Investment in the Russian Mining Sector in 2012

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In Russia, the metals and mining sector has always been a core driver of economic activity and the health of this industry is critical to the creation of wealth through employment, infrastructure, tax to the government and profits for owners and investors.

With the region now experiencing a substantial economy boost, it is vital for Russian mining companies to optimise their production in order to stay competitive on the global stage. The past 12 months alone have seen increasing investment from across the world, as the country forges links internationally to expand its huge network of natural resources.

The most recent development came with the announcement that Russia and Iran would create a $1.2 billion (£775 million) joint venture between state company Russian Technologies and Tehran state Bank Saderat to commercialise Iran's vast zinc deposits. The partnership will see the construction of a mining complex at the Mehdiabad deposit, in central Iran, which is thought to contain as much as 394 million tonnes of zinc, lead and silver.

In August, the Stoilensky subsidiary of NLMK Group awarded a €280 million (£240 million) contract to a consortium of Siemens VAI and Outotec for the construction of an iron pellet plant at Stoilensky, Russia. The deal will involve the design and supply of required technologies and equipment, as well as the provision of other services related to the construction of a production facility.

With a projected annual capacity of six metric tonnes, the iron ore pellet plant is scheduled for completion in the year 2014. Stoilensky is currently in the process of expanding its pit and increasing ore processing and beneficiation capabilities. The firm has said that its iron ore concentrate capacity could reach a total of 14 metric tonnes a year, with sinter ore capacity of 1.7 million tonnes, by the end of this year.

Meanwhile, in the north-eastern region of Siberia, DRA Mineral Projects is building two new automated DMS plants at Alrosa's Mirnyi Ore and Processing Complex. The existing plant, to which the new equipment will be retrofitted, consists of two modules fabricated and pre-assembled in Johannesburg, South Africa.

In recent times, DRA has established a track record for the supply of its DMS modules to mines operating in challenging conditions. As well as the Russian site, it has supplied the Snap Lake Diamond Project in northern Canada, in a similar environment.

Earlier this year, Norilsk Nickel announced plans to develop copper-nickel deposits in Russia's Voronezh region. As part of its geological exploration programme, around $1.7 billion is being invested, with the Elansk and Elkinsk ore occurrences the main focus. Upon completion, the firm has said it may construct ore mining and processing plants in the region.

Producing copper-nickel pellets, the estimated annual output will be around two million tonnes. Acting first deputy general director, Yuri Filippov, said: "These are the last major nickel deposits in Europe and they may considerably increase the resource base of the company and its production volumes."

In the Russian coal mining sector, one of this year's major developments has been a growing emphasis on safety. Official data suggest that last year, 135 miners died in 22 separate accidents, including the high-profile Raspadskaya tragedy in May 2010. Speaking in March 2011, energy minister Sergei Shmatko said the country's coal mining companies needed to allocate a third of their combined profits from the previous year to increase their spending on safety.

With so much now happening in the Russian mining industry, at a time when the country's economy is experiencing a considerable boost, it has arguably never been more important that firms acknowledge how to optimise all areas of production in order to stay competitive and profitable on the world stage.