Russia’s Mining Industry and the Eastern Vector: Production, Processing, Sales and Delivery, Technological Sovereignty, Personnel and New Projects
Only a third of the Far East's large deposits are now being developed
The Far East is the breadbasket, the forge of our country in terms primarily of solid minerals: 98% of all tin reserves are contained in the Far East, 60% of tungsten, 48% of gold and 38% of copper. As a matter of fact, out of 4,546 deposits with commercial categories of the reserves only 35 % or slightly more than one and a half thousand are under development today. This, on the one hand, indicates a huge potential that has not yet been realized, but on the other hand, that there are systemic problems as to why these deposits have not yet been brought into development — Evgeny Petrov, Head, Federal Agency for Subsoil Use.
The Far East could become an export flagship
The Far Eastern Federal District has the potential to become a leader in almost all aspects of the fuel and energy sector: production, refining and exports — Sergey Mochalnikov, Deputy Minister of Energy of the Russian Federation.
The government has developed a new programme, which fits into the eastern vector. It targets reorientation towards Asia Pacific countries, China in particular. China will help us, everyone hopes so. But China, as we know, is an Eastern country, not an easy one — Evgeny Petrov, Head, Federal Agency for Subsoil Use.
Thanks to its Far Eastern reserves, Russia has enough gas for a hundred years
Explored reserves in the Far East are about 6.8% of Russia’s total. Russia’s total explored reserves are about 48–49 trillion cubic metres. This is enough gas for our country as a whole and for the macro-region for a hundred years — Pavel Suranov, First Deputy General Director, Primorsky Gas.
Russia has access to absolutely new markets in Asia
Now everyone has been remembered coal. And many major suppliers, such as Australia and Indonesia, have oriented their flows towards European markets, which have been freed up by the departure of our producers. But, you know, everything in life is cyclical. They shifted to Europe and vacated Asia for us. And a market like India – apart from China, which we are talking a lot about today – is a potentially big consumer for us — Pavel Suranov, First Deputy General Director, Primorsky Gas.
Russia could become an international trendsetter in mining and geological audit
Now, of course, it is a bit difficult to talk about global trends. We see that both the political and energy balance has changed around the world. We now have a unique chance to become a trendsetter, including in mining and geological audits – to unite all mining countries and make seamless work with geological information and its assessment. So that our results of the State Commission on Mineral Reserves or Russian independent auditors can also be accepted in China, India and we do not have to go through the trouble of involving a huge number of independent experts to align the results — Evgeny Petrov, Head, Federal Agency for Subsoil Use.
Private companies are in no hurry to look back at government priorities in exploration
With market-based approaches in the industry, one needs to understand that exploration is a costly and risky activity with a slow return on investment. Therefore, private companies are exploring in their own interests rather than guided by government priorities — Sergey Mironov, Leader of faction A Just Russia in the State Duma.
Supply routes have changed so much that the problem of transport infrastructure capacity has become a real issue
A number of regions cannot export products because the railway capacity does not allow us to do so. And we missed out on a great time when coal prices were as high as possible. We have billions unsold roubles in warehouses — Anna Tsivileva, Chairman of the Board of Directors, Kolmar Group.
Gold mining faces an unprecedented combination of economic turmoil
In my 63 years in the gold industry, this is the first time I have encountered the issue of not knowing where to sell the gold? At what price? London Good Delivery – commanding our gold to be removed – announced no one would buy gold. The Bank of Russia took advantage of the situation – a 15% discount. Then the rouble got stronger, so the price of gold fell from RUB 7,000 to 3,500 thousand a gram — Viktor Tarakanovsky, Chairman, Russian Gold Prospectors’ Union.
Sanctions raise the issue of in-house technology solutions for the industry with renewed vigour
Due to the rather difficult situation both politically and economically, the mining complex is, of course, facing a rather serious problem of maintaining the existing development trends and improving those technological solutions that absolutely need to be introduced today. In this case, it requires both time and development of our technological complex — Valery Zaharov, Director, Institute for Comprehensive Exploitation of Mineral Resources of the Russian Academy of Sciences.
