Russia Nickel Mining Market Overview and Forecast to 2020: Trends, Fiscal Regime, Major Projects, and Competitive Landscape

Home , Mechel, Norilsk Nickel

Reference Code: GDMMNI008IDB

Publication Date: Apr 2012

Russia Nickel Mining Market Overview and Forecast to 2020 GDMMNI008IDB /Published APR 2012

Table of Contents

1 Table of Contents

1 Table of Contents ...... 2

1.1 List of Tables ...... 5

1.2 List of Figures ...... 5

2 Executive Summary ...... 6

2.1 Largest Nickel Mine Producer ...... 6

2.2 Volatility in Nickel Prices ...... 7

3 Introduction ...... 8

3.1 GlobalData Report Guidance ...... 8

4 Russia, Nickel Mining Industry – Drivers and Restraints ...... 9

4.1 Russia, Nickel Mining Industry – Drivers ...... 9 4.1.1 Substantial Investments to Support Mining Activities ...... 9 4.1.2 Major Sport Events Lead to Surge in Demand ...... 9

4.2 Russia, Nickel Mining Industry – Restraints ...... 10 4.2.1 New Export Tax to Discourage Miners ...... 10 4.2.2 Nickel Prices to Decline by 2017 ...... 10 4.2.3 Occupational Health and Safety Hazards...... 10 4.2.4 Subsoil Law ...... 10

5 Russia, Nickel Mining Industry – Nickel Mine Production and Reserves ...... 11

5.1 Russia, Nickel Mining Industry – Nickel Mine Production ...... 11

5.2 Russia, Nickel Mining Industry – Nickel Reserves ...... 13

6 Russia, Nickel Industry – Nickel Metal Consumption ...... 15

7 Russia, Nickel Industry – Nickel Ores and Concentrates, Exports and Imports Scenario ...... 17

8 Russia Nickel Mining Industry – Top Active and Planned Projects ...... 19

Russia Nickel Mining Market Overview and Forecast to 2020 GDMMNI008IDB /Published APR 2012

Table of Contents

8.1 Russia Nickel Mining Industry – Top Active Projects ...... 19

8.2 Russia Nickel Mining Industry – Mine Profile ...... 20 8.2.1 Severny Nickel Mine ...... 20 8.2.2 Oktyabrsky Nickel Mine ...... 20 8.2.3 Taimyrsky Nickel Mine...... 21 8.2.4 Komsomolsky Nickel Mine ...... 21

8.3 Russia Nickel Mining Industry – Planned Projects ...... 22

9 Russia, Nickel Mining Industry – Fiscal Regime ...... 23

9.1 Russia, Governing Bodies ...... 23 9.1.1 Ministry of Natural Resources and Environment of the Russian Federation ...... 23 9.1.2 Federal Agency on Mineral Resources ...... 23 9.1.3 Federal Service for Environmental, Technological, and Nuclear Surveillance ...... 23

9.2 Russia, Governing Law ...... 24 9.2.1 Subsoil Law ...... 24 9.2.1.1 Issuance ...... 24 9.2.1.2 Types ...... 24 9.2.2 Subsoil Use Licensing Regulations ...... 25

9.3 Russia, Rights and Obligations...... 25 9.3.1 Rights ...... 25 9.3.2 Obligations ...... 25

9.4 Russia, Key Fiscal Terms ...... 26 9.4.1 Severance Tax ...... 26 9.4.2 Corporate Income Tax ...... 26 9.4.3 Russia Property Tax ...... 26 9.4.4 Capital Gains ...... 26 9.4.5 Withholding Tax ...... 26 9.4.6 Depreciation ...... 27 9.4.7 Loss Carried Forward ...... 27 9.4.8 Value Added Tax ...... 27

10 Russia, Nickel Mining Industry – Competitive Landscape ...... 28

10.1 Russia, Nickel Mining Industry – Key Companies, OJSC MMC Norilsk Nickel (Norilsk Nickel) . 29 10.1.1 OJSC MMC Norilsk Nickel (Norilsk Nickel), Overview ...... 29 10.1.2 OJSC MMC Norilsk Nickel (Norilsk Nickel), Business Description ...... 29 10.1.3 OJSC MMC Norilsk Nickel (Norilsk Nickel), Nickel Projects ...... 30

Russia Nickel Mining Market Overview and Forecast to 2020 GDMMNI008IDB /Published APR 2012

