Russia Mining Report Q3 2016

Date: June 22, 2016
Pages: 79
US$ 1,295.00
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)
ID: RF0CD059294EN

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Includes 3 FREE quarterly updates

BMI View: Russia's gold and coal production growth will be the sector's relative bright spots, while PGM's and iron ore output growth will grind to a halt. Low metal prices, the country's inadequate infrastructure and Western sanctions will continue to limit the sector's production growth.

Latest Developments & Structural Trends
  • With 157bn tonnes (bnt) of coal deposits, Russia's holds the second largest recoverable coal reserves in the world. We expect Russia's coal production to grow from 392mn tonnes (mnt) in 2015 to 427mnt in 2019, as production ramps up in the country's Kuznets basin. This would represent an average annual production growth of 2.3% during 2016-2020, significantly lower than the average 6.4% during 2010-2014.
  • We forecast Russia's gold output to grow from 8.0 million ounces (moz) in 2016 to 8.4moz in 2020. This would represent an average annual growth of 1.5% during 2016-2020, significantly slower than 5.3% during 2011-2015.
  • We have revised up our iron ore forecasts to 2020. We expect iron ore prices to average USD48.0/tonne during 2016 and USD43.0/tonne in 2017, up from our previous forecasts of USD38.0/tonne and USD40.0/tonne, respectively. Our upwards revision is predicated on the strong H116 iron ore price rally due to increasing demand from Chinese steel mills (see: ' Iron Ore: Chinese Stimulus Only Short-Term Boost To Prices', May 5).
  • We've revised down Russia's 2016 output forecast from 2.3% to -0.5% for 2016 due to weaker than expected output from Russian iron ore producer Mettaloinvest. Despite this, Russia's iron ore production growth will be supported by the country's vast iron ore reserves and Metalloinvest's strategy to increase output through innovation at the firm's existing mines over our forecast period to 2020. Russia holds more than 25bn tonnes of iron ore reserves, making it the third largest holder of reserves, after Australia and Brazil, respectively. We forecast Russia's iron ore production to row from 107mn tonnes (mnt) in 2016 to 117mnt in 2020, averaging annual growth of 1.8% during 2016-2020, showcasing consistent growth following 2.4% y-o-y during 2011-2015.
BMI Industry View
  Table: Russia Mining Industry Value
Industry Forecast
Coal: Growth To Be Supported By Eastwards Drive
  Table: Coal Production Forecast (Russia 2015-2020)
  Table: Russia - Distance From Coal Production Area To Shipping Seaport
Gold: Rouble Weakness To Support Output
  Table: Gold Production Forecast (Russia 2012-2020)
Iron Ore: Subdued Growth Ahead
  Table: Iron Ore Production (Russia, 2014-2020)
Nickel: Tough Times Ahead For Miners
  Table: Russia - Nickel Mine Production Forecast
Palladium: Gradual Growth In Coming Years
  Table: Palladium Production
Platinum: Reserves Offer Growth Potential In The Long Term
  Table: Russia - Platinum Production
  Table: Russia - Largest Platinum Projects
Industry Risk/Reward Index
Russia Risk/Reward Index
Europe: Risk/Reward Index
  Table: Europe - Mining Risk/Reward Index
Regulatory Development
Commodities Forecast
Commodities Outlook
  Table: BMI Commodities Price Forecasts
Competitive Landscape
  Table: Russia - Key Financial Data
Company Profile
Polyus Gold
  Table: Polyus Gold - Financial Data
  Table: SUEK Subsidiaries
Global Company Strategy - Norilsk Nickel
  Table: Select Commodities - Price Forecasts
Company Analysis
  Table: Norilsk Nickel - Key Projects
  Table: Norilsk Nickel - Key Financial Data
Regional Overview
Industry Forecast Methodology
Risk/Reward Index Methodology
  Table: Weighting Of Indicators
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