Oil and Gas, Rare earth metals
Industry and Trade Minister of Russia Denis Manturov held a meeting on issues of industrial development of rare metals (REM).
Since 2013 in Russia has been implementing sub-program of rare-metal industry developing. At the first stage - until 2016 - to be set up scientific and technological capacity in the industry, on the second - up to 2020 - is planned to establishing industrial plants.
Opening the meeting, Denis Manturov stated that the first stage of the subroutine is focused on technology development, on the basis of which will be produced rare earth metals (REM) and products using them. For this purpose has allocated over 4.6 billion rubles of budgetary funds. This draws the same amount of extra-budgetary funding.
The Government has allowed Russian investors to conduct geological exploration and production at areas of federal importance till the completion of prospecting. Previously, companies had to wait for five years until prospecting licenses would expire, and ask for permission to develop from the Government. Market participants support the changes, hoping to benefit from projects earlier. The access to strategic areas for foreign investors is limited for a while, but the Ministry of Natural Resources plans to simplify it too.
On October 28, the Prime Minister Dmitry Medvedev signed a decree (published on Tuesday), according to which Russian companies are entitled to conduct geological exploration and production at areas of federal subsoil before the completion of geological study. According to the explanatory note, the decision removes the contradictions between regulations, which defined this order in different ways: the regulation, approved by the Government in September 2008 and Article 6 of the Federal Law "On Subsoil". The decree also introduces a mechanism for attributing subsoil users to Russian or foreign ones through submission of documents to Rosnedra and the FAS. Now companies, controlled by foreigners, can obtain access to strategic fields with the permission of the Government.
During formationof geological exploration plans for the medium term it’s necessary to pay more attention to strategic and highly liquid types of raw materials, thematic and research types of work. Head of the Rosgeologiya’s long-term planning department Alexander Karpuzov said this, spoken at a roundtable on "Sustainable development of the industry and economic risks in conditions of sanctions".
The priority in the plan of projects geological exploration through until 2020, approved by the Scientific and Technical Council of Rosnedra, is given to the development of the most popular mineral resources among private companies (oil, natural gas, precious metals, diamonds) and issues of national security, import substitution, development of high-tech and innovative industries are weakly considered, Rosgeologiya notes.
Today 259 objects of subsoil use are registered in the East Kazakhstan region, including 227 - for solid minerals, one for hydrocarbon raw materials (oil, Zaisan), 22 for groundwater and others.
In addition to the use of non-ferrous and rare metals work on small deposits of non-metallic materials (sand, clay, etc.) becomes more intensive. The number of subsoil users in the region is growing every year, experts say.
The output of rare earth metals in Russia is almost absent despite of the potential demand from the part of domestic and foreign companies. The reasons are the extremely difficult and expensive methods of their production, absence of industrial production though in Russia there is a technology of extraction of rare earth metals out of phosphorous acid – a semi-product of processing of apatite concentrate.
“This technology is based on the sorption extraction of rare earth metals’ combinations out of wet-process phosphoric acid at a special machine installed in the cycle of production of mineral fertilizers by the sulfur acid scheme with further extraction cleaning and separation of rare earth metals. Such production differs by its effectiveness due to the absence of necessity to found a mining and processing plant, development of transport and logistics schemes as well as the absence of radioactivity and necessity of waste burial, that is typical to rare earth metals extraction out of other raw materials sources.
As the Kommersant has got to know, joint venture of Rostekh and the ICT Group of Alexander Nesis on development of the Tomtorskoe rare earth metals deposit in Yakutia has faced difficulties with the energy supply. Rostekh wants to create generation there and to use gas of the Pronchischevskoye field for this, but this site is located in a protected natural area. Local authorities are willing to change the status of the reserve, but as the Ministry of Environment, as well as the habitants oppose this. As a result, head of Rostekh Sergei Chemezov asked for support of President Vladimir Putin.
The head of Rostekh, Sergei Chemezov has asked Vladimir Putin to give instructions to hold a competition for the extraction mining licenses for the Pronchischevskaya oil and gas area in Yakutia before the end of the year. This is stated in a letter of Mr. Chemezov dated July 25th. The Rostekh’s head explained that the joint venture of the state corporation and ICT Group of Alexander Nesis Triark Mining would develop the Tomtorskoe rare earth metals deposit in Yakutia (investment will be about $1 billion), and taking into account "the severe climate conditions and geographical remoteness" the projects need an independent power supply. According to Sergei Chemezov, back in February, the President of the republic Egor Borisov asked the head of the Ministry of Environment Sergey Donskoy to include the Pronchischevsky site in the list of projects for geological exploration
The Russian Prime Minister Dmitry Medvedev has signed the decree on the holding of an auction for the right to use the subsoil site of federal significance, which includes Titanovy-1 at the Yaregskoye field (Komi), in 2014.