Table of Contents

10.2 Russia, Nickel Mining Industry – Key Companies, Mechel OAO (Mechel) ...... 30 10.2.1 Mechel OAO (Mechel), Overview ...... 30 10.2.2 Mechel OAO (Mechel), Business Description ...... 31 10.2.3 Mechel OAO (Mechel), Nickel Projects ...... 32

11 Appendix ...... 33

11.1 Abbreviations ...... 33

11.2 Bibliography ...... 33

11.3 GlobalData’s Methodology ...... 34 11.3.1 Coverage ...... 34 11.3.2 Secondary Research ...... 34 11.3.3 Primary Research ...... 35 11.3.4 Expert Panel Validation ...... 35

11.4 Disclaimer ...... 35

Russia Nickel Mining Market Overview and Forecast to 2020 GDMMNI008IDB /Published APR 2012

Table of Contents

1.1 List of Tables Table 1: Nickel Mining Industry, Russia, Nickel Mine Production (’000 metric tons), 2000–2020 ...... 12 Table 2: Nickel Mining Industry, Russia, Nickel Reserves (MMt), 2001–2009 ...... 13 Table 3: Nickel Mining Industry, Russia, Nickel Reserves by Regions and Deposits (MMt), 2009 ...... 14 Table 4: Nickel Industry, Russia, Nickel Metal Consumption (’000 metric tons), 2000–2020 ...... 16 Table 5: Nickel Industry, Russia, Nickel Ores and Concentrates, Exports/Imports (’000 metric tons), 2000–2020 ...... 18 Table 6: Nickel Mining Industry, Russia, Top Active Projects ...... 19 Table 7: Nickel Mining Industry, Russia, Severny Nickel Mine, Historic Production (’000 metric tons), 2004–2009 ...... 20 Table 8: Nickel Mining Industry, Russia, Oktyabrsky Nickel Mine, Historic Production (’000 metric tons), 2003–2009 ...... 20 Table 9: Nickel Mining Industry, Russia, Taimyrsky Nickel Mine, Historic Production (’000 metric tons), 2003–2009 ...... 21 Table 10: Nickel Mining Industry, Russia, Komsomolsky Nickel Mine, Historic Production (’000 metric tons), 2003–2009 ...... 21 Table 11: Nickel Mining Industry, Russia, Planned Projects ...... 22 Table 12: Nickel Mining Industry, Russia, Depreciation Rates, (%), 2012 ...... 27 Table 13: Nickel Mining Industry, Russia, OJSC MMC Norilsk Nickel, Major Nickel Projects ...... 30 Table 14: Nickel Mining Industry, Russia, Mechel OAO, Major Nickel Projects ...... 32

1.2 List of Figures Figure 1: Nickel Mining Industry, Russia, Nickel Mine Production, (’000 metric tons), 2000–2020 ...... 6 Figure 2: Nickel Mining Industry, Russia, Nickel Mine Production (’000 metric tons), 2000–2020 ...... 11 Figure 3: Nickel Mining Industry, Russia, Nickel Reserves (MMt), 2001–2009 ...... 13 Figure 4: Nickel Mining Industry, Russia, Nickel Reserves by Regions and Deposits, 2009 ...... 14 Figure 5: Nickel Industry, Russia, Nickel Metal Consumption (’000 metric tons), 2000–2020 ...... 15 Figure 6: Nickel Industry, Russia, Nickel Ores and Concentrates, Exports (’000 metric tons), 2008–2020 ...... 17 Figure 7: Nickel Mining Industry, Russia, Total Production by Company (’000 metric tons), 2009 ...... 28

Russia Nickel Mining Market Overview and Forecast to 2020 GDMMNI008IDB /Published APR 2012

Executive Summary

2 Executive Summary

2.1 Largest Nickel Mine Producer

Figure 1: Nickel Mining Industry, Russia, Nickel Mine Production, (’000 metric tons), 2000–2020

Source: GlobalData; ABARES; BREE; Information and Analytical Centre "Mineral”–Russia; Primary interview with officials of the Information and Analytical Centre "Mineral”–Russia

Russia Nickel Mining Market Overview and Forecast to 2020 GDMMNI008IDB /Published APR 2012

Executive Summary

2.2 Volatility in Nickel Prices

Russia Nickel Mining Market Overview and Forecast to 2020 GDMMNI008IDB /Published APR 2012

Introduction

3 Introduction

GlobalData’s report, “Russia Nickel Mining Market Overview and Forecast to 2020”, provides in- depth coverage of Russia’s nickel mining industry. It covers trends in Russia’s nickel mine production, nickel metal consumption, and includes detailed information on nickel ores and concentrates exports and imports. It also presents the key drivers and restraints for the nickel mining industry in Russia, and an overview of the fiscal regime, detailing the laws and regulations governing the industry.

