Abstract At the end of 2009, Letovsky, Director of the Russian Geological Survey, delivered a report at the 4th Russian Mining Congress, analyzing the impact the global financial crisis had on Russia’s geological exploration industry. He proposed developing an anti-crisis plan aimed at strengthening geological exploration efforts, tapping into Russia’s potential for mineral resource development, avoiding a prolonged crisis, and achieving a higher rate of economic growth.
At the end of 2009, at the Fourth Russian Mining Congress, Mr. Letovsky, Director of the Russian Geological Survey, delivered a report pointing out that the future socio-economic development of Russia and its geopolitical standing in the world would to a large extent still depend on tapping into the potential for mineral resource development as well as on formulating and implementing effective development strategies. However, under the impact of the global economic crisis, Russia’s geological exploration sector has been severely affected, and investment levels have become insufficient to sustain the normal operations of the mineral resources sector.
Letovsky said that the mining sector plays a pivotal role in Russia’s national economy. Approximately 40% of industrial enterprises and 13% of fixed assets are concentrated in the mineral resource utilization sector. The mining industry accounts for more than 33% of the country’s GDP and roughly 70% of total exports. Mining companies are the mainstay of geological exploration investment; however, affected by the global financial crisis, many companies now lack both the capacity and the willingness to participate in bidding for geological exploration projects. Indeed, even some conditions stipulated in previously obtained licenses—such as deadlines for commencing geological exploration work, the minimum volume of exploration work that must be completed, and the prescribed timelines for initiating mine development—have become difficult to meet.
Letovsky believes that, given Russia’s natural resource endowment, if these resources were utilized effectively, Russia would be fully capable of avoiding a prolonged crisis and achieving a high rate of economic growth. However, to attain these goals, it is essential to develop an anti-crisis plan aimed at strengthening geological exploration efforts.
This plan should ensure the production potential of geological survey agencies and prevent the loss of technical talent; maximize efforts to curb the decline in the volume of mineral resource exploration (geological survey workload); strengthen the functions of the Russian Federal Service for Geology and Mineral Resources through legal means and optimize its organizational structure; and develop a strategic plan for geological survey work through 2030, while updating relevant quotas, regulations, and planning documents to support the implementation of this strategy.
The head of Russia’s Geological Survey believes that, to accomplish the aforementioned tasks, a series of comprehensive measures must be adopted to create favorable conditions that encourage private companies engaged in geological exploration in Russia to increase their investments. These measures should not only address the issuance of mineral resource utilization permits but also involve economic and financial aspects. To this end, it is essential to ensure that geological explorers who discover large-scale national-level mineral deposits during their exploration activities are granted mining rights—albeit at least partial rights—to exploit such deposits. The duration for conducting mineral geological exploration on land should be extended from five to seven years. Moreover, if mineral extractors carry out geological exploration in deep strata beneath existing deposits or in adjacent areas and discover new ore sections or ore bodies, they should be granted mining rights to these newly discovered sections or bodies. If a miner conducts geological exploration on two or more target areas using its own funds, and only one of these areas yields a mineral deposit, the purchaser of the mining rights will cover the geological exploration costs for all target areas. Additionally, if mineral extractors use their own funds to conduct geological work and discover mineral deposits, they will be exempted from paying the one-time fee when obtaining mineral exploration and development licenses. Furthermore, periodic fees for mineral resource utilization will be abolished when miners carry out geological studies on their own resources. A mechanism should also be implemented to deduct from the total mineral extraction tax the expenses incurred by miners for geological exploration. Finally, issues related to the rational allocation of land and forestland used for mineral resource exploitation must be appropriately regulated.
Leaders of the Russian Federal Service for Geology and Mineral Resources believe that implementing the above-mentioned measures will effectively stimulate private investment and boost enthusiasm for geological exploration. At this conference, Letovsky also called on Russian mining companies to strictly adhere to current procedures and regulations for mineral resource development, create a healthy competitive environment, and encourage greater efforts in innovation as well as the exploration of effective approaches for developing remote regions—particularly those in Eastern Siberia, the Far East, and the Arctic continental shelf—to help Russia’s economy quickly overcome the impact of the global financial crisis.