The decree was made by the Ministry of Natural Resources.
The document was developed on the assumption of the requirements of the Russian Law “On Subsoil”.
The law implies that the decision to hold auctions for the right to use subsoil areas of federal importance, the composition and procedure of auction fees and the procedures and conditions of such auctions with respect to each subsoil area or group of areas is made by the Government of the Russian Federation.
The Kyrgyz Government has adopted a package of measures aimed at improving the conditions for investment in the mining sector; the corresponding document was signed by the Prime Minister of the Republic, Djoomart Otorbaev on Wednesday.
In particular, the Government defined the authority to perform certain types of expertise that will contribute to a more comfortable purchase of a license and a package of geological information; the procedure for participation in tenders and auctions for foreign legal entities was simplified. In addition, the share of the costs for participation in auctions was reduced for foreign investors.
About 80% of the Kyrgyz territory is located in mountainous regions, which are extremely rich in minerals. Copper, oil shale, peat, gas, oil, precious and rare earth metals are mined in the country. Rich deposits of antimony, mercury, uranium, zinc, tin, tungsten, lead etc. are located here.
On July 2nd 2014 the information on the work carried in the framework of the realization of the State program of the planned industrial-innovation development of Kazakhstan for 2010-2014 was released. The State program of the planned industrial-innovation development aims for the stable and balanced economic growth via the diversification and rise of its competitiveness.
Until 2015 the priority of the planned industrialization policy was the realization of large investment projects in the traditional export-oriented sectors of economy, with the multiplication of new business opportunities for small and medium business via the targeted development of the Kazakh contents, for further processing.
Speaking about the regions, particular attention should be paid to the Atyrau region. There are certainly positive results – compared to 2008 the real growth of gross regional product was 10%, it reaches 3,635.1 bln tenge. In the framework of the industrialization map 27 projects in various sectors of economy for the amount of about 68 bln tenge have been put into operation.
The oil and gas production from 2008 has risen 1.5 times: oil – by 149%, gas - 157.4%. Atyrau will become the center of the oil and gas cluster, one of the main directions of which will be car manufacturing. It is planned to launch 3 unique projects.
The East-Kazakhstan region is the first by the volumes of innovation products in the Republic. The regional enterprises produce ¼ of the entire innovation production of the country. The regional industrialization map comprises 61 projects with the investment cost of 685.2 bln tenge, 70% of which are of high production stage. Within 4 years 37 projects for the total amount of 201 bln tenge have been put into operation.
There are 13 projects in the region on the construction of small water and wind electric stations on which preparatory works are held. It is explained by the deficit of electric energy which amounts to 2 bln kWh that forces to look for new energy sources. The total cost of the projects is about $200 mln. Among the main goals of the East-Kazakhstan region is the project of the National company “Kazatomprom” on the foundation of the first in Kazakhstan enterprise on the production of solar batteries with the capacity of 70 MW a year.
Another large project of Kazakhstan in 2014 is the chemicals plant on reagents production for gold mining enterprises in the Zhambyl region. The plant’s cost is 13 bln tenge. This is the first chemicals enterprise in Kazakhstan that produces this type of import-replacing products.
In total in the framework of the industrialization map 41 projects with the total investment volume of 597 bln tenge are realized in the Zhambyl region. 27 projects for more than 100 bln tenge have been put into operation. Together with the developed sectors, such as construction and agriculture, the projects in the mining and metallurgical, chemicals, light industry, electric engineering, pharmaceutical and other spheres are realized.
The North-Kazakhstan region comprises 31 projects for 38 bln tenge. At the present time 28 projects for 27 bln tenge have been put into operation. The stake of projects in the processing industry rose from 11 to 17%. From 2010 the export of the enterprises made up 4 bln tenge.
The investment into main capital has doubled. More than 100 projects aim for being included in the industrialization map. It is planned to launch the project on the energy boiler equipment.
In the framework of the industrialization 24 projects for the total amount of 150 bln tenge are being realized in the Kyzylorda region. Until 2020 the priority directions are the development of car manufacturing, metallurgy, production of construction materials, agricultural sector, tourism and recoverable sources of electric energy.
20 projects are submitted to the Ministry of Industry and New technologies to be included into the industrialization map. It will comprise 4 large projects: construction of a solar electric station with the capacity of 50 mW; development of the “Shalkiya” lead-zinc deposit; car manufacturing plant and a ferroalloys plant on the production of special and composite alloys.
The Karaganda region shows good results. 80 projects are realized in the region for the amount of 500 bln tenge. 53 projects for 100 bln tenge have been launched. The gross regional projects from 2010 rose from 1.9 to 2.6 trln tenge. The region is the 4th in the country by the volume of the gross regional product.
