The Future of Industries: What to Buy and What to Produce? Mining
The Far East has enormous reserves of minerals, which need to be exploited
The role of the Far East’s commodities industry as part of the commodities industry of the entire country is so large that it is virtually impossible to separate them. The Far East is home to 49% of all gold reserves, 65% of silver reserves, 80% of uranium reserves, and 65–67% of molybdenum and tungsten. So, everything that happens in the Far East’s commodities industry has a direct and immediate bearing on the entire country. This is where the biggest discoveries are being made. The largest geological prospecting projects are under way here. <...> The development of the Far East’s commodities industry determines the development of the sector nationwide — Oleg Kazanov, Director, All-Russian Institute of Mineral Resources. N.M. Fedorovsky.
We have sufficient reserves in our country, but we need to have a clear understanding of what commodities the economy needs – and in what quantities – over the medium and long term. <...> For the first time in 26 years, we have updated the list of strategic commodities. This will help us set geological prospecting objectives. <...> The new list is made up of 61 commodities. Fifty-five of them are produced in Russia, and particularly in the Far East, where 27 commodities are produced — Alexander Kozlov, Minister of Natural Resources and Environment of the Russian Federation.
Russia has everything it needs to accelerate the development of deposits, including in terms of digital solutions
The most important thing is to accelerate the development of deposits. We need to work more quickly on establishing a competitive national base, establishing a strategic national commodity base, opening new deposits, and starting new, major geological prospecting projects. <...> Our aim is to make the way the industry is managed more effective, and to reduce the time taken from prospecting to production. <...> A universal digital platform for obtaining geological information has been launched in the country. The licensing procedure for mineral resources has also gone digital, which is very important. That does not only cover bidding, but also obtaining a licence according to the declarative principle. <...> Essentially, we have gone digital. There is no longer any need to visit the Federal Agency for Mineral Resources in person with kilo upon kilo of documents. Now you can just register on a special website and make contact through your personal account. It took us just a year to do. The amendments were made to legislation, <...> and we have received almost 2,000 applications in this form. <...> In addition, mining companies have sent almost 5,000 messages online — Alexander Kozlov, Minister of Natural Resources and Environment of the Russian Federation.
Additional government support is needed to increase production of strategic materials
A list of 17 strategic materials where there are shortages has been drawn up. <...> We are doing everything we can to commission the Ilmenite Tugansk Ore Mining and Processing Enterprise in Tomsk Region by the end of the year. Once ready, it will produce both titanium and niobium. <...> The government should always help in this endeavour. <...> We cannot manage without government support in extracting rare earth metals. <...> The mineral resource base of materials which are in short supply has been neglected due to low liquidity — Vladimir Verkhovtsev, General Director, Atomredmetzoloto.
A lack of protection for mining companies, and long document processing times
Mining companies must be protected. <...> It takes months, even a year <...> to transfer land from one category to another so that minerals can be extracted under the licence that was provided to us. That means stopping production. We let people go, equipment stands idle, there are no profits, plans are disrupted, and we in uranium production suffer a great deal. I think that if a licence is issued, then it should protect the mining company — Vladimir Verkhovtsev, General Director, Atomredmetzoloto.
[It’s vital – ed.] to reduce time frames as much as possible. That applies to energy-related materials, and also to their use. We want to reduce the time it takes to receive a licence – to develop a quarry – to 30 days from submitting an application. For example, we plan to reduce the time taken to get approval from government bodies from 125 to 10 days. This is a genuine revolution — Alexander Kozlov, Minister of Natural Resources and Environment of the Russian Federation.
Insufficient mineral extraction equipment due to sanctions
The import substitution programme is an incredibly pressing issue, as no mining equipment is produced here. And let’s be honest, 90% of these machines come from Poland, the US, and Austria, which have completely closed themselves off to us — Anna Tsivileva, Chairman of the Board of Directors, Kolmar Group.
Conducting geological prospecting work in production areas and reducing mineral extraction tax
We need to conduct a review of how we approach geological prospecting work. First of all, it should be done where minerals are already being extracted. <...> All the infrastructure is already there, including roads and power lines. <...> This will minimize the time taken to develop deposits — Vladimir Verkhovtsev, General Director, Atomredmetzoloto.
In order to make projects more attractive to investors, we would suggest exploring the possibility of <...> reducing the rate of mineral extraction tax for projects in their initial stages – for around the first 10 years. <...> We believe that tax incentives will help shore up companies operating at mature fields. After all, these deposits are things which support whole cities. <...> With regard to supporting mining companies in the new economic environment, we are discussing extending several anti-crisis measures for the coming year. We have also endeavoured as much as possible to lift the burden in terms of paperwork — Alexander Kozlov, Minister of Natural Resources and Environment of the Russian Federation.
It’s crucial to enact long-term legislative measures to make the development of hard-to-recover oil reserves cost-efficient. Companies need to be confident that their investment in developing these reserves are protected for the long term. <...> Today we need to create an environment which makes the production of current oil reserves a cost-efficient venture. Most oil reserves are classified as hard to recover. <...> In 2020, hard-to-recover oil accounted for 88% of annual production — Vyacheslav Chirkov, Chief Geologist - Deputy General Director, Surgutneftegaz.
Providing a one-stop service enabling mining companies to purchase and prolong licences
A one-stop service will be of great help and will expedite numerous processes, because <...> we need to develop licences and provide them to those investment projects which can be implemented in a minimum time frame. With proper support from the government, we – investors and entrepreneurs – will not only overcome the sanctions, but will have the opportunity to develop the economy of our country at a more intense rate than before. We have all the tools, experience, and knowledge to do this — Anna Tsivileva, Chairman of the Board of Directors, Kolmar Group.
The end goal we are endeavouring to reach is a one-stop subsoil licencing service. We have studied the entire chain of how mining companies obtain licences. Getting all the approvals regarding adjoining natural features – that includes forests, water, and specially protected natural areas – takes 573 days on average. That’s almost two years. People are running around for two years getting approval for various documents. <...> We have studied the chain, and settled on a maximum of 100 days in which this can be done. <...> We have expanded the land size limit per applicant from three to five. <...> This will subsequently lead to 30% annual growth in investment in geological prospecting — Alexander Kozlov, Minister of Natural Resources and Environment of the Russian Federation.
The material was prepared by the Russian news agency TASS