Even relatively recent plans for the development of the mineral resource base are outdated and need to be revisited
It must be explicitly recognized that the strategy for the development of the mineral resource base of the Russian Federation until 2035, which was adopted in 2018, does not meet modern requirements and should be completely reconsidered — Sergey Mironov, Leader of faction A Just Russia in the State Duma.
The problem of human resources for the industry has not been solved despite years of investment and development
A lot of investment has come in: the industry is developing. But, frankly speaking, the Far East has failed to create a mining school, a centre of expertise and competence. Specialists come and leave. Engineers come, start a company and leave. People of working professions pass through the Far East without accumulating expertise. We are still very dependent on large federal educational institutions in this sense. It seems to have accumulated that number of enterprises, recorded growing demand in today’s geopolitical situation, which has shifted the centre of gravity to the Far East — Elvira Nurgalieva, First Deputy General Director for Social Development, Corporation for the Development of the Far East and the Arctic.
Education authorities are waiting for a training order for the industry, but market players seem to be in no hurry to give it
In Russia, more than 80 universities in all eight federal districts train personnel for the mining industry. A separate group of majors and specialties is called Applied Geology, Mining Engineering, Oil and Gas Engineering, and Geodesy. In the past academic year, a total of 5,286 people studied in this group. These numbers are formed, among other things, based on the needs stated by the regions, universities and in partnership with businesses that have a demand for relevant training areas. In the Far Eastern Federal District, 15 universities and their branches train staff for the mining industry. Year after year, we are increasing the number of state-funded places to study at universities in the region — Dmitry Afanasiev, Deputy Minister of Science and Higher Education of the Russian Federation.
A few months ago, we did a mass mailout. We took a hundred of the largest subsoil users and inquired about their demand for personnel, the competences in short and medium-term demand and the areas that need to be developed in general. The majority of the ten biggest ones replied, ‘we do not need anything: we are fine — Evgeny Petrov, Head, Federal Agency for Subsoil Use.
The Far East Development Corporation has calculated the staffing needs. Meanwhile, universities are unable to recruit students
More than 400 companies in the Far East are engaged in mining and processing, with more than 120,000 people involved today. We see that already in the next four years an additional 25,000 people will be needed for those enterprises that are currently in the investment stage, as well as for the development of existing ones. The need for personnel is enormous — Elvira Nurgalieva, First Deputy General Director for Social Development, Corporation for the Development of the Far East and the Arctic.
Every summer there are calls from deans and rectors of geology universities asking for students, because there is a shortage. They do so because we have a school movement called Young Geologist, and we actually send all of our young geologists to universities — Evgeny Petrov, Head, Federal Agency for Subsoil Use.
It is not so much a question of quantity as of the quality of specialists produced by universities
The workforce decides everything. This is the main slogan. What actions and what measures should be taken to make this a priority in the Far East, not in Central Russia? To make it the way they did it in the West Siberian oil and gas industry: the institutes in Tyumen – it was quite a small town then, of just 400 thousand people – ensured that this great project is filled with human resources. We need the same measures and actions to ensure that the existing and future projects on are also staffed — Yury Shafranik, Chairman of the Board, Union of Oil and Gas Producers of Russia.
The question is not how many students graduate, but it is a more profound one: what kind of education they get. Because, unfortunately, the fundamental Soviet school, no matter how much one criticizes it, has already been lost. Here we need to get companies involved in the educational programme and allocate the remaining staff who can provide knowledge sought after not only by business, but also by the state — Evgeny Petrov, Head, Federal Agency for Subsoil Use.
Subsoil users will have their lives simplified by prioritising their real business plans over tick-box documentation
Many companies formally go in for reserve estimates and design documents for field development, just to have some sort of document. They can often be quite different from a company’s business plan. In fact, all our work today is aimed at aligning and simplifying the life of the subsoil user as much as possible, so that they work based on one document – their business plan. The state should only understand the main parameters for the development of these fields at the macro level in order to take them into account in planning, primarily in planning and infrastructure development — Evgeny Petrov, Head, Federal Agency for Subsoil Use.
