THE MINERAL INDUSTRIES OF THE COMMONWEALTH OF INDEPENDENT STATES ARMENIA, AZERBAIJAN, BELARUS, GEORGIA, KAZAKHSTAN, KYRGYZSTAN, MOLDOVA, RUSSIA, TAJIKISTAN, TURKMENISTAN, UKRAINE, AND UZBEKISTAN By Richard M. Levine, Mayumi Bendiner, and Glenn J. Wallace Foreign mineral trade is the focus of this 2002 annual which included minerals for itself and the Soviet bloc states that report on the Commonwealth of Independent States (CIS) comprised the Commonwealth of Mutual Economic Assistance countries. These countries are Armenia, Azerbaijan, Belarus, (CMEA); the members were Bulgaria, Cuba, Czechoslovakia, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, the German Democratic Republic, Hungary, the Mongolian Turkmenistan, Ukraine, and Uzbekistan. During the Soviet People’s Republic, Poland, Romania, the Soviet Union, and period, trade data, and in particular those for many mineral Vietnam. Exports of certain minerals, such as diamond, gold, commodities, were either maintained as a state secret or reported natural gas, nickel, oil, and platinum-group metals (PGM), and in ways that did not permit analyses of most mineral trade. armaments provided the Soviet Union with practically all its Since the breakup of the Soviet Union in 1991, a somewhat hard currency earnings. Hard currency was used to purchase greater amount of mineral trade data has been available for the goods on world markets that were not produced in adequate CIS countries, but it is still far below the level of trade reporting amounts in the Soviet Union and/or the bloc states during the for advanced market economy countries and is of limited use Soviet period, such as grain and steel pipe for gas pipelines. for analyzing trade patterns. Since 1987, comprehensive trade Most mineral production was consumed within the country or data for the Soviet Union and its successor states that were sent to countries of the Soviet bloc. included in the Minerals Yearbook annual reports were based Mineral consumption has fallen sharply since the breakup of primarily on trade data from the trading partners of the Soviet the Soviet Union and has not significantly revived for a number Union and its successor states; these data were not compiled by of reasons that include the sharp reduction in consumption by the U.S. Bureau of Mines nor, subsequently, the U.S. Geological the defense sector, the breakdown of economic ties within and Survey. Some mineral trade data from CIS countries, however, among the CIS countries, and the curtailment of State subsidies. if available, have been included in these reports. Minerals that were once consumed in large quantities in the This chapter provides 2002 mineral trade data for the CIS CIS and the CMEA countries, such as aluminum, nickel, and countries from available CIS sources, which include available titanium, were now primarily exported outside the CIS, but not statistical yearbooks from the Interstate Statistical Committee of to the former CMEA countries on a subsidized basis. Since the Commonwealth of Independent States (2003), information the breakup of the Soviet Union, the CIS countries increased from the separate CIS countries’ statistical agencies, other the traditionally large exports of mineral commodities, such as trade reporting from the CIS countries, and Global Trade Atlas diamond, gold, natural gas, nickel, oil, and PGM outside the data provided by the Global Trade Information Services, Inc. CIS. The Soviet Union’s mineral industries were geared to Inclusion of all possible sources of CIS trade data, which would supplying consumers in the region through a central planning include trade data collections from all countries that trade with mechanism; since 1992, however, the mineral trade of the CIS CIS countries, has not been attempted. Using reported CIS trade has been focused on supplying consumers outside the CIS. As data, this chapter includes a synopsis of major trends in mineral a result of this large shift, the mineral supply of the CIS is now trade for each of the CIS countries and trade tables for the CIS calculated as part of the world mineral supply. countries for which data were available. All trade data reported Mineral trade within the CIS was limited primarily because of in these synopses are based on the data in the corresponding the steep fall in consumption in the region. Nevertheless, owing country trade tables included in this chapter unless otherwise to the uneven distribution of mineral resources in the CIS, many referenced. CIS countries were dependent on other CIS countries for their Mineral exports were a mainstay of the economies of mineral supplies. For example, Russia produced the majority of practically all the CIS countries, which earned the majority of oil and natural gas in the CIS and exported these commodities their export revenues from mineral trade. The Soviet Union to those CIS countries that lacked these resources; other CIS had a policy of trying to ensure economic self-sufficiency, producers of these fuels, such as Azerbaijan, Kazakhstan, and THE MINERAL INDUSTRIES OF THE COMMONWEALTH