A half of the region’s gross regional product is produced in the industrial sector – 47%. Within the last 5 year the growth speed of the industrial goods production rose 35%. In 2010-2014 the growth of the production volume from 300 to 700 bln tenge is forecast (not taking into account the volume of Arcelor and Kazakhmys).
The Akmola region plans to use the Kazakh raw materials purchased in the domestic market in the production process. The production will meet the needs of agricultural goods producers of Kazakhstan and will be exported outside the country.
A new innovation concrete plant was put into operation in the Mangistau region. The plant will increase the speed of the accommodation construction in the framework of the housing program. Concrete will be produced by a dry method, by the modern and “clean” technology that has the minimal influence on the environment.
“CaspiiCement” actively participates in the planned industrial-innovation development program. Due to the plant’s activity the dependence on imports will fall, local production is being formed.
The Pavlodar region gave a start to a new plant on the ball-rolling production which will produce balls for the mining enterprises of the country using modern Italian equipment. The project gains particular importance by the fact that FerroSilicoAluminium – “Kazakh Alloy” will be used – the author of which is the President of Kazakhstan, N. Nazarbaev. The plant plans not only to cover the needs of the local market but to enter the CIS markets. More than 50 new plants were launched in the region.
The industrialization map of the Aktyubinsk region comprises 76 investment projects for 590.6 bln tenge. By today 70 projects have been launched. The enterprises of the processing sector are supported by the National Fund. It is planned to help enterprises enter not only the local market but also ship products to the foreign market, including the near-the-border regions of Russia.
36 projects for 286.7 bln tenge are realized in the West-Kazakhstan region. For the last 2 years 360 bln tenge of investment have been attracted. The main focus is made on the development of the non-raw materials sector of the economy. On the basis of one of the processing enterprises the production of transformers with the capacity of up to 5,000 pieces a year with the value of 3.1 bln tenge is growing and it is put into operation in 2014.
The Almaty region shows the following results: on the results of 2013 the launched objects produced goods for the amount of more than 27 bln tenge, in Jan-May 2014 – 13.9 bln tenge. In the framework of the industrialization map 47 projects out of 56 are realized, 6 projects will be launched in H2 2014, 3 – in 2015. The investment into the main capital of the processing industry is planned to reach 36.5 bln tenge, the level of activity in the sphere of innovations – to 9.5%.
In the framework of the industrialization map 13 investment projects for more than 27 bln tenge are realized in the Kostanai region. The production of “Toyota Fortuner” cars refers to them. Within 4 years the stake of the processing sector rose by 13% that has significantly reduced the dominant position of the mining sector. The 2nd project – the plant on tyre processing – has been started.
The South-Kazakhstan region increased the volume of the processing industry by 18%, volume of non-raw materials export by 47% within 5 years.
In Astana and Almaty in the framework of the industrialization map the following work has been done:
In Astana 26 projects for 446 bln tenge are being realized. In total 19 projects have been launched since 2010. In 2013 among the 9 put into operation projects was the launch of the energy saving glass units plants “KSS” LLP – construction of the plant on industrial glass processing.
In the framework of the industrialization program in Almaty the project “Foundation of the Industrial area in the Alatau region” started. The total area is 490 ha. The engineering infrastructure works have been executed by more than 70%. 10 projects with the total cost of 67 bln tenge plan to start the construction this year. For the first time within 40 years the largest Cinema and Concert hall was constructed in Almaty, the construction of a new Ice stadium for 12 thousand people has started.
In general the state support of the economy’s diversification is effected via the realization of measures of economic policy at the macro- and within the sector’s levels as well as with the help of the realization of the selective measures on supporting of certain sectors of economy and projects of the regions.
The government may ease operation conditions of foreign state-owned companies in Russia. Until now, they could get in projects of strategic deposits development in the country not more than 25%. Primarily, this liberalization aims to attract investors from China, India and the Middle East. Primarily state-owned companies conduct international expansion just in these countries, and Russia will reorient to partnership with them in condition of conflict with the West over the Ukraine.
The Government has instructed the Ministry of Natural Resources, Ministry of Economy and FAS to consider whether to give foreign investors the opportunity to increase their share in companies, which develop subsoil plots of federal importance (large deposits of oil, gas, gold, nickel, platinum and copper) in excess of the limit, set by the legislation. This topic was raised by CEO of Metalloinvest Andrei Varichev at the Cabinet’s meeting on July 10; he offered to amend the law "in terms of increasing the possibility of the presence of foreign investors – certainly, through consideration by the Government Commission - from 25% to 49%". According to him, such measures are necessary for the development of large deposits, in particular to attract project financing.
Now, according to the federal law 57, there is a special procedure of foreign investments in companies that hold licenses for subsoil plots of federal importance. These companies are considered to be controlled by a foreign investor if it has a share of 25% or more.