Russian copper industry still facing hurdles — Use of red metal expected to grow under privatization

Copper production and consumption in Russia are poised to increase following years of weakness attributable to the collapse of the Soviet regime.

According to a report from London-based Metal Bulletin Research, the country’s copper industry has good potential for expansion, decreased costs and greater efficiency.

Russia’s copper resource base was mapped by Soviet-era geologists, and deposits located during that time still form the bulk of the country’s reserves. Most of these are in Russia and Kazakstan, though significant deposits also exist in Uzbekistan, Armenia and Ukraine. However, additions to reserves have been minimal, and several deposits are expected to be depleted by the turn of the century.

In Russia, 38 copper deposits are mined by 14 companies. The bulk of the material is produced by the Noril’sk Kombinat in Siberia, though a significant portion is produced by private companies with mines in the Ural Mountain region. Those operations are said to be streamlining operations in order to become more profitable.

One of the greatest obstacles facing the resurgence of the Russian copper industry is processing costs. Russian smelters and refineries employ outdated technology and aging equipment, and are among the highest-Cost producers in the world.

Inefficiency is also a concern. The total design capacity of Russian refiners is around 900,000 tonnes per year, yet only 560,000 tonnes of refined copper were produced in 1996. Under privatization, however, many operations are importing modern technology in an attempt to become more efficient.

Copper consumption in Russia slid drastically throughout the 1990s, dropping by as much as 17% in 1996. However, consumption of concentrate and refined copper is now expected to increase faster than production. Copper exports are expected to peak in 1998 at 750,000 tonnes, compared with 700,000 tonnes in 1996.