copper industry. Copper production in Russia: the introduction of high technologies, the development of new deposits is a guarantee of maintaining a leading position in the world

Copper is the second among non-ferrous metals (after aluminum) in terms of consumption by the world economy. In terms of explored copper reserves, Russia ranks third in the world, behind Chile and the United States.

Copper has the highest electrical conductivity after silver. Windings of transformers and generators, wires of power lines, internal wiring are made of copper. Copper alloys are also widely used in technology - brass (with zinc), bronze (with tin or aluminum), etc.

Copper ores usually contain, in addition to copper, iron, zinc, lead, nickel, cobalt, molybdenum and other elements. Therefore, in the production of copper, more than 40 types of commercial products are obtained: copper, zinc, molybdenum and lead concentrates, blister and refined copper, gold, silver, platinum, rare metals, etc.

Copper is one of the first metals of human civilization. The oldest copper objects and pieces of ore were found at the excavations of the early agricultural settlements of Western Asia. Copper alloys were the main material for the production of tools and weapons in the Bronze Age. The oldest bronze tools found in southern Iran, Turkey and Mesopotamia date back to the 4th millennium BC. e.

In Russia, the copper industry arose at the beginning of the 17th century. In 1630-1653. Pyskorsky and Kazansky factories were built in the Urals.

* See also: Copper (special issue)//Geography, No. 31/99.

Raw material base

In terms of explored copper reserves, Russia ranks third in the world, behind Chile and the United States. Copper reserves are explored in 120 deposits, of which 52% are found in deposits of pyrite copper and copper-zinc ores and cuprous sandstones, 45% - in deposits of sulfide copper-nickel ores, 1.3% - in polymetallic, 0.7% - in tungsten and molybdenum and 0.6% - in tin. About 1% of copper reserves are explored in gold and iron ore deposits.

The largest copper deposits in Russia are Oktyabrskoye and Talnakhskoye in the Krasnoyarsk Territory (Norilsk mining and industrial region, copper-nickel ores), Gaiskoye, Podolskoye and Volkovskoye in the Urals, Udokanskoye in Transbaikalia.

Despite the presence in Russia of significant explored copper reserves, the degree of their industrial development is relatively low: less than half of all explored reserves are in exploited deposits. Such large deposits as Udokanskoye in the Chita region, Yubileinoye and Podolskoye in Bashkiria, containing a quarter of all copper reserves explored in Russia, have not been developed by industry and remain in reserve.

The development of copper ores in Russia is carried out both by open and underground methods. The largest quarries of the copper industry - Sibaisky, Uchalinsky and Molodezhny (the first is being developed by the Bashkir Copper and Sulfur Combine, the second and third - by the Uchalinsky Mining and Processing Plant) - are completing their reserves, and the copper content in the ores of these deposits does not exceed 0.9%.

Of particular note is the issue of bringing into commercial operation the largest in Russia, the Udokanskoye deposit. According to experts, in 5-6 years it will be possible to mine up to 7.5-10 million tons of ore per year at the Udokan deposit with an average copper grade of 1.3%. However, the development is hampered by difficult natural conditions and the sparsely inhabited area.

Production of copper concentrates

In Russia, the extraction and enrichment of copper ores is carried out by 13 mining and processing enterprises. The main amount of copper (70-75%) is mined at the deposits of copper-nickel ores by the enterprises of RAO Norilsk Nickel. Second in terms of copper production (25-27%) are pyrite copper and copper-zinc ores, the deposits of which are developed in the Urals (Orenburg, Sverdlovsk, Chelyabinsk regions and the Republic of Bashkortostan) and the North Caucasus (Karachay-Cherkessia). Long-term and intensive development of copper deposits in the Urals has led to the depletion of the mineral resource base of operating enterprises.

The processing of ores and the production of copper in concentrates is carried out at 10 concentrating factories of the copper industry, three factories of the nickel industry, as well as factories of the molybdenum, tungsten and tin industries (one enterprise each). Copper smelters and refineries faced the problem of a shortage of domestic raw materials. They partially solved this problem by processing raw materials supplied from foreign countries under tolling** contracts. Thus, the Mednogorsk copper-sulfur plant produces almost all blister copper from imported raw materials. Concentrates produced at enterprises that have long-standing production ties with the Russian copper industry are also considered imported: in Kazakhstan's Zhezkazgan, Balkhash, Glubokoe and in Mongolian Erdenet.

