Williamstown, MA -- (SBWIRE) -- 04/30/2012 -- Demand for Russian mining output will remain sensitive to the potential for renewed economic recession in Europe and possibly the US in 2012, along with slowing growth in Asia and emerging markets. Notwithstanding unexpected shocks, however, the tempered demand will help limited capacity and weakening productivity in the country's mining industry.
BMI calculates that the industry will be worth RUB4.6trn (US$157.6bn) in 2011 and RUB3.9trn (US$128.0bn) in 2012. The sector's share of Russia's GDP will edge down over the coming years, and it will have a market value of RUB3.3trn (US$123.7bn) by the end of our current forecast period, in 2015.
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We forecast that Russia's production of coal will climb y-o-y to 2015, growing to 366mn tonnes in 2011, from 311mn tonnes in 2010. Output of iron ore will also grow, hitting 104.8mn tonnes in 2015, up from 92.2mn tonnes in 2010. However, diamond production will decline in the near term, to 76,050 tonnes in 2011 from 84,300 tonnes. Diamond output will drop until 2014-2015, when stagnating supply will hover at 62,300 tonnes. ALROSA forecasts 2011 diamond sales of about US$5bn. The company kept to its original forecast for 2011 thanks to US$5bn-worth of sales of cut and uncut diamonds. It sold diamonds worth more than US$3bn dollars for the first eight months of 2011 and has seen stable overall demand, despite a dramatic decline in speculative pressure on the diamond market.
BMI sees mining export values growing y-o-y across the board over the next four years, except in molybdenum ores and concentrates (excluding roasted) and in tin ores and concentrates. Iron ore concentrate exports - by far Russia's most valuable - are expected to settle at US$1.86bn in 2011 from US$1.54bn in 2010. Steady increases will see iron ore exports reach US$3.03bn by the end of the forecast period, in 2015.
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