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COLLABORATION between
the Russian and South African mining industries could replace
competition as both countries move into new political eras. South
Africa could participate in the exploitation of Russia's enormous
mineral resources through its marketing, commercial and technical
expertise in the mining sector.
Both countries are
mining superpowers and are major world producers of a number of
minerals including platinum, chrome, vanadium, gold and diamonds.
Excessive exports to
the West from Russia and other CIS states of virgin metal and scrap
have contributed to the collapse of the prices of some metals
including aluminium, ferrochrome, nickel and zinc.
South Africa has been
most seriously affected by exports of ferrochrome and stainless
steel scrap from Russia, Ukraine and Kazakhstan which have
aggravated the oversupply of ferrochrome and depressed prices to
levels of about 40 US cents per pound (c/lb) compared with prices of
about 80c/lb in 1989.
Russian Chamber of
Commerce representative in South Africa Vadim Mejnikov tells The
Engineering News that there is considerable scope for collaboration
between the mining industries of the two countries as they each have
strengths which complement each other.
Because of its
traditional orientation towards the West, South Africa has developed
expertise in marketing minerals which is lacking in the CIS
countries.
Mejnikov suggests that
South African companies might consider offering Russian mining
companies access to their marketing channels.
In this way not only
would South African mining companies gain some control over
porentially disruptive Russian sales but they would also increase
their product range and add flexibility to their marketing
operations.
On the other hand
Russia has a very large pool of technical expertise in the mining
area as a result of the emphasis on science and technology during
the Communist regime.
Furthermore early
retirement has given the opportunity to many specialists to work as
consultants. Mejnikov suggests that many such people would be
available at a relatively low cost to assist in the education of the
South African mining industry's unskilled labour force.
There are also many
Russian experts with superior knowledge and experience in some
highly-specialised but important areas. However Mejnikov is
concerned about the lack of “commercial infrastructure” between the
two countries and particularly the lack of a South African presence
in Russia.
Although some South
African mining companies have local representatives in Russia, De
Beers is the only South African mining company with their own
permanent representative.
Mejnikov is
particularly disappointed that, of the approximately 300 foreign
companies in Russia from over 100 countries with accreditation to
the Russian Chamber of Commerce, there is not a single South African
company.
Mejnikov feels that
South African companies are not sufficiently aware of the great
opportunities which exist in Russia - particularly in the mining
sector - and the progress which has been made in moving towards a
free market economy.
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Many thousands of new
companies have emerged during the last few years ranging in size
from single individuals to large conglomerates.
Some of the most
powerful "new generation conglomerates" have been formed in Russia's
industrial heartland - the Ural region. These conglomerates grew out
of the need of industrial enterprises to create joint marketing
organisations to market their products.
During the Communist
regime industrial enterprises had no marketing role which was the
sole prerogative of the state. In order to compensate for the lack
of marketing skills industrial enterprises pooled their resources
and formed conglomerates.
Two
such major Ural based conglomerates formed during the last two
years are EKO and UralTEC. EKO already has a representative in
South Africa and a delegation from UralTEC visited South Africa
in January in order to make arrangements for a permanent
presence in South Africa.
UraITEC has already
established ties with the South African mining metallurgical
industry through hosting Highveld Steel MD Trevor Jones who
attended the international "Opportunities for Foreign
Investment" conference at Ekaterinburg in the Urals in September
1993.
Mejnikov says that
despite barriers of language and lack of commercial skills,
Russia has moved rapidly towards establishing a financial and
commercial infrastructure which will facilitate trade with the
West.
The Russian Chamber
of Commerce can play a key role in promoting contact between
South African and Russian companies including the mining sector.
The Chamber already
has over 100 000 members and 60 regional branches which could
increase to 150 – 200 within next few years.
Mejnikov points out
that though Russia has a low investment rating in the West ,
excellent opportunities exist for involvement in the mining
industry and South African companies could acquire an interest
or control in mining projects very cheaply.
Such opportunities
could include investment in chrome and ferrochrome ventures.
This would enable
South African companies to exercise some control over excessive
Russian exports which have depressed world prices and severely
damaged the South African chrome industry.
Mejnikov suggests
that South African Chamber of Mines should have a Representative
in Russia in order to establish a permanent link between the
mining industries of the two countries.
The Russian Chamber
of Commerce would be happy to sponsor this initiative.
About 99 % of all
mines in Russia are members of the Chamber. Over 2000 commercial
banks have been established during the last three years and the
Chamber of Commerce is currently involved in establishing a
company which will insure foreign countries against risks in
business dealings with Russian companies.
Mejnikov says that
Russian mining equipment producers will participate at the
Electra Mining in Johannesburg this year. |