In 2000, only 69% of copper production in Russia was provided with its own copper concentrates, the rest was imported from abroad.

** Tolling (from English tolling - taxation, tribute) - the transfer by the customer of raw materials, components from one state to a manufacturing company in another state in order to process them into finished products. Then the finished product is returned back and, as a rule, is exempted from customs duties. Products that are in tolling turnover are exempt from taxation, which is unprofitable for the country accepting tolling, but often beneficial for the manufacturer. Tolling schemes in the modern Russian economy have led to a sharp reduction in payments from foreign companies to the federal budget, but they help preserve the qualifications of specialists in difficult times of falling production.

Blister and refined copper

Copper concentrates are melted in furnaces resembling open-hearth furnaces (recall this process from ferrous metallurgy). But it is not copper that comes out of the furnaces, but the so-called matte (from the German Stein - “stone”) - an alloy of copper with iron, sulfur, silver, zinc and other elements. Non-copper impurities in matte 70-80%. Then the matte is poured into the converter and oxygen or air is blown through it, as a result of which the sulfur residues are burned out and iron is removed. This process takes not minutes, as in a converter for processing pig iron into steel, but hours. The matte is converted into blister copper, which contains 1-2% impurities, which is also very high for modern technology. Pure or refined copper is produced by electrolysis. A plate of purified blister copper - an anode - is placed in an electrolytic bath with a solution of sulfuric acid and copper sulphate. The cathode is a sheet of pure copper. The electric current carries only copper particles to the cathode. Gold, platinum and silver sink to the bottom of the bath and are subsequently removed, other impurities remain in solution.

The largest amount of refined copper (54% of the total Russian production) is produced by the RAO Norilsk Nickel plants in Norilsk and Monchegorsk, more than 37% - by the Uralelectromed plant in Verkhnyaya Pyshma.

The copper industry is closely related to the chemical industry. Copper ores used in Russia are saturated with sulfur, which is removed in the form of sulfur dioxide during the metallurgical processing, captured and used to produce sulfuric acid, a product necessary for the production of a number of chemical compounds. In Krasnouralsk and Revda, phosphate fertilizers are produced on the basis of sulfuric acid and imported apatite concentrates.

Development trends

Most of the copper produced in the country is exported. In 2000, 845 thousand tons of refined copper were produced; 644 thousand tons - exported.

The domestic Russian copper market is mainly determined by demand from the two most capacious consumers - the electrical industry and non-ferrous metallurgy manufacturing enterprises (alloys, foil, powders, etc.).

Experts assess the country's modern copper industry as a steadily developing one. The most ambitious project of the next decade in the domestic copper industry is the construction of a mining and processing plant on the basis of the Udokan copper deposit in the BAM zone with a capacity of 10 million tons of ore per year, from which up to 130-140 thousand tons of pure copper can be obtained annually.

Based on the materials of the Information and Analytical Center of INFOMETGEO LLC

Some business performance indicators incoming

to the Ural Mining and Metallurgical Company (UMMC), 2003

** Data for Uralelectromed and Kirovgrad copper smelter are combined.

Among non-ferrous metals in terms of consumption, copper is in second place, second only to aluminum. With high corrosion resistance, thermal and electrical conductivity, as well as easy deformability, it is used primarily in the form of electrolytic copper and electrical conductor. A significant amount of copper is used in the form of alloys. A wide range of applications determines the stable demand in the world market. Moreover, with some reduction in the use of copper in some industries, the areas of its consumption are expanding, for example, in the manufacture of electric vehicles, heat pumps, demineralizers, etc.

Mining of copper ore. The largest reserves of copper ores are concentrated in America (Chile, Peru, USA, Mexico, Canada), Australia, China, Poland, Russia, Kazakhstan, Zambia.

However, in the first half of the XIX century. The leading position in the copper mining industry was occupied by England (50% of world production). But its share in global production began to fall rapidly, not only because of the depletion of reserves and the abolition of import duties on imported copper ore. Already in the second half of the XIX century. new states appeared that began to develop large deposits of copper (Chile, USA, Peru). And the center of ore mining gradually moved from Europe to America.