OF INDEPENDENT STATES—2002 5.1 Turkmenistan, also exported oil and natural gas to other CIS ARMENIA countries. The situation was the same for nonfuel mineral resources. For example, practically all the chromite was According to official Armenian trade statistics, Armenia’s produced in Kazakhstan, and all the manganese was produced total volume of exports increased by 48% in 2002 to $507.2 in Ukraine; these alloying materials were needed by the Russian million from $341.8 million in 2001. The country’s volume steel industry. of imports increased by 12.5% in 2002 to $991.0 million from Mineral trade within the CIS also still occurs at below world $877.4 million in 2001. Less than 20% of Armenia’s total value market prices for commodities for which markets outside the of exports went to CIS countries, but more than 30% of the CIS are lacking owing to the inability of some mineral industries country’s imports were from CIS countries. to compete because of low quality or lack of markets for their Mineral products exports composed about 70% of the total products. These mineral industries still supply enterprises value of exports. Of total exports, the category “Natural or within the CIS that were designed to process these commodities. cultured pearls, precious or semiprecious stones, precious Such trade at times has been conducted in accord with special metals” composed 51% of exports, of which more than 99% trade agreements that have included barter. of exports in this category went to countries outside the CIS; Mineral production in the CIS was mainly under the control cut diamonds accounted for the majority of exports in this of private firms that produced minerals to earn profits. State category. Other significant mineral product export categories firms that controlled mineral production were also profit were “Ores, slag, and ash,” which composed 5.6% of total oriented. Although the Soviet Union exported minerals to earn exports; “Aluminum and aluminum goods” (3.5%); “Mineral specific amounts of hard currency to purchase a limited quantity fuels, mineral oils and products of their distillation: bituminous of goods, the owners of mineral industries in the CIS primarily substances, mineral waxes” (2.7%); “Copper and articles exported minerals to earn profits. The mineral producers in the thereof” and “Ferrous metals” (2.3% each). A number of other CIS actively competed in world markets. Taxes on the export of mineral product categories comprised lesser percentages of minerals were major sources of Government revenue for most total exports. In the case of copper and aluminum exports, the CIS countries. Profits on mineral sales, however, still were not majority of these exports went to the CIS. reinvested in adequate amounts in the CIS mineral industries or Mineral product imports composed almost 50% of the total economies because capital flight has been a major problem in value of imports in 2002. The two major categories of imports the post-Soviet period. were “Natural or cultured pearls, precious or semiprecious The world has been dependent on mineral exports from the stones, precious metals,” which composed 21.6% of imports, CIS for a number of important mineral commodities. The and “Mineral fuels, mineral oils and products of their CIS (in particular Russia) and Saudi Arabia were the leading distillation: bituminous substances, mineral waxes” (17.2%). suppliers of oil to world markets, and Russia was the world’s For the precious metals and stones category, the majority of leading supplier of natural gas. The CIS was also a major imports were from outside the CIS, and for the fuel category, the supplier to world markets of aluminum, nickel, PGM, potash, majority of imports were from the CIS. titanium, and uranium. Besides these minerals, the CIS played a significant role in the world supply of numerous other mineral AZERBAIJAN products, which included beryllium, chromite, copper, diamond, gold, iron ore, and iron and steel. In 2002, Azerbaijan had a positive balance of trade—exports Large mineral exports from the CIS caused disruptions and totaled $2.1675 billion, and imports, $1.6656 billion. The dislocations on world mineral markets, which included the country’s positive trade balance of $501.9 million was less than markets for aluminum, potash, steel, and titanium. A combination its positive trade balance in 2001 of $883.1 million. Exports of trade sanctions and agreements and adjustment of capacity listed in categories for mineral and mineral-derived products among producers resulted in a new market equilibrium. If CIS composed more than 90% of the value of exports. Exports of countries were to begin consuming mineral products at anywhere crude petroleum and petroleum products composed almost 70% near the rate of developed industrial countries, then this would and almost 20%, respectively, of the total value of exports. bring about major changes in world mineral supply because a Almost all exports of crude petroleum were to countries outside significant percentage of mineral products currently exported the CIS.