Energy industry

Congress of miners of Russia is concerned about rising costs and world prices for raw materials

VI union of mining producers of Russia

The participants of the VI all-Russian Congress of miners, which was held on 25 November 2016 at the chamber of Commerce and industry (CCI of Russia) discussed the issues of development of mineral raw complex of the country and its prospects. The place of meeting was not chosen by chance. Vice President CCI of Russia Dmitry Kurochkin said that “from the start, a Union of miners was tied to the chamber and its energy Committee of CCI.”

The event was attended by representatives of the Russian Orthodox Church, Federal authorities, RF CCI, nonprofit partnership “Miners of Russia”, business and also industry experts. The delegate from the Russian Orthodox Church, FR. L. Semenov read a word of the Patriarch. The message noted: “it is gratifying that today the miners recover the torn down shrine”.

Partnership “Miners of Russia” has arisen in 1999, at the First Congress of Industrialists and entrepreneurs of the industry of the mineral sector of the economy. Head of partnerships – Chairman of the Supreme mining Council, doctor of Economics, Vice-President of the Academy of mining Sciences Yu. K. Shafranik.

According to Yu. K. Shafranik, the mining industry, which makes at the moment about 44% of the budget of the country, depends mainly on world market. Not counting the energy sector, it employs about 1’500’000 people.

The global market is experiencing a low level of growth (+1.7%), which increases the risks of increasing trade barriers and increasing competition for markets. Low commodity prices, according to experts, will continue as a trend, despite the increase in coal prices. In this field the global pricing environment today is helping the industry, although the coal production had a loss in connection with the low prices and at the same time increased costs (+32% compared to 2011). The coal production is growing now, its production meets domestic demand and growing exports.

The internal problems of the mining industry are associated with low levels of investment and falling consumer demand. Keeping in mind that the government is planning for several years to cut spendings and had already passed a budget for next year, it is not promising. “With the right policies, these industries would show a greater effect, – says Yuri K. Shafranik, In Texas it is profitable to produce even 500 l, but here it is not.” Also Yury Konstantinovich complained that in the last 2 years in Russia, “tax policy is not enough.”

An important problem mentioned by the participants is the tariffs of railway transportation, for which the energy Ministry conducts talks with Russian Railways. “It is necessary in the long term to balance transportation rates,” – was said at the Congress. Gas prices is the second concern associated with the risk of increased costs.

Another problem of the industry is the risk of increased taxes.

The third problem is the elimination of unprofitable mines, particular attention was drawn to the bankruptcy of the mines in the Rostov region. To date, the tax authorities shift the obligations of the debtors to other market participants, for whom it is unsustainable.

According to Yu. K. Shafranik, today the mining industry in Russia has the following objectives:

  1. Improving the efficiency
  2. Cost reduction
  3. The introduction of advanced technologies
  4. Export support
  5. Flexible operation of credit institutions

To date, the support of the Ministry of industry and trade R & d approved and supplemented by the mining industry. “Support should depend on the final result,” – said Yu. K. Shafranik.

Cultural-political magazine “E Vesti” addressed to Y. K. Shafranik with a request to determine the level of investment attractiveness of the industry in Russia, what advantages it has from the investor’s point of view, he answered us the following:

«There is no advantages. Now, when we pass the difficult period. We have had very serious potential in 10-15 years. And the industry as a whole, and the companies has achieved the modernization, introduction of new technologies. A lot of things have already been done. Especially in coal industry, oil refining, petrochemicals, fertilizers. I am sincerely happy for those successes. Once completely unprofitable branch became profitable in 2000 and today operates efficiently. For today in branch units of obsolete facilities.

But this is the third year we have this base to preserve and to keep the investment process at least at the level from year to year. The production program should care of miners, and not of miners only, because they will survive anyway. After all, the products will still buy at a low price or at a great price. But Russia’s economy will go into stagnation, if the production program of 2017 not hold at least at the level of 2016. It will be negatively script.

E Vesti: If we compare the level of innovation of our mining industry and the European one, whose position is ahead?

Individual businesses operate at the level of the world, it is a reference. In General, in some areas we have recovered and even overpassed all the Soviet figures. Not many industries of other cycles went back at least to 1990. We are talking about such parameters as productivity, efficiency, volumes, exports, profitability.

But, sometimes there is new technology, and the options do not stand up to world levels. This means that incorrectly designed, incorrectly works management, and someone from them does not ask either the owner or the state. There are also opposite examples. This Mist, which at the same machine 10 times more work than others on the same technique. Success depends not only on technology but also on how it is organized.

In General, if we speak about the global level, I’m not satisfied here. We still subconsciously hold the old settings, while we have a global product and performance indicators must be global too”.