Major changes in the geography of copper mining also occurred in the middle of the 20th century, when, thanks to the development of rich deposits in Central Africa, Northern Rhodesia (now Zambia) and the Belgian Congo (Zaire, now the Democratic Republic of the Congo) were included in the number of mining countries. The mining of copper ores in Chile continued to grow. The share of European countries, although mining in them also increased slightly, in world copper production has constantly decreased.

On the eve of World War I, the total copper production (in terms of metal content) was about 1 million tons, before World War II it had already exceeded 2 million tons (in terms of metal content in ore), in 1970 - 6.5, and in 2007 - 15 million tons. For many decades, the United States occupied the leading position in the industry (1900-1913 - about 60%, 1937 - 34, 1950 - 32, 1970 - 24%). In the 1950s-1960s. there was a further expansion of production in Northern Rhodesia and the Belgian Congo, as well as in Canada, where new deposits were developed. Northern Rhodesia came second in the world, even ahead of Chile, and in total, African countries mined more copper than the United States (although in 1960 they were still the leader in world production).

In the US non-ferrous metallurgy, as in the countries of Western Europe, there was a shift towards the use of low-grade ores (0.8-1.0% copper in ore), since as a result of intensive exploitation of the richest sections of copper ore deposits, the average copper content in mined ores systematically decreased. This led to changes in the placement of prey

within countries, as well as to some rise in the cost of a unit of production. The use of poorer ores would not have been possible without progress in processing technology and without the use of complex methods for their use in the conditions of scientific and technological revolution (for example, copper-molybdenum ores in the USA and Chile and copper-nickel ores in Canada). There was a tendency to greater use of cheap (metal-poor) ores from deposits controlled by American capital in other countries of the world. Thus, the average copper content in the ores of the Congo was 6.4%, in Northern Rhodesia - 3.6-3.8%, and the wages of a worker in African mines were ten times lower than in developed Western countries.

In 1970, 6.5 million tons of copper ore were mined in the world and the leaders in the industry were the USA (24%), the USSR (14%), Zambia (13%), Chile (11%), Canada (9%). At the same time, the total share of the three American states of the USA, Chile and Canada was 44%. In the 1980s-1990s. the share of Latin American countries (especially Chile), as well as Asian countries, continued to increase. At the same time, the share of Eastern European countries was decreasing (although not very significantly), and the share of African countries in this industry was rapidly declining.

By the beginning of XXI. V. world copper production exceeded 13 million tons, while again it is necessary to characterize some changes in the location of enterprises that extract ore and produce concentrates. Chile and the USA are leaders in the world mining of copper ores. And the share of three American states (Chile, USA, Canada) exceeded 50% of the global production. At the same time, the share of African copper producers in Zambia and the DRC has halved since the 1980s. It should be noted that Indonesia, Australia, and China have become major producers of copper (Table 7.25).

Table 7.25

Copper mining (by metal content in ore)

in leading countries, mmt

The end of the table. 7.25

Copper ores and their concentrates are much poorer in metal than aluminum ores. This causes the linkage of ore enrichment and even the production of blister copper to the places of ore mining. The production of copper by leaching and selective extraction is growing. Considering the investment policy in the world copper mining industry at the end of the 20th century, two main directions can be distinguished.

First, there is the development and development of unique, rich deposits. Thus, in 1988, a new Neves-Corvo copper plant was put into operation in Portugal with a design capacity of 400 thousand tons of concentrate per year with a 25% copper content (the average copper content in mined ores is 0.9%, and at this mine - 7.7%). In 1991, the Escondida plant was put into operation in Chile. The ore reserves there are mined open-pit, and the plant receives ore with a copper content of 2.8%, and the annual production of copper in concentrates is more than 300 tons.

Secondly, a method is used for leaching poor copper ores (with a copper content of 0.15-0.5%) mainly from dumps. It has found its greatest application in areas where copper has been mined for many years (for example, in the USA up to 25% of copper is mined in this way). The cost of producing refined copper with this method is half as much as with the usual scheme of mining, enrichment and pyrometallurgical processing.

