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Inside Russia's Mining Expansion Plans
Emma Cox | 12 May 2015

When people talk about mining, there are several nations that come to mind: South Africa, Australia, Canada, and Russia, among others. Russia is one of the largest producers of mineral resources in the world, and its mining industry remains robust despite recent economic and socio-political troubles.

According to the Australian Trade Commission's estimate, 15-17 percent of mineral deposits in the world can be found in Russia. A large part of it lies in Siberia and the Russian Far East. In fact, one mining company, Amur Minerals Corporation (AIM:AMC), has recently discovered a massive reserve of nickel and sulphide in one of its exploration sites – the Kun-Manie project in Amur Oblast. It is said to be one of the biggest nickel discoveries in modern history.

Moreover, Russia's mineral production reportedly amounts to 14% of the global yield. In a previous study by the Business Monitor International, it predicted that the country's mining industry will increase in value to as much as $160 billion by 2016. The government is also keen on investing a lot in the coal sector, and might do so until 2030.

Currently, major mining companies such as Norilsk Nickel (OTCMKTS:NILSY) and Severstal (MCX:CHMF) command a huge part of Russian output in terms of nickel and steel. Alrosa (MCX:ALRS) leads production in diamonds.

Norilsk, in particular, has been a long-standing operation in Russian High Arctic, with the nickel deposits having been discovered in the 1920s. The production was started during World War II, with underground mining coming to prominence in the 1950s.

Gazprom (OTCMKTS:OGZPY), on the other hand, is engaged in natural gas operations, and controls most of the supply to European nations. Transportation of gas and oil, as well as generation of energy, is very crucial right now to neighboring countries given the Ukraine-Russian conflict, which greatly affects communication and transaction.

In terms of overseas expansion, a lot of businesses involved in mining are taking advantage of the growing interest from other countries, prompting some to broaden their reach and plunk down some investments abroad. Some of the viable nations that they are eager to explore are Burkina Faso, Guinea, and Kazakhstan, which has shown some promise especially in terms of abundance in gold.

While economists still see a rough future ahead for Russia, there are still investors who are confident that the country will be able to recover from ruble instability and other predicaments that have befallen the Kremlin.

The promise is in the mineral industry, which continues to be a backbone for the country. Its production of mineral fuels and commodities such as copper, aluminum, and iron ore, to name a few, as well as precious metals like gold and silver, still make for valuable resources that the rest of the world needs.