Russia will ensure easy transport of gas between industry centres in the Far East
Power of Siberia 2, Power of Siberia 3, and the Sakhalin–Khabarovsk–Vladivostok gas pipeline project will be interconnected, allowing huge gas reserves to be moved between them — Pavel Suranov, First Deputy General Director, Primorsky Gas.
Industry and science await extra support for demand from government
Unfortunately, the development of the base of metals for high-tech industry in Russia today is held back primarily by low demand. Today, this is driven by the fact that we technologically need to link the following processes: extraction, enrichment, deep processing, and consumption. To overcome these trends for strategic metals, a state order must be formed to obtain strategic parity — Valery Zaharov, Director, Institute for Comprehensive Exploitation of Mineral Resources of the Russian Academy of Sciences.
Who will buy gold? This is what it has come to! In view of the sanctions, our proposal is that the government should buy at least 300 tonnes a year out of 360. The price of gold in Russia should be set by the government. Our proposal, based on the cost of production: gold should be at least RUB 4,300 per gram. And this price does not even account for all the costs of exploration! — Viktor Tarakanovsky, Chairman, Russian Gold Prospectors’ Union.
New classification of solid mineral reserves to emerge
We have changed the classification for the oil industry, and as of January 1, it is already in full force and effect. We have introduced the concept of ‘profitable reserves’, when we can get a snapshot of profitable reserves in our country and their availability under specific macroeconomic parameters at a given moment in time. This is a very important factor, and we want to do the same for solid minerals. We will approve a new classification by the end of the year. Today, this work is still in progress — Evgeny Petrov, Head, Federal Agency for Subsoil Use.
The work of small companies in exploration should be supported
The industry already has efficient independent geological companies, including junior ones. Their work should be supported. The application principle for obtaining licences should be developed. Access to geological information should be facilitated. Raw material and tax incentives should be established, and the issues of selling the final products of geological exploration as a commodity should be regulated — Sergey Mironov, Leader of faction A Just Russia in the State Duma.
Authorities will crack down on dormant licences to clamp down on speculators
We are revoking licences en masse for companies that are not operating at all. This is because these are so-called dormant licences. To clean up the industry as much as possible from all sorts of speculation — Evgeny Petrov, Head, Federal Agency for Subsoil Use.
The Ministry of Education and Science is ready to increase the number of state-sponsored scholarships for geology majors
It is very important that the constituent entities of the Far Eastern District, together with universities and key employers in the mining industry, formulate quantitative requirements that are justified and take into account new projects and submit them to us. We will be ready to plan more state-sponsored scholarships that the Ministry currently has at its disposal — Dmitry Afanasiev, Deputy Minister of Science and Higher Education of the Russian Federation.
The industry is unlikely to systematically address the shortage of staff for the Far East without universities
It is imperative to invite universities to report on the problems they have and companies that have best practices in terms of human resources development. So that these projects can be scaled to universities as well. Because, unfortunately, we will not be able to overcome this problem without it — Evgeny Petrov, Head, Federal Agency for Subsoil Use.
Ten universities in the Far East will receive additional support
Together with our colleagues from the Ministry for the Development of the Russian Far East, we will be selecting at least ten universities in the Far Eastern Federal District based on development programmes to support their infrastructure, training and facilities, staffing, innovative educational programmes, all forms of research and interaction in terms of applied research in specific industries. Since such programmes require the support of regions, we would very much like for the interests of the extractive industry to be represented in them — Dmitry Afanasiev, Deputy Minister of Science and Higher Education of the Russian Federation.
Personnel shortages in the Far East could theoretically be filled by young people from Ukraine
It seems to me that now it is necessary to attract all young people from Ukraine politically and socially to areas from Krasnoyarsk to Sakhalin. That would be an invaluable social and political success — Yury Shafranik, Chairman of the Board, Union of Oil and Gas Producers of Russia.