My Findings About The Russian Economy

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May 19th, 2012
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As both the global resources business and the Russian economy are changing, the Russian mining industry will change. Two key trends will shape the development of the industry in the next decade: a struggle for competitiveness, increasing productivity and investing in new technology, and internationalization of the key players, with western companies entering Russia and the Russian champions focusing more on the west. Where miners around the world try to increase capacity, many Russian miners first have to focus on reaching the existing capacities of operations. Russian competitiveness stays behind because of a legacy of old assets with outdated equipment and a lack of solid institutions and skilled workforce as dryer machine.

According to the World Economic Forum Russian productivity stays 72% behind OECD average. Although the overall education level is relatively high, skilled labor for many industrial tasks is lacking. Probably the most important and challenging issue in increasing competitiveness of the Russian is the portfolio of old mining and processing assets with old, unreliable equipment. Much Russian-made equipment is still in use in operations, resulting in low efficiency. The key focus of the Russian mining industry and responsible government institutions in the next decade will be to modernize the operations and to build the infrastructure required to bring new projects on steam. Organizing investment to replace equipment and processing lines will be a difficult task.

Another part of the struggle for competitiveness is the workforce reduction challenge. Increasing efficiency typically means reduction of the workforce, leading to social tension in the mining regions. Alignment with government employment programs will be crucial to sustainably reduce the labor intensity of Russian mining. As the professional manufacturer of complete sets of mining machinery, such as raymond mill, Henan Hongxing is always doing the best in products and service. ore beneficiation:http://www.hxjq-crusher.com/63.html
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The development of exchange rates will be important in the future of Russian competitiveness. Operating costs are incurred in rubles, while revenues are for a large part based on dollars. The Russian ruble slowly grew stronger between 2002 and 2008, increasing the relative cost of Russian production. The economic crisis made exchange rates jump to the level of 2002 again, helping the recovery of the Russian industry (Figure 3). However, when the Russian economy grows in strength and the USA continues to struggle with a government deficit the ruble is likely to appreciate again, hindering competitiveness of Russian.

The Russian mining industry sees Russian companies moving abroad and Western companies and investors trying to gain exposure to the Russian potential. ARMZ is gaining control over uranium deposits in Ukraine; Severstal is aiming for iron ore in Guinea; Rusal, Norilsk and Evraz are buying many assets abroad rotary kiln. At the same time Rio Tinto is looking for ways to mine diamonds in Russia; both BHP Billiton and Rio Tinto have set up exploration partnerships in the country; and several international gold mining firms are opening mines in Russia. However, a law regulating ownership structures of companies in strategic sectors, signed by mr. Putin in 2008 as a reaction to the economic crisis, restricts the voting rights of foreign owners of Russian operations, making it hard for western companies to control operations in Russia.

Russia already is an important mining country, and based on the reserves in the country has the potential to grow even bigger. However, to realize this potential, challenges of productivity, infrastructure and international alignment have to be overcome. Whether foreign companies will get a chance to play a role in the new developments or not, the Russian mining industry will be present on the global mining stage.

Article Source: http://www.informationbible.com/article-my-findings-about-the-russian-economy-202382.html

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