Smelting of blister copper. Copper has been known to mankind since time immemorial. However, industrial scale smelting

copper learned only with late XIX V. There is still a territorial gap between the production and consumption of products of the copper smelting industry. So, even in the 1990s. the ratio of economically developed and developing countries of the foreign world in copper ore reserves was approximately 30: 70, in the production of copper concentrates - 40: 60, blister copper - 55: 45, refined copper - 66: 34, and in the consumption of refined copper this ratio was 85 : 15.

Most of the world's smelting of blister copper (more than 12.5 million tons, 2010) is concentrated where it is mined. This is due to the relatively low specific fuel costs at copper smelters, as well as the relatively low content of copper not only in its ores, but also in concentrates (15-25%). For these reasons, more copper enters the world market in the form of metal (blister or refined) than in the form of concentrates.

In 1950, almost all the production of blister copper in the world was concentrated in just 10 countries: the USA, Chile, Zambia, Canada, Zaire, Great Britain, the USSR, Germany, Mexico, Yugoslavia.

Currently, the world leaders in the smelting of blister copper are: China (20%), Chile, Japan, India, Russia, USA, Republic of Korea, Poland, Australia, Canada, Kazakhstan.

Smelting of refined copper. Refining, as the final stage of copper production, has little to do with raw material bases. It was carried out and is being carried out now either where there is a metallurgical processing at specialized enterprises, which is combined with the smelting of black metal, or in areas of mass consumption of finished products. At the same time, there is a group of countries that carry out large volumes of both copper mining and the production of blister and refined copper: the USA, Chile, Canada, Australia, and Zambia. The smelting is also growing in developing countries (Peru, Republic of Korea, Mexico). A rather significant amount of refined copper is produced in developed countries that do not have their own raw material base (Japan, Belgium, Germany).

The production of refined copper (primary and secondary in total) in the world by 2013 exceeded 17 million tons. The top three countries account for about 70% of smelting. The leading positions are occupied by: China, Chile, USA, Japan, Germany, Canada, Russia (Table 7.26). According to the forecast, the output of refined copper in the world will continue to grow.

Table 7.26

Production of refined copper in the leading countries, mmt

International trade in industry products. The consumption of refined copper is mainly concentrated in countries with a high level of industrial development (with a developed and diverse electrical industry: China, the USA, Japan, Germany, the Republic of Korea, Italy, Taiwan, which are the largest consumers of copper). The G7 countries alone account for about 70% of world copper consumption. Demand for copper in the world market as a whole is at high level. In recent years, a group of Asian states, as well as South Africa and Latin American countries - Brazil and Mexico, have become major consumers of refined copper in recent years.

Japan and Germany are recognized as the largest importers of copper ore raw materials. Most developed countries import mostly blister copper, such as Belgium from its former African colony (now the Democratic Republic of the Congo), or import refined copper. So, in the world market already in the late 1990s. the export of refined copper accounted for more than 50% of the output, including almost 1 million tons of refined copper are exported from the CIS countries.

Major exporters refined copper - Chile, Russia, Peru, Kazakhstan, Japan, Canada, Australia, Zambia, Poland. In 1967, copper exporting countries created the SIPEC association, which included Chile, Peru, Zambia and Zaire, who tried to protect their interests in the world trade in copper ore raw materials. Later Indonesia, Australia, Mauritania, Papua New Guinea, Yugoslavia joined this group of countries. The share of these countries in the extraction of ore and the production of blister copper is very significant, but in consumption it is still small.

Russia, as well as Kazakhstan, is now one of the largest suppliers of copper to the world market. The cost of its production in our country is much lower than the world level, export is beneficial for both producers and the state. But main reason nevertheless, there remains a decrease in copper consumption in our country in the 1990s, due to the general decline in industrial production.

Major importers refined copper - USA, France, about. Taiwan, Germany, Italy, Republic of Korea, Great Britain, Japan.

In the copper industry (as in many other branches of non-ferrous metallurgy), the key positions are held by the largest TNCs.

Send your good work in the knowledge base is simple. Use the form below

Students, graduate students, young scientists who use the knowledge base in their studies and work will be very grateful to you.

