Base Metals Mining in Russia. Economic and Legislative Overview

Contents

INTRODUCTION

Legal regulation of mineral wealth use and mining industry in Russia

1. GENERAL POLITICAL AND ECONOMIC TENDENCIES IN MINING INDUSTRY

1.1. Governmental Policy for Nonferrous Ores Mining
1.2. General economic tendencies
1.3 Market tendencies in mining industry.

2. PROJECTS

2.1. Udokan copper deposit (Chita oblast)
2.2. Chineisky deposit of copper and titanomagnetite ores (Chita oblast)
2.3. JSC MMC Norilsk Nickel

3. LEGISLATION: RUSSIAN LEGAL REGULATIONS OF MINERAL RESOURCES USE

3.1. Nationality requirements
3.2. The system of licensing of the subsurface use
3.3. Grounds for issuing licenses
3.4. Legal aspects of transferring the right to use mineral resources
3.5. The system of payments for mineral resources use
  3.5.1. Mineral mining tax
  3.5.2. Rates of the Tax
  3.5.3. Payments for the use of mineral resources
  3.5.4. One-time payments
  3.5.5. Fee for participation in bidding (auction) and license fee
  3.5.6. Regular payments for the use of mineral resources
3.6. Withdrawal of licenses
3.7. Recent the Subsurface Law amendments: Two-key to one-key, and more
  3.7.1.Context/Fundamentals
  3.7.2. The new one-key principle: specific rules affected
  3.7.3. Other amendments introduced; prospects of further change
  3.7.4. Further Developments.
3.8. The New Draft Law On the Subsurface
3.9. Practical aspects

4. REVIEW OF TAXATION SYSTEM

4.1. Russian Taxation System Framework
4.2. Corporate Profit Tax
4.3. Contributions in Kind to Charter Capital of LLC - VAT and Duty Exemptions
4.4. The Current State of VAT Deductions in Russia
4.5. Tax-Related Aspects of Russian Customs Practices
4.6. Dividend tax
4.7. Law Enforcement in Tax Disputes

5. FOREIGN INVESTMENTS

5.1. Legal regulation of foreign investments
5.2. Establishing a Legal Presence with foreign capital affiliation
  5.2.1 Representative Office or Branch
  5.2.2. Legal Entities

6. LEGAL REGULATION OF NATURAL ENVIRONMENT PROTECTION IN RUSSIA APPLICABLE TO MINERAL RESOURCES EXPLOITATION

6.1. Institutional framework of natural environment protection in Russia
6.2. Ecological Licensing during Life Cycle of an Industrial Target
6.3. Existing Mechanisms of Environmental Compliance Enforcement, Encouragement and Control
  6.3.1. General Principles of Environmental Enforcement
  6.3.2. Environmental Violations (non-compliance cases) and Respective Sanctions
  6.3.3. The Economic Mechanism of Preservation of the Environment

7. HEALTH AND SAFETY REGULATION IN RUSSIA

7.1. State Policy and Institutional Framework
7.2. State Regulation of Industrial Safety of Industrial Objects
7.3. Legislation for dangerous industrial objects
7.4. Obligatory Certification of Work Conditions

8. LABOR REGULATIONS

CONCLUSIONS AND RECOMMENDATIONS

LIST OF TABLES

Table 1. Key parameters of social-economic development of Russia
Table 2. Large deposits of nonferrous metals
Table 3. Production of alumina in the CIS.
Table 4. Mining of nickel in ores in Russia for 1991-2003, kt
Table 5. The main nickel deposits in Russia
Table 6. Dynamics of PGM mining in Russia (conventional units)
Table 7. Distribution of predicted reserves (P1, P2) of PGM by Russian regions
Table 8. Dynamics of Russian PGM balance reserves (B+C1, C2) change in 1991-2003 (by the end of year, conditional units)
Table 9. Pattern of ore mining in the Polar Division of MMC Norilsk Nickel in 2002-2004 (by mines), mln tonnes
Table 10. Pattern of ore production (by quarries and mines) of KMMC in 2002-2004, mln tonnes

LIST OF FIGURES

Figure 1. Dynamics of GDP (bulk (1) and corrected by seasonal and calendar components (2) (January 1995 (2) - 100%)
Figure 2. Dynamics of metallurgical production and production of finished metal articles compared with December 2001
Figure 3. Commodity structure of Russia exports to extra-CIS countries for the first 9 months of 2005 (2004)
Figure 4. Commodity structure of Russian imports from extra-CIS countries for the first 9 months of 2005 (2004)
Figure 5. Dynamics of capital investments, corrected by seasonal and calendar components (January 1995 - 100%)
Figure 6. Russian Ruble (R)/USD and R/EUR exchange rates (1997 - 100%)
Figure 7. Structure of production flows of Ni-containing products at Russian enterprises of MMC Norilsk Nickel
Figure 8. Procedure of Transferring Deposits in Use
Figure 9. Major Areas Available for Exploitation
Figure 10. Pattern of accumulated foreign investments in Russian economy by the end of March, 2005