Red dirt in Red Square: Mining World Russia

As the Mining World Russia exhibition wraps up, Australian companies are looking to head home and count their successes at the show, and in the country.

Speaking to a number of Australian companies which participated in the Austmine and Austrade developed trade mission and the exhibition as well, they said it was a positive experience and has helped them get a foot in the door of one of the largest mining markets in the world.

The trade mission was carried out as a political storm grew in the background, however this didn’t work to deter miners, who were focusing on the longer term goals of taking Australian experience and technology into new and willing markets.

But why Russia?

According to Palaris’ Joe Carr “Russian miners are currently seeing a requirement for technical expertise that they just don’t have here,” which includes high end products and experience that many Australian mining and METS companies have.

Bradken added that “there is a real desire for better technology and equipment in the country,” with Gekko’s Nigel Grigg explaining that previously Russia operated with smaller equipment, but lots of it, so now they are looking to larger, single pieces of machinery or technology”.

This point was previously stated by Austmine’s head Robert Trzebski.

"Russia is a huge country with huge potential," Trzebski said.

"Russia is still much cheaper than Australia, although there are cost pressures, but it does have a tremendous wealth of resources."

One of the major selling points for the nation is that despite having nearly a fifth of the world's mineral deposits, it is still grossly underexplored. 

Some of the major challenges like in the fact that "it is still highly disorganised and state driven", yet the "opportunities still outweigh the risks, as it is a controlled risk," he explained.

And this controlled risk is Australian companies either setting up with an agent, or going in and doing the groundwork themselves.

Grigg explained Gekko’s own situation, which saw them go from having years of presence in Russia through an agent, and the next day have none whatsoever – due to M&A.

A major part of the mission, apart from getting Aussie companies in front of major Russian miners, was to develop and sign off an MoU between Austmine and its Russian equivalent, the Union of Mining Industry.

Austmine CEO Robert Trzebski told Australian Mining "the signing of this agreement is very symbolic, and regardless of the current political situation, the show must go on, and this agreement provides a pathway for Australian companies to do that".

"It also shows that Russian companies recognise what Australians are doing and want to work with them as they can see the value of our products and services.

"Working in Russia and the CIS is a long term opportunity, and this agreement gives us the vehicle to work on that and really expand Australia's reach."

Speaking at the launch of the MoU at Mining World Russia, Australia’s ambassador to Russia Paul Myler commented on the effectiveness of agreements such as these, stating that “when miners talk to miners, good business gets done,” adding that the new agreement is “an opportunity to expand our bilateral trade” with Russia.

Bradken, an Australian manufacturer of wear plates, crawler shoes, and other heavy duty steel mining consumables, said the week was a success for it.

“The Austmine and Austrade mission went really well,” the company stated.

“We’ve had some positive feedback and interest shown for our products from some Russian miners and will have some talks with them on the front,” they added.

Gekko added that it has managed to get in front of major mines, such as Polymetal and Polyus, and has teed up additional meetings with these major Russian miners later this year, following interest in their products.

“As long as you can show that your technology can provide optimisation, whether that is through cost or productivity gains, cutting energy, or simply improving availability, you have to demonstrate you can maximise their operations,” Grigg said.

Immersive Technologies also saw interest in its simulated trainers, which can expose operators to new equipment quickly without the danger of inexperienced operators damaging new machinery.

GE Mining, which hosted a number of Australians on their stand (and won the award for ‘successful international debut’ at the exhibition) has operated in Russia for a number of years, and has been building its presence in the country.

Operated from Australia, the company used the exhibition to showcase its technology, particularly in its collision avoidance systems.

The company also recently saw a success with the installation of its technology in LukOil drills in Russia.

However it was not just the majors and Australian companies working with Austmine and Austrade that were in show.

QSteel, run out of Perth and China, was also at the exhibition.

Speaking to Neil Watt, he explained that QSteel was focusing on Russia as it is one of the major markets, and an area that Australian companies could look to for growth in the mining space, as well as the other typical markets such as South America.

Risk vs. Rewards?

However as Trzebski stated before, there are potential risks, but the changing environment  of Russia is removing a lot of these former barriers to business.

Concerns over funding, and making sure the money is there for work used to be major issues in the country.

But Gekko’s Sandy Gray said this has changed significantly over the last few years, explaining that once a company is in the flow sheet, then funding is secure.

“We’ve never had a problem getting paid while operating in Russia due to the funding structure, and we’ve never had to fight for money and have done around $20 million worth of business here,” he said.

Yet Grigg added that “it can still take years to develop these markets, so being here is definitely a long term decision”.

“At the end of the day, getting in here is not just about selling products, you’re also selling a brand.”

Where to next?

The question of what will be the next big hotspot is one that the mining industry always asks.

In this case, the answer to the question is to continue to look east – this time towards Kazakhstan.

Like many former Soviet states it comes with a raft of preconceptions.

However unlike other nearby CIS countries, it is taking major steps to address the issues inherent within its governmental structures.

Earlier this year Kazakhstan introduced new mining regulations, closely mirroring those of Australia and Canada, which relate to approvals processes, as well as those governing investment.

Following its success in Russia, Austmine is also looking to Kazakhstan, with Trzebski outlining a new mission with eight to ten Australian METS companies within the coming months.

“This’ll be our sixth visit to Kazakhstan,” he told Australian Mining.

With Sandy Grey adding that Gekko is already looking towards the country.

Trzebski explained that “while the currency devaluation has some questioning the country’s stability, the truth is there are still massive opportunities, particularly in base metals and maybe even uranium.”

He went on to add that state of coal, however, is a different one, as the commodity is battered by poor prices globally.

“Kazakhstan has always offered great opportunities, and has always been ahead in the region in terms of adopting technology and implementing new technology.”

This sentiment was echoed by Palaris’ Carr, who stated “Kazakhstan is modernising”.

He went onto say that the country may have even more potential if it effectively implements and follows through on its laws relating to approvals processes and foreign investment.

Gekko’s business development manager added “Kazakhstan has been large in mining for some time, and it is the natural next target for a lot of foreign companies operating in Russia”.