Hosted at http://www.allbest.ru/

Copper industry as an object of analysis. Strengths and weaknesses of the industry on the example of Russian enterprises

Strengths and weaknesses of the industry on the example of Russian enterprises Copper is a highly liquid commodity that is used in the calculation of most commodity indices. Its price is determined on the stock exchanges - COMEX (USA) and LME (London). The price dynamics of copper clearly traces the phases of growth and recession of the world economy. This is due to a fairly diversified structure of demand for copper, determined by the widespread use of this metal in many industries.

The uniqueness of copper, determined by its chemical properties, allowed it to take the third place in the world in terms of consumption of metals after iron and aluminum. Thus, copper finds its main application in finished products in the following areas: electrical engineering, heat transfer, pipe production, alloy production, and so on.

Thus, the variety of ways to use copper and copper alloys determines the constant demand for it from a wide range of industrial enterprises. In this regard, the price of copper in the world market is highly volatile, does not directly correlate with the level of economic development of a particular consumer state, and is determined by the expectations of investors and consumers regarding the dynamics of supply and demand for this metal. Figure 1 shows the dynamics of copper prices for the period 2007-2013.

The figure shows that the period of the maximum decline in copper prices coincided with the peak of the global financial crisis (December 2008), however, the growth in price positions outpaced the recovery of the economies of the leading countries of Europe and America (which is primarily due to the growing demand for non-ferrous metals from Chinese enterprises) and in 2010 already exceeded pre-crisis levels.

World reserves of copper ores are localized according to the territorial principle. Most of the reserves (approximately 40% of the world) are concentrated in Chile and Peru, in this regard, the world leader in the industry are enterprises controlled by the Chilean state enterprise Codelco, the share of participation of other companies in world copper production is presented in table 1.

As can be seen from the table, among the world leaders in the copper industry there are three Russian companies that are also dominant players in the domestic market - these are OJSC UMMC (and its parent organization OJSC Uralelectromed), OJSC MMC Norilsk Nickel, as well as ZAO Russian Copper Company (ZAO RMK). The dynamics of the share of participation of the companies mentioned above in Russian copper production is presented in Table 2.

copper market industry

Let us briefly characterize the strengths and weaknesses of the main copper producers in Russian Federation.

JSC « Uralelectromed.

Industry risks. The main activity of OJSC "Uralelectromed" is the production of cathode copper and products from it. Therefore, industry risks that could adversely affect the Company's operations include a reduction in copper consumption and a deterioration in the non-ferrous metallurgy industry. The main risk factor that has a significant impact on the results of the Company's operations is the price and level of consumption of copper in the world market. Since a significant portion of Uralelectromed's revenue comes from contracts for the supply of metals at LME prices linked to the delivery period, a decrease in prices on the world market could significantly affect its operations. Despite the negative impact of the above factors, OJSC Uralelectromed takes a number of measures to continue its core business at an acceptable level of profitability. The risks associated with possible changes in prices for raw materials purchased by the Company are insignificant due to the fact that OJSC Uralelectromed is part of a vertically integrated holding. In addition, there are long-term contracts for the purchase of this raw material.

Country and regional risks. At this time, OJSC Uralelectromed does not anticipate any negative changes that may affect the ability to fulfill its obligations under securities. The risks associated with possible military conflicts, the imposition of a state of emergency and strikes in the Russian Federation and the Urals region are assessed as minimal. The risks associated with the geographical features of the Russian Federation and the Urals region, including increased risk of natural disasters, possible termination of transport communications due to remoteness and / or inaccessibility, etc., are also assessed as minimal.

Political and social risks. At present, the political situation in the Russian Federation is characterized as stable. A number of reforms are being carried out to create a free market for goods and capital, optimal conditions for entrepreneurial activity and the formation of the foundations of free competition. The company has a certain level of financial stability in order to overcome short-term negative economic changes in the country and region of JSC "Uralelectromed".

Financial risks. At the end of 2011, inflation in the Russian Federation amounted to 6.1%, which is 2.7 percentage points lower than in 2010 (8.8%). An increase in the inflationary burden may have negative consequences for the activities of OAO Uralelectromed.

Currency risks. Significant factors influencing the performance of JSC "Uralelectromed" are the foreign exchange rates in which transactions are made in foreign markets. Taking into account that OJSC Uralelectromed mainly exports to European countries, the growth of the euro exchange rate has a positive effect on the company's activities, increasing export earnings in terms of rubles 3 .

