Consultant’s Comment: To Russia with...stuff
Listening to the news and looking at the state of economies around the world one can see that our commodity export based economy is bound to fluctuate. But what else could Australia export, if not commodities?
By Dmitry Przhedetsky*
For years we have been successfully exporting skills and knowledge born by the mining industry, and mining consultants from this part of the world are well regarded. Australian mining specialists have been involved in successful projects from Canada to Mongolia; from Ghana to Chile; from the UK to Papua New Guinea. Due diligence; technical audit; bankable feasibility studies; modelling and resource evaluations are some of the activities where Australian consultants have made a contribution.
For numerous reasons one of the largest mining regions in the world is yet to be conquered - the countries of the former USSR. Some Australian mining consultants have been assigned to individual projects in the past and a few companies have opened offices in these countries or FIFO operations from the UK or from Australia.
Of course, apart from the language barrier, Australian specialists are facing different design and operating practices, different technical standards and resource validation methods, however it is worth the effort.
In particular, there is an enormous market for consulting work related to operational efficiency; equipment performance optimisation; environmental targets and personnel training at different levels.
Australian mining knowledge and skills can be exported with low risk and low capital investment, but with short-term return and long-term business. And other mining products could be successfully exported to the same markets.
Because the Russian and Australian currencies fluctuate in the same phase, as both economies are commodity dependent, this may present opportunities to Australian mining equipment exporters. And sea freight from Australian shores to the Russian Far East would be cheaper than the rail freight or sea freight from Europe.
It is not correct to think that the Australian mining contractors are uncompetitive in countries with developing economies. They have been successful in the past in Indonesia and India, so in some cases there could be a real chance to outbid local competition not only on price, but on higher safety records, faster mine development and smaller environmental footprint.
Russian technologies and consulting can compliment immensely the existing knowledge base of Australian operations and consulting companies due to the three main reasons:
1. In the former Soviet Union there was no practise of disclaimers. The Government officials were conducting both: the review and approval of the project. This has generated some complexity on one hand, however has developed multiple levels of control and error correction.
2. Many of the methods and technologies were developed in parallel with the traditional Western school and have been a viable alternative to it for decades, such as ISL of uranium.
3. Some deposits are unique for the countries of the former USSR and so are the solutions found by the specialists.
Russian manufacturers of mining equipment and consumables have been welcome guests at numerous trade shows and their inventions are definitely worth looking into. It is understood that the business for these companies cannot be developed overnight and without investments.
Importing consumables for the mining industry may be a faster solution, but again requires dedicated people, time and money. For example, there have been previous attempts to import cheaper ammonium nitrate into Australia, but they failed due to high transportation cost and anti-dumping measures. Nevertheless, there is a potential for importing into Australia some specialised Russian-made mining equipment, along with high tech consumables (where the added value can justify high transportation cost).
It is fair to say that despite the enormous potential for collaboration between Australia and Russia in mining the relations have been quite narrow and episodic. But both countries have unique mining experience and could benefit from sharing it.
Equally, Australian mining interests can be applied in all countries of the former Soviet Union – in the large coal deposits of Ukraine; the coal and uranium deposits of Kazakhstan; the copper and gold deposits of Uzbekistan.
There are risks associated with developing of any new business and establishing new ventures or just deepening the existing relations between some companies, hence it is important that Australian mining consulting firms are well prepared for the job and understand the specifics of the Russian mining industry; approval processes; rules and regulations.
More links between the academia and professional associations could generate more business in the end. Translating of some promotional materials of Australian companies into Russian and some Russian reference books would be of a great help for mutual understanding.
Any initiatives of the Australian Government in promotion and support of the Australian mining entities operating overseas would be of help and the experience of the Canadian Government in particular is quite remarkable in this regard.
* Dmitry Przhedetsky (M Eng (Mining), FAusIMM) is a director of Rock Cognition Pty Ltd. Contact him at: email@example.com