As far as I know the expectation is that they are intending to sell the Columbian assets. This is part of their strategic review which was due for announcement in May. Obviously delayed.
Their thoughts and priorities are definetely with Russia, as can be seen from the following comments by Owen Hegarty where he talks about Tigers coal towards the end of his article.
Russia set to woo mining investment June 14, 2012 By Owen Hegarty
In the world of mineral exploration, nothing is ever static. New mineral provinces emerge, new technologies revitalise old regions and changing market conditions add lustre to previously prosaic commodities. And vice versa.
This month I may have witnessed the beginnings of another step-change: The stirring of Russia as a mining power. Russia’s mineral potential has long been recognised. It has a huge land mass — roughly equal to Australia and the USA combined — and much of it looks highly prospective. Even with modest exploration it has produced the resources (particularly coal, oil and gas) to power Russia’s own industrial economy and to generate export surpluses in many commodities. But that has been achieved barely scratching the surface; it is massively under-explored.
In terms of exploration density – that is, the dollars spent on mineral exploration per square kilometre – expenditure over the past five years has been about a fifth of that spent in Australia, a tenth of that spent in Mexico and a 20th of the expenditure in Chile. On that basis alone you would imagine there are some prime deposits to be found.
So what has changed? Attitudes. As I discovered on a visit this month, Russians have seen the export wealth flowing from Australia and Canada (and also emerging from neighbouring Mongolia and Central Asia) and understand the benefits it can bring to a country and its people. In this context the visit of President Putin to China this month was highly significant. Russia has long looked west to Europe for markets, but President Putin’s visit signalled that it now also sees the huge opportunities to its south and east – in China and the rest of Asia. Like so many other nations they are seeking their place in the Asian century.
They recognise they need international capital and technologies to speed this process. Russia’s Foreign Investment Advisory Council recently commissioned Canadian-listed Kinross Gold to advise on how to attract more mining investment. Kinross has given them a pretty handy blueprint, setting out the investment regime that is required, the taxation policies that have worked so well for Canada and the permit administration systems that are necessary to attract international players.
How much of this Russia will adopt and how quickly it can move is yet to be seen, but just by commissioning this report Russia has signalled its intentions. If you are wondering why Russia looked to Kinross in Canada rather than to Australia for advice, the answer is twofold:
First, Kinross has a very successful record of mining in Russia – most notably at its Kupol gold operation in the far-eastern Chukotka region. They have demonstrated there what international companies can deliver in terms of capital and technology. Secondly, Canada’s record in becoming a centre of mining finance and mining development is impressive. Canada attracts considerably more exploration spending than Australia (an average $1788m a year for the period 2006-10, compared to Australia’s $1167m) and its stock exchanges attract more than twice the volume of mineral investment. It also offers explorers some useful tax incentives.
We in Australia are inclined to interpret our booming resource developments as proof of our sound policies. We should perhaps reflect that much current activity is built on discoveries made decades ago. In terms of current exploration density (ie. expenditure compared to size) we are hardly a hot-spot – Chile, Peru, Mexico and South Africa, as well as Canada, outstrip us by big margins. We are to some degree living now on past success. Russia is working to get its regulatory regimes right and there is no doubt it has the prospectivity to become a serious player.
In some parts of the country the mining environment and administration is already excellent. Tigers Realm Coal, of which I am a Director, has a big coking coal deposit at Amaam in Chukotka province in far east Russia and our experience with the local administration has been highly positive.
The Amaam project is pretty exciting. It is high quality coal and the two deposits (at Amaam and Amaam North) both appear very extensive. This looks to have the makings of a long-term world-class operation. Best of all is its location – in mining-friendly Chukotka, close to ports and close to the huge coking coal markets of China, Japan and Korea. It is hard to think of a better CV for a mining development.
Needless to say I am very positive about Amaam, but the attitudes to mining I encountered on my Moscow visit have also rekindled my enthusiasm for other commodities and other regions in Russia. To use that age-old cliché: The bear is stirring.
TIG Price at posting:
20.0¢ Sentiment: ST Buy Disclosure: Held