JSC « MMC Norilsk Nickel. We will analyze the strengths and weaknesses of the enterprise in the context of analyzing its main risks and the Company's response to them.

Industry risks. The Company is exposed to the risk of changes in metal prices, as the majority of sales proceeds come from contracts for the physical delivery of fixed volumes of metals at prices linked to the delivery period. There are risks associated with a possible change in prices for the services of contractors provided to the Company for processing metal concentrates, processing finished metals into products with enhanced consumer properties, transportation and insurance of concentrates and finished metals, and cargo transportation, but the Company takes the necessary actions to minimize these risks , including:

* there are long-term contracts for the provision of services, in which the price of services is fixed and provides the necessary level of profitability;

* it is possible to attract alternative contractors.

Country and regional risks. The modern Russian economy is characterized, in particular, by such phenomena as currency controls, low levels of liquidity in the capital markets and ongoing inflation. Severe weather conditions in the Far North, as well as any force majeure circumstances, may affect the production activities of MMC Norilsk Nickel. As part of solving this problem, practical work is being carried out to build long-term relations with regional authorities aimed at the effective and comprehensive development of the regional economy; harmonious development of social partnership, taking into account the opinion of all employees of the Company; creating and maintaining sufficient stocks of material and technical resources in hard-to-reach areas; organization of measures aimed at minimizing damage from ice drifts and floods.

Financial risks. The Company considers market (price, currency and interest rate), credit and liquidity risks to be financial risks. Financial risk management is carried out centrally and is regulated by internal regulations and methods approved by the Company's management. The Company continues to improve the methodology for quantitative risk assessment and control over risk mitigation measures.

Legal risks. Most sales of the Company's products are made in foreign currencies. Therefore, changes in currency legislation may affect the Company's financial results. MMC Norilsk Nickel is a conscientious taxpayer, fulfilling its obligations to calculate and pay taxes, fees and other obligatory payments in a timely manner and in full. Thus, at present, the Company sees no significant risks associated with global changes in the legislation on taxes and fees, which may come into force in the shortest possible time and significantly increase the tax burden 4 .

CJSC Russian Copper Company. We will analyze the strengths and weaknesses of the enterprise in the context of analyzing its main risks and the Company's response to them.

Industry risks. The impact of a possible deterioration in the situation in the Company's industry on its activities and the fulfillment of obligations under securities. The main difference between the RCC Group and OJSC UMMC and OJSC MMC Norilsk Nickel is the significant dependence of its activities on the copper market and a small specific share of products from other non-ferrous metals. Therefore, the main factor that could adversely affect the activities of CJSC Russian Copper Company may be the deterioration in the situation in the non-ferrous metallurgy industries, in particular in the copper industry.

RCC Group cannot influence external factors. However, some negative impact of the industry level can be neutralized by increasing prices for finished products (copper rod) in the foreign and domestic markets.

Country and regional risks. The general country risks for Russia, which may have a negative impact on the activities of CJSC Russian Copper Company, include:

* the imperfection of the legislative framework and the insufficient efficiency of the work of arbitration courts in resolving economic disputes;

* Dependence on the external economic commodity conjuncture and financial market conditions.

The risks associated with the political situation in the Russian Federation and the Ural region, where CJSC Russian Copper Company is registered as a taxpayer and carries out its main activities, are assessed as minimal.

The risks associated with the geographical features of the region are minimal and, in the event of a risk event, have an insignificant impact on the results of financial and economic activities.

Regional risks. CJSC Russian Copper Company is registered in the Russian Federation, in the city of Yekaterinburg, Sverdlovsk Region, but its main counterparties are RCC Group companies located in various regions of the country, as a result, the regional risks of CJSC Russian Copper Company are diversified. The RCC Group has a certain level of financial stability in order to overcome short-term negative economic changes in the country and the region.

The region in which the Company carries out its main business activities is characterized by a developed infrastructure and an extensive transport network. There is no increased risk of natural disasters in the region, the region is not remote and difficult to access. According to CJSC Russian Copper Company, the risks associated with the geographical features of Russia and Yekaterinburg are minimal.

