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The conflict in eastern Ukraine, which has been lasting for nearly ten months, has had direct implications on the Russian economy. Foreign investments, as the best tool to integrate the world’s economies, are more and more often bypassing Russia. According to the Central Bank of Russia, the country is going to lose 90 billion US dollars of foreign investments as a result of the war.
The energy industry, which is the core of the Russian economy, is very close to the heart of the Kremlin. As a place where hundreds of different minerals are exploited every day, we generally associate the Russian energy industry with oil and natural gas. However, besides “black gold” and “blue fuel”, Russia’s coal mining is also a very significant part of its energy business. One-third of the world’s coal supplies are located in Russia, primarily in Siberia.
In 2012, the Russian Federation endorsed a long-term coal development programme. Its main aim is to increase Russia’s annual coal production to 430 million tonnes. The first step to success is its large coal reserve. The second are the specialised technologies which are usually purchased from other countries. The current level of exhaustion in the mining infrastructure shows an immediate upgrade is needed in up to 60 per cent of production sites (in 139 open-pit mines and in 93 underground mines).
The Russian coal industry is also a chance for the Polish economy. Until the end of the 1960s, Poland imported coal-mining technologies from Russia – now the boot is on the other foot and the Russian market is dominated by companies like Becker Mining Systems (Germany), Sandvik Mining Construction (Finland) and the export alliance of Czech Mining Technology. Open-pit mines could not function properly without equipment provided by Caterplillar, Hitachi, Liebherr, Komatsu or Terex. So far, most of the Russian coal mines (both brown coal and bituminous coal) operate thanks to outdated Soviet technologies.
Foreign technologies are also essential in metalliferous ore mines. For example, in Russian gold and silver mines, only machines produced by three companies are in use: Atlas Copco (Poland), Hitachi and Komatsu (both from Japan). Although coal, silver, gold and other metals remain a very important element of Russia’s primary industry, oil and gas are still on the top.
Reserves matter, but what is really crucial is the price and cost of transportation. The price of coal reached its peak in 2008 (since 2000) and quickly dropped. It has since remained stable at the 2004 level. But the price of oil has been increasing within the last years, and this is what constitutes the majority of the revenues of the Russian budget.
In terms of oil extraction, there are more than 30 large-sized activities located on the Russian territory which are operated by international companies such as Exxon Mobil, Shell, Chevron, Conoco Philips or Mitsubishi. Most of them operate in western Siberia, the European part of Russia, such as the regions of Volgograd, Murmansk, Orenburg and Kirov, Krasnoyarsk Krai and Yakutia. However, it is not only foreign capital that had been investing in Russia – Russian companies have been also seeking opportunities for potential investments abroad.
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