
18
Examples of Innovation Approaches
in the Far East Mineral Sector Development
«Appraisal - Exploration» stage
• «Polus Zoloto» (Natalka,Yakutia deposits);
• «Polimetall» (Albazino, Maiskoe);
• «Kinross» ( Kupol);
• «Petropavlovsk» (Pioneer and Malomyr)
19
Examples of Innovation Approaches
to the Far Easts Mineral Sector Development
«Development & Mining/ Processing» Stage
• «Polimetall»: inter-regional project «Albazino Amursk», «Maiskoe - Amursk» (pressure
oxidation technology)
• «Petropavlovsk»: inter-regional project «Far
Eastern metal works» (direct reduced iron
production - ITmk3 technology)
20
Level of exploitation in the Far East
Mineral Sector (as of 2009/01/01)
Products
Mineral reserves transferred for use
(licenses issued for exploitation), %
Diamonds
Gold
83.2
86.5
Silver
Platinum
Tungsten
Lead
85.3
100
31
44.9
Zinc
Tin
Iron
84.4
31.3
16.9
Manganese
72
21
Return of Government to the Mineral Sector:
Institutional and Financial Aspects
1) State participation in reproduction of mineral
resources under the market economy (the
Long-term State Program of Mineral Resource
Reproduction until 2020)
2) Attempt of long-term planning of interrelated
development of mineral sectors and territories
(strategic creation of local centers of economic
development (CEDs) instead of commonpurpose financing and random licensing of
mineral resource objects)
22
Federal Financing of Exploration Works
•
•
•
•
2008 – 22 billion rubles
2009 – 18.9 billion rubles
2010 – 18 billion rubles
2011-2012 – 14 billion rubles
• Annual financing benchmark for the implementation of
the Long-term State Program of Mineral Resource
Reproduction until 2020 - 35-40 billion rubles
23
Fundamental Characteristics of the
Economic Development Centers
• availability of diverse mineral resource potential and
capability to increase it substantially;
• necessity and feasibility of infrastructural transformations
in the region by implementation of state development
programs;
• financing the Economic Development Centers by means
of public-private partnership mechanism;
• capability to use the above mentioned factors to ensure
sustainable economic growth and development of
territories.
24
The Far East Economic Development Centers
ready for real investment
Economic
Development
Centers
Key types of
resources
Start
of works
Labor, thousands
of people
YanoKolymskiy
Gold
2012
60,0
YuzhnoYakutskiy
Coal, Iron, Gold,
Uranium
2010-2015
30,0
Yuzhno Kamchatskiy
Gold, Silver, Nickel
2010
7,0
Kupolniy
Gold, Silver
2008
2,5
Stanovoy
Iron, Titanium, Gold
2010-2015
4,0
Khinganskiy
Iron, Manganese,
Gold
2015
7,0
25
Prospective Centers of Economic Development
of national level
CED,
region
YanoKolimsky
(Magadan
region,
Yakutia)
SouthYakutia
(Yakutia)
Key
mineral Start
of Yearly
resources
exploitation output
capacity
Gold, ton
2012
100
Number of
new
jobs
(thousand)
60
Coal, mln. ton
30
2010-2015 32-37
Iron, mln. ton
20
Gold, ton
10
Uran, thousand
ton
5
26
Example: Correction of exploitation schedule for
Natalka deposit
Schedule before the economic
crisis
After-crisis corrections
•2010 – start of exploitation
•2013 – reach production of 40 ton
of gold for the next 30-40 years
•2020-2030 гг. – reach maximum
output of 125 mln ton as a whole
Yano-Kolimsky gold mining area,
by gradual addition of other
deposits (Pavlik, Degdekan,
Badran etc.)
•2013 - launch of gold extraction
facility, capacity of 10 mln ton of
ore per year;
•2017 – increase output to 20 mln
ton of ore per year;
•2022 г. – reach maximum output
of 40 ton of gold per year
27
3. Far East mineral resources sector and
the international cooperation.
28
International cooperation of Far East mineral
resources sector.