The report includes sections that discuss the trends in production, consumption, demand and reserves. The trade section provides information on exports volume by destination countries, as well as imports. The competitive landscape covers the top players in the nickel mining industry in Russia with major active and planned projects, taking into consideration reserve volume and annual production. The report provides a comprehensive coverage of Russia’s nickel mining industry.

3.1 GlobalData Report Guidance

The report starts with an executive summary capturing the key elements of Russia’s nickel mining industry.

Chapter two consists of the executive summary, detailing key points from the report. Chapter three provides an introduction to the report and a guide to the contents.

Chapter four contains the key growth factors and restraints affecting Russia’s nickel mining industry.

Chapter five provides an overview of Russia’s nickel mining industry, with detailed information about nickel mine production and reserves.

Chapter six provides an overview of Russia’s nickel industry, with detailed information about nickel metal consumption.

Chapter seven provides an overview of Russia’s nickel industry, with detailed nickel ores and concentrates trade.

Chapter eight provides detailed information of the top active projects and future planned projects in Russia.

Chapter nine includes Russia’s fiscal regime, with a section dedicated to mining business licenses, rights and obligations of the mining companies, and the fiscal terms defined in detail.

Chapter 10 provides detailed information of the competitive landscape in Russia’s nickel mining industry. The section consists of the top producers of nickel with their detailed reports.

Russia Nickel Mining Market Overview and Forecast to 2020 GDMMNI008IDB /Published APR 2012

Production and Reserves

5 Russia, Nickel Mining Industry – Nickel Mine Production and Reserves 5.1 Russia, Nickel Mining Industry – Nickel Mine Production

Figure 2: Nickel Mining Industry, Russia, Nickel Mine Production (’000 metric tons), 2000–2020

Source: GlobalData; ABARES; BREE; Information and Analytical Centre "Mineral”–Russia; Primary interview with officials of the Information and Analytical Centre "Mineral”–Russia

Russia Nickel Mining Market Overview and Forecast to 2020 GDMMNI008IDB /Published APR 2012

Production and Reserves

Table 1: Nickel Mining Industry, Russia, Nickel Mine Production (’000 metric tons), 2000–2020 Year Nickel Mine Production (’000 metric tons)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: GlobalData; ABARES; BREE; Information and Analytical Centre "Mineral”–Russia; Primary interview with officials of the Information and Analytical Centre "Mineral”–Russia

Russia Nickel Mining Market Overview and Forecast to 2020 GDMMNI008IDB /Published APR 2012

Production and Reserves

5.2 Russia, Nickel Mining Industry – Nickel Reserves

Figure 3: Nickel Mining Industry, Russia, Nickel Reserves (MMt), 2001–2009

Source: GlobalData; Information and Analytical Centre "Mineral"–Russia

Table 2: Nickel Mining Industry, Russia, Nickel Reserves (MMt), 2001–2009 Year Nickel Reserves (MMt)

2001 2002 2004 2005 2006 2007 2008 2009 Source: GlobalData; Information and Analytical Centre "Mineral"–Russia

Russia Nickel Mining Market Overview and Forecast to 2020 GDMMNI008IDB /Published APR 2012

Appendix

11 Appendix

11.1 Abbreviations

 ABARES :Australian Bureau of Agricultural and Resource Economics and Sciences

 BREE: Bureau of Resources and Energy Economics

 CAGR: Compound Annual Growth Rate

 FIFA: Fédération Internationale de Football Association

 MINPROMTORG: Ministry of Industry and Trade

 MNR: Ministry of Natural Resource and Environment

 MMt: million metric tons

 UN COMTRADE: United Nations Commodity Trade Statistics Database

 USGS: United States Geological Survey

 VAT : Value Added Tax

11.2 Bibliography

1. ABARES (2011). Australian mineral statistics, 2011. Australian Bureau of Agricultural and Resource Economics and Sciences. Available from http://adl.brs.gov.au/data/warehouse/pe_abares99001790/AC11.1_March_part_1_REPORT. pdf.

