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Russian government concerned over possible depletion of mineral resources

The sustainable development of the Russian mineral resources sector requires its demonopolization, Natural Resources Minister Yuriy Trutnev said today, according to ITAR-TASS news agency. He was addressing a government meeting which later endorsed a long-term state programme for the study of subsurface resources and the recovery of mineral resources.

The agency quoted Trutnev as saying that at present the extraction of many mineral resources, including strategic ones, is concentrated in the hands of one or two companies. "Thus, nine companies extract in aggregate 82 per cent of Russian oil, and two companies account for almost 100 per cent of diamond extraction." He added: "It is obvious that in this situation a company that has a monopoly in the sector is not interested in further geological exploration and development of competition."

The agency went on to quote head of the Federal Antimonopoly Service Igor Artemyev as labelling the situation in the sector, where just a handful of big companies operate, as "economic poaching". He added that these companies "take under their wing" the most profitable deposits, thus increasing their plough-back, whilst paying little attention to geological exploration.

The agency said he urged the government and the Ministry of Natural Resources to pay "special attention to the level of monopolization in the sphere of subsurface use", and quoted him as saying he believes the monopolies "hinder the development of civic law relations in the sphere and the arrival of new companies that will create competition and lead to development of the industry". Artemyev sees the use of state-private partnership as the "main line" of policy in this field, the agency said.

The report went on to quote Aleksandr Belyakov, first deputy chairman of the Duma committee on natural resources, as saying that under no circumstances should the state abandon control over subsurface use. In his view, the state should also be in charge of geological exploration.
Trutnev was quoted as saying that Russia's biggest copper deposit at Udokan will be sold at auction in 2005. According to him, "Udokan is a typical example of how long it takes to bring a deposit to commissioning: it was entered on the balance of resources almost 50 years ago".

A report on the government meeting by external TV service NTV Mir noted that Russia has profitable reserves of gold up to 2011 and reserves of oil, copper and uranium up to 2015, but if a potential shortfall is to be avoided, action is needed now. It showed Prime Minister Mikhail Fradkov saying:
"In the midst of reform, our mineral and raw materials industry has found itself in a difficult situation. The raw materials base of existing enterprises has been seriously depleted because new deposits have been brought into operation slowly and there has been a considerable reduction in the volume of geological prospecting. These and other negative trends emerging over the past few years now require the government to draw up and implement an effective mineral and raw materials management policy in the interests of both today's citizens and future generations."

The report said the meeting adopted as a basis for further work a long-term state programme for the study of natural resources and replenishment of the minerals and raw materials base, with a view to increasing state investment in geological prospecting work. Over the entire period of the programme up to 2020, funding should total R255bn.

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