Financial risks. Changes in interest rates may have a negative impact on the Company by increasing its interest costs. Thus, the risks associated with changes in interest rates on loans, in the opinion of the Company, are moderate.

CJSC Russian Copper Company plans to mitigate these risks by using fixed interest rates and extending loan terms. RMK Group plans to use derivative financial instruments to minimize these risks.

RMK Group is subject to change exchange rate, since most of the RCC Group's revenue is either generated in US dollars or denominated in US dollars, therefore, the depreciation of the US dollar against the ruble in the market leads to a decrease in revenue in rubles and a decrease in the profitability of the RCC Group.

In the event of fluctuations in currency risks and interest rates, RCC Group plans to:

* increase in the share of foreign currency borrowings in US dollars in the structure of the loan portfolio, since most of the proceeds are generated or denominated in US dollars;

* refinancing of existing loans and their early repayment with the attraction of credit resources at lower rates or changing rates on existing loans downward;

* fixing the sale price in contracts concluded with buyers.

Legal risks. Legal risks associated with the activities of CJSC Russian Copper Company (separately for the domestic and foreign markets), including:

1. Risks associated with changes in currency regulation;

2. Risks associated with changes in tax legislation;

3. Risks associated with changes in the rules of customs control and duties.

This type of risk may have a moderate or insignificant impact on the activities of the RCC Group. 5

Thus, the author considered the copper industry of the Russian Federation as an object of analysis, as well as the strengths and weaknesses of the industry on the example of the leading Russian enterprises: OJSC UMMC, OJSC MMC Norilsk Nickel and CJSC Russian Copper Company. During the writing of this publication, it was found that:

* the copper industry, due to the unique individual characteristics of copper, is a constantly in demand and promising type of industrial production;

* leading Russian copper companies (OJSC UMMC, OJSC MMC Norilsk Nickel and CJSC Russian Copper Company) are among the world's leading copper producers;

* the Russian copper industry in the course of doing business is exposed to a number of risks that may affect the final financial results of the business (industry risks, financial risks, country and regional risks, legal risks, political and social risks, as well as risks associated with the implementation of activities) ;

* despite the existing risks of the copper industry, the leading enterprises of the industry are developing and actively implementing countermeasures aimed at minimizing the negative impact of external and internal economic factors.

Literature

copper market industry

1. Copper quotes, price, value, news. [Electronic resource] - http://www.finam.ru/analysis/profile049F3/default.asp.

2. Annual report of JSC "Uralelectromed" for 2011.

4. Annual report of OJSC MMC Norilsk Nickel for 2011.

5. Annual report of RMK-FINANCE LLC for 2011.

Hosted on Allbest.ru

Similar Documents

general characteristics enterprises, industries, products. Analysis of the strengths and weaknesses of the company, market and main competitors, systems for generating demand and stimulating sales, organizational structure. Principles of pricing policy. Investment planning.

business plan, added 03/05/2015


a brief description of branches of mechanical engineering for the food and light industry. Differentiation of new technologies in mechanical engineering, main indicators and their dynamics. Description of enterprises, their activities, problems of the industry and prospects for their solution.

report, added 02/28/2011


The role, tasks, composition and significance of the woodworking industry. Technological features of the woodworking industry in Russia, their impact on the location of enterprises. Causes and factors determining the development of the industry in Russia.

term paper, added 09/24/2014


General characteristics and prospects for the development of light industry in the Russian Federation. Principles of location of industry. Light industry in the Central Federal District. Draft strategy for the development of light industry in Russia for the period up to 2015

term paper, added 09/03/2010


World copper market: ore mining, production, consumption, world copper prices. World prices for copper and exchange stocks. Variation analysis by volume of mined copper. Correlation-regression analysis between copper mining and copper exports.

term paper, added 06/17/2015


The largest deposits of copper, the development of industry and the forecast of the formation of the world metal market until 2013. Application of regression-correlation and trend analysis to calculate the economic characteristics of copper. Statistical assessment of the tightness of the connection.

term paper, added 05/08/2011


State of the chemical and petrochemical industry in Russia. Comparative assessment of the competitiveness of organizations in the Volga Federal District and the Republic of Tatarstan. Analysis of organizations in the chemical and petrochemical industry on the example of individual enterprises of the Volga Federal District.