1. Trade Cooperation
1. Export product structure
•
•
precious metals and stones – more then 95%
ores and concentrates – about 5%
2. Export geographical structure
precious metals and stones:
•
•
•
•
European countries – more then 70%,
Middle East countries - more then15%,
North American countries – about 4%,
NEA countries – less then 1%
ores and concentrates:
•
•
•
NEA countries – more then 75% (China – about 45%, Japan – about 20%,
Korean Republic - more then 10%)
European countries – more then 20%
ASEAN – less then 1%
29
International cooperation of Far East mineral
resources sector.
2. Investment Cooperation
• According to The Far East Development Strategy until 2025
investments needs for new mining and processing clusters in FEFO
(including resource and infrastructure projects) exceed $30 billion.
• Ex. 1: In 2007 the rate of the Republic of Korea’s investments to
Russian mineral resource industry started to grow. In 2008 Korean
investments in this sector were on the 2nd place in the whole
structure (24.4%). The potential investment area is metal industry (
Khalaktyrskoe titanium-magnetite sand deposit at Kamchatka).
• Ex. 2: Chinese companies activity: The formation of the mining and
metallurgical cluster in Amur Area on the first step will be financed
by Xuan Yuan Industrial Development (XY Group, China), that will
extend credit to Joint Venture “Petropavlovsk” at the rate of about
$375 mln for 10 years (70% of all work cost)
30
International cooperation of Far East mineral
resources sector.
3. Technological Cooperation
• Ex.: Direct Iron Production (DRI), “Petropavlovsk”.
• ITmk3 - innovation developed by Kobe Steel Corporation
(Japan). It is the third and the last for nowadays technology
for obtaining the raw material for steel production.
• ITmk3 technology advantage: possibility to reduce cost,
production period (10 minutes) and carbonic acid emissions.
31
International cooperation of Far East mineral
resources sector.
4. Joint Ventures Foundation.
• Ex. 1: Joint development of Eugenjevskoe apatite deposit in
Amurskaya Oblast for providing production of 1.2 mln tons of
complex phosphatic manure. The apatite concentration plant
building in Amur Area and phosphatic manure plant construction in
Hegang City (China)
• Ex. 2: The plant building for titanium sponge production in Jiamusi
City (Joint Venture “Petropavlovsk”& Chinalco). Facility – 15 000
tons p.a. at the beginning and up to 30 000 tons p.a. then.
Investments – approx. $30 mln. Joint Venture: 65% “Petropavlovsk” and 35% - Chinalco. Employment – 3 000 people.
Raw materials – from Kuranakhskiy ilmenite- titanium- magnetite
deposit in Amurskaya Oblast
32
International cooperation of Far East mineral resources sector.
5. «Cooperation program» for 2009-2018 between Far East and
East Siberia regions and North-East of China».
1. Projects with “industrial” potential (Examples: industrial
exploitaition of Yagodninsky zeolites deposit, production of heat
insulation materials from perlite, Nachikin and Paratun deposit in
Kamchatka region);
2. Projects with significant “industrial” potential but high risk of
implementation of raw product output scenario (Examples:
exploitation of Kimkan-Sutar iron ore deposit in Jewish Autonomous
region);
3. Projects, planned for implementation of only raw material
output scenario (Examples: exploitation of Evgenevsky apatite
deposit in Amur region for production of complex phosphate
fertilizers in Hegan city area (China); exploitation of Kuranah ilmenittitanmagnetit deposit in Amur region for supply of raw materials to
titan sponge plant in Jiamusi city (China).
33
Threats of the raw materials production development
scenario of Russian Far East, for national and regional
economies
• Possible threats for national economy:
loss of control over supply of strategic mineral resources
to russian industry; weakening position of Far East as
Russian farpost in the Asia Pacific region
• Possible outcomes for Far East: strengthening of
resource-export specialization of the regional economy,
dependence of regional economy on commodity markets
price dynamics, depletion of resource-based growth
potential
34
Some conclusions and key tasks
• Far East mineral resources sector will keep its national
specialization in near future
• Potential for international cooperation of Far East mineral
resources sector is quite high
• The key question is that of estimating the mineral resources
sector contribution to the sustainable regional development.
• The high-priority theoretical and practical tasks are: estimation
of “full” effects of exploitation of mineral resources for regional
development, search of the ways to determine structure
(disintegrate private benefits and regional development) and
localization (effects inside and outside region/national border)
of these effects.
35
Thank you for attention!
Prof. Natalia Lomakina
Economic Research Institute, FEB, RAS
Khabarovsk, Russia
[email protected]