2. ABARES (2011a). © Commonwealth of Australia 2011. Australian commodities March quarter 2011. Australian Bureau of Agricultural and Resource Economics and Sciences. Accessed from: www.abares.gov.au [Accessed Date February 8, 2012].

3. BREE (2012). Publications: Resources Programme. Resources and Energy Quarterly, March Quarter 2012. Bureau of Resources and Energy Economics. Available from: http://www.bree.gov.au/documents/publications/resources/REQ-Mar-2012.pdf

4. OJSC MMC Norilsk Nickel Annual report (2010). Annual Report. Available from: http://www.nornik.ru/_upload/editor_files/file1647.pdf.

5. OJSC MMC Norilsk Nickel Annual report (2011). Financial Documents. Available from: http://www.nornik.ru/_upload/editor_files/file1823.pdf

6. OJSC MMC Norilsk Nickel (2012) Press, Publications. Available from: http://www.nornik.ru/en/press/publications/1904/ [Accessed on Feb 6, 2012].

7. MINPROMTORG (2010). Development Strategy for Metal Industry of Russia in 2020. Ministry of Industry and Trade. Available from: http://v2009.minprom.gov.ru/activity/metal/strateg/2. [Accessed on July 26, 2012]. 8. USGS (2011). Nickel Reserves-Russia, 2010. United States Geological Survey Mineral Commodity Summaries, January 2011.

Russia Nickel Mining Market Overview and Forecast to 2020 GDMMNI008IDB /Published APR 2012

Appendix

11.3 GlobalData’s Methodology

GlobalData’s dedicated research and analysis teams consists of experienced professionals with a pedigree in marketing, market research, consulting backgrounds in the nickel mining industry and advanced statistical expertise.

GlobalData adheres to the Codes of Practice of the Market Research Society (www.mrs.org.uk) and the Strategic and Competitive Intelligence Professionals (www.scip.org).

All GlobalData databases are continuously updated and revised. 11.3.1 Coverage

The objective of updating GlobalData’s coverage is to ensure that it represents the most up to date vision of the industry possible.

Changes to the industry taxonomy are built on the basis of extensive research of company, association and competitor sources.

Company coverage is based on three key factors: market capitalization, revenues and media attention/innovation/market potential.

 An exhaustive search of 56 member exchanges is conducted and companies are prioritized on the basis of their market capitalization.

 The estimated revenues of all major companies, including private and governmental, are gathered and used to prioritize coverage.

 Companies which are making the news, or which are of particular interest due to their innovative approach, are prioritized.

GlobalData aims to cover all major news events and deals in the nickel mining industry, updated on a daily basis. 11.3.2 Secondary Research

The research process begins with exhaustive secondary research on internal and external sources being carried out to source qualitative and quantitative information relating to each market.

The secondary research sources that are typically referred to include, but are not limited to:

 Company websites, annual reports, financial reports, broker reports, investor presentations and SEC filings.

 Industry trade journals and other literature.

 Internal and external proprietary databases.

 National government documents, statistical databases and market reports.

 News articles, press releases and web-casts specific to the companies operating in the market.

Russia Nickel Mining Market Overview and Forecast to 2020 GDMMNI008IDB /Published APR 2012

Appendix

11.3.3 Primary Research

GlobalData conducts hundreds of primary interviews a year with industry participants and commentators in order to validate its data and analysis. A typical research interview fulfills the following functions:

 It provides first-hand information on the market size, market trends, growth trends, competitive landscape, future outlook, for example.

 It helps in validating and strengthening the secondary research findings.

 It further develops the analysis team’s expertise and market understanding.

Primary research involves e-mail interactions, telephone interviews as well as face-to-face interviews for each market, category, segment and sub-segment across geographies.

The participants who typically take part in such a process include, but are not limited to:

 Industry participants: CEOs, VPs, business development managers, market intelligence managers and national sales managers,

 Outside experts: investment bankers, valuation experts, research analysts and key opinion leaders specializing in nickel mining markets. 11.3.4 Expert Panel Validation

GlobalData uses a panel of experts to cross verify research and forecast methodologies and drive its analytical content.

The GlobalData expert panel consists of marketing managers, product specialists, international sales managers from mining companies; academics and geologists from research universities, consultants from venture capital funds and distributors/suppliers of nickel mining goods and services.

11.4 Disclaimer

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, GlobalData.

Russia Nickel Mining Market Overview and Forecast to 2020 GDMMNI008IDB /Published APR 2012