term paper, added 04/13/2009


Analysis of the macro-environment of the enterprise. Description of the state and prospects for the development of the industry. Analysis of the use of the potential of the enterprise, its strengths and weaknesses. Formation of movement guidelines. Development of functional strategies of the enterprise.

term paper, added 10/14/2014


Efficiency and competitiveness of Russian enterprises and Russia as a whole in the world markets, both joint and without the participation of foreign capital. Problems and reasons for the low competitiveness of Russian enterprises against the backdrop of global economic relations.

term paper, added 01/09/2011


General characteristics of the Russian chemical complex, which is a strategic component of the industry and includes 15 large sub-sectors. Overview of chemical products markets, modern problems of the petrochemical industry and ways to solve them.

The metallurgical crisis has not bypassed the copper market. The metal price at the end of November last year reached $4,462 per ton. This is a record low since late 2008 - early 2009. At the beginning of this year, the anti-record was broken by $4,331 per ton. What happened to the market and how did it affect its main participants?

World copper market

Copper is one of the first metals mastered by man, which indicates the relative simplicity of its production. Today, the copper industry is the second largest non-ferrous metallurgy sub-sector after aluminium.

Copper is supplied in refined form and as a concentrate or ore for further processing. The metal is widely used for the production of end products and alloys, mainly brass and bronze. Due to their mechanical properties, copper and copper alloys are widely used in various industries. According to the GFMS Copper Survey, copper usage by industry is broken down as follows:

According to the same source, at the end of 2015, the world production of copper ores amounted to 19,022 thousand tons. The main production facilities are concentrated in the countries of South America, which accounts for just over 41% of world production. The second place is occupied by the countries of Asia with a share of about 20%, and the third place is occupied by North America with a 14% share.

The leader in the extraction of copper ores is Chile. About 30% of the world's copper is mined in this country. The second place, far behind, is occupied by China. Russia is only in seventh position.

In the production of refined copper, the situation is somewhat different. The main volumes are concentrated in Asia, where more than 51% of the world's copper is produced. The key producing countries are China, Chile and Japan, the production in which, at the end of 2015, amounted to 7,350, 2,688 and 1,467 thousand tons, respectively.

Against the backdrop of the development of the electronics industry, energy, construction and engineering over the past five years, metal production has been growing at an average of 3% per year. Demand for copper is growing not so actively: about 2.5% per year with a constant slowdown.

Thus, the shortage of the metal that arose in 2011 turned into an excess, and since 2013 it has been actively growing.

This was reflected in copper prices. If in 2011 (according to the website westmetall.com) the average annual price of copper on the London Metal Exchange was $8,821 per ton, then in 2015 the average annual price was $5,502

The main reason for the decline in the global copper market was the slowdown in the growth of the Chinese economy, which led to a drop in the growth rate of demand for copper in this country. Due to the rapid development of construction, energy and engineering in the country, China is now the main consumer of copper and covers about 46% of world consumption. Therefore, the slowdown in the country's economic growth had a significant impact on global metal consumption and provoked the accumulation of exchange stocks.

Another significant factor is the fall in oil prices. Metal prices are closely correlated with oil prices, since the cost of metal production includes a significant amount of costs for petroleum products. Thus, the decline in demand in China and the fall in oil prices, which occurred almost simultaneously, were a strong blow to the copper market.

Key Players

The largest copper producers are usually evaluated by the volume of metal mining. At the end of 2015, the top five manufacturers include Chilean Codelco, American Freeport-McMoRan, Swiss supplier of raw materials Glencore, as well as BHP Billiton and Southern Copper.

At the end of 2015, the dynamics of the production of the two largest companies is in line with market trends, which cannot be said about Glencore and BHP Billiton, whose production indicators fell. The drop in indicators is primarily caused by the initiative of the companies themselves to fight the market downturn by reducing production. The most efficient company in this regard was Southern Copper, which outperformed production by 12% compared to 2014 results.

Despite the increase in production, financial performance leaves much to be desired. The revenue of all companies decreased significantly in 2015 due to extremely low prices for products. Freeport-McMoRan showed the largest decline in revenue, almost 26%. In second place was Glencore, whose copper division saw a 19% decline in revenue and a 23% drop in the