Transcript CANADA-ITALY TRADE AND INVESTMENT FORUM

Mining in Russia
March 2007
Data provided by Ivan Zavedeev
SNC-Lavalin Interantional,
Moscow Office
Important highlights – Russia 2007

Increasing degree of State control over business
environment

New tax / legislative reform tends to increase
transparency of local operations for investors

Economic boom due to increasing demand for the
principal exported and locally used mineral resources
(oil, gas, coal) and value added products (steel and steel
made products, non-ferrous metals) – brought additional
revenues to Russian business
Availability of investment resources and high degree
of depreciation of the local plants assets (~70-80%)
form steady grounds for development of the plants
modernization and new construction

Important highlights – Russia 2007

Development of financial leasing of equipment

Partial tax exemptions for the new projects

Increasing activities of local and foreign financial
institutions and State export promotion agencies
Mining in Russia
Reference information
Mining in Russia
Iron ores
EXTRACTION OF IRON ORES IN RUSSIA
METALLOINVEST
EUROCHEM
MDM GROUP
GAZMETALL
Kov dor Mine &
Concentrator
Kareliapellet
concentrator
EURAZHOLDING
Olenegorsk Mine&
Concentrator
KostomukshaMine
&Concentrator
SEVERSTAL
UGMK
Mikhailov Mine
&Concentrator
Bogoslov sk Mine&
Concentrator
Lebedinskiymine&
concentrator
Kachkanar Mine&
Concentrator
StoilenskiyMine&
Concentrator
Korshunov skMine
&Concentrator
VysokogorskMine&
Concentrator
KMA Ruda mine &
concentrator
BakalskMine&
Concentrator
Kuznetsk
Metallurgical
Plant - mine
MagnitogorskmetallurgicalPlant
Mine & Concentrator
Irbinsk Mine&
Concentrator
TeiskMine
Novo Lipetsk
Metallurgical Plant
(NLMK)
ShergeshMine
EXTRACTION
AbakanMine
OPEN PIT
SCALE: 10
MLN. TONS
MMK JSC
Steel Group "MECHEL"
Sokolovsko-Sarbaisk Mine and Industrial
Complex (Kazakhstan)
UNDERGROUND
MINE
MIXED
Key supplies
Ownership
COMPANY
SUBSIDIARY
EURAZHOLDING
INVESTMENTS,
MLN. $
2004
2005
15
43
Kachkanarskiy GOK
12,5
29,8
Vysokogorskiy GOK
4,45
5,71
Mikhailovskiy GOK
28,5
35
Lebedinskiy GOK
50
250*
Stoilenskiy GOK
35
45**
KMA Ruda
2,8
6,2
Karelskiy Pellet
42,7
80
Olenegorskiy GOK
19,7
38
Korshunovo GOK
70***
40
Kovdorskiy GOK
15,7
16,4
EURAZ RUDA
METALLOINVEST/GAZMETALL
NLMK
SEVERSTAL
MECHEL
MDM
Investments im mines & concentrators by Russian Companies (2004-2005)
700
600
Investments, mln. $
500
400
300
200
100
0
2004
2005
EURAZHOLDING
31,95
78,51
METALLOINVEST/GAZMETALL
78,5
285
NLMK
37,8
51,2
SEVERSTAL
62,4
118
MECHEL
MDM
TOTAL
70
40
15,7
16,4
296,35
589,11
Commercial grade Iron ores production in Russia, mln. tons
100
80
60
40
20
0
1992
1995
Iron ores extraction in Russia, mln. tons
1998
1999
2000
2001
2002
2003
2004
1992
1995
1998
1999
2000
2001
2002
2003
2004
82,1
78,3
72,6
82,3
86,8
82,8
86,1
91,8
94,9
Iron ores derived products (concentrate, agglomerate, pellets)
sales by producers, mln. tons (2004) - EXTERNAL MARKETS
UKRAINIAN PRODUCERS
35%
MDM GROUP
SEVERSTAL
6%
8%
METALLOINVEST/GAZMETALL
45%
NLMK
6%
Commercial iron ores derivatives (concentrate, agglomerate, pellets) sales on Russian internal
market by local and foreign Companies, mln. Tons
11%
3%
1%
26%
4%
17%
25%
13%
EURAZHOLDING
METALLOINVEST/GAZMETALL
NLMK
SEVERSTAL
MDM GROUP
MECHEL
Urals Metal & Metallurgy Company
SSGPO (Kazakhstan)
Mining in Russia
Copper
RUSSIAN COPPER INDUSTRY
KolaMMC
PolarMMC
Pechenganickel mines:
Tsentralnoy e / Sev erny /
Semiletka/Sev erny -Gly bokiy
Pechenganickel concentrator - roaster-smelter
(blister copper)
Severonickel copper ref inery
Copper Smelter
Norilsk-1 / Talnakh concentrators
Novgorod mettalurgical
plant
Norilsk
Norilsk -1 / Talnakhsk / Okty abrsk / Taimy r
/Medv ezhiy ruchei / Zapoly arnoy e mines
TARNSERSKOY EDEPOSIT
Sev eny copper/zinc mine
Svyatogor Smelter
SUMZ Smelter
V. Pushma
Karabashmed blister
copper smelter
Ky shty m
Uchalinsk mine and concentrator
Urupskiy mine
and concentrator
Kyshtymskiy electrolitic copper plant
PODOLSKOY EDEPOSIT
Gaiskiy mine and concentrator
Uralgidromedmed
plant
Y UBILEINOY EDEPOSIT
Kazakhmys
(Kazakhstan)
By strinsk
Mine
Unit
Russian
Copper
Company
JV with
Kazakhmy
s
Mineable deposits
Blister
copper
UDOKAN DEPOSIT
Alexandrovsk mine and concentrator
Mednogorsk blister
copper smelter
Bashkirskiy
copper -sulphur
Plant *
Scale: copper production
100 000 tons / y ear
Solnechy Mine and Concentrator
- copper production closed
Uralelektromed Smelter; subsidiaries
Kirovograd copper smelter;Raduga Verkhnaya Pushma - f erroalloy s,
Verkh-Neiv inskmine, Safianovo copper mine
Ref ined copper
Legend:
1) propiertorship
ZAO Shilka
Minerals
(100%
owned by
PD)
Lazurnoy e copper
porf irite deposit (license)
2 copper deposits in
Amur region
Phelps Dodge
USA
2) strategic ownership interest
EXPORTSTOCHINA
Discov ered deposits av aliablef or dev elopment
* Bashkirskiy copper-sulphur Plant is owned by Gov t. of Bashkiria and is under gov ernance of UMMC
Production of cathode copper by Russian Companies (% ) - 2005
10%
52%
38%
Norilsk Nickel
Urals Mining and Metallurgical Company
Russian Copper Company
Mining in Russia
Nickel
Mining in Russia
Gold
10 T OP GOLD MINING COMPANIES IN RUSSIA
Company
1 Norilsk Nickel
Share holders
Interros (59%)
Total
2 Amuro
3 Highland Gold
FF&P (31%)
4
5
6
7
8
Total
Susumanzoloto
Omolonskaya MMC
Aldanzoloto
ByriatZoloto
Polymetal
Total
9 Yuzhuralzoloto
10 Peter Hambro
Tas-Uriakh and others
Mnogovershinnoye
Darasunskoye
Novoshirokinskoye
Mayskoye
Khristov (76%)
Kinross Gold (98%)
Alrosa
High River (51%)
IST (100%)
Portfolio investors
EXTRACTION, THOU. OUNCES
Norilsk Nickel
Amuro
Highland Gold
Susumanzoloto
Omolonskaya MMC
Aldanzoloto
Byriatzoloto
Polymetall
Yuzhuralzoloto
Peter Hambro
Deposits
Polus-Olimpiadinskoye
Matrosov mine - Natalkinskoye
Lenzoloto
Extraction as by product
Titimukhta
1303
194
193
185
176
156
156
144
129
121
Omchak, Svetloye,Vetrenskoye
Kubaka, Birkachan
Kuranakhskoye
Irokinda, Berezitovoye, Zynholba
Vorontsovskoye
Khakandzha
Dukat
Lunnoye
Bereznyakovskoye, Kochkarskoye
Pokrov mine, Pioneer, Omchak
Extracted, thou. ounces
Extracted, %, Russia Deposit reserves, mln. Ounces
832
15
22,51
23
0
7,88
312
5
6,43
136
2
1,1
1303
23
37,92
194
3
5
193
185
176
156
156
93
8
20
24
144
129
121
RESERVES, MLN. OUNCES
Norilsk Nickel
Amuro
Highland Gold
Susumanzoloto
Omolonskaya MMC
Aldanzoloto
Byriatzoloto
Polymetall
Yuzhuralzoloto
Peter Hambro
3
3
3
3
3
2
0
0
0
3
2
2
37,92
5
17
3,2
0,39
4,1
2,37
6,56
2,4
5,29
17
3,2
0,39
4,1
2,37
1,74
2,07
0,95
0,48
6,56
2,4
5,29
EXTRACTION, THOU. OUNCES - 2005
5%
4%
5%
Norilsk Nickel
6%
Amuro
6%
47%
Highland Gold
Susumanzoloto
Omolonskaya MMC
Aldanzoloto
Byriatzoloto
Polymetall
6%
Yuzhuralzoloto
7%
Peter Hambro
7%
7%
RESERVES, MLN. OUNCES
3%
6%
8%
Norilsk Nickel
3%
Amuro
5%
45%
Highland Gold
Susumanzoloto
Omolonskaya MMC
Aldanzoloto
Byriatzoloto
0%
4%
Polymetall
Yuzhuralzoloto
Peter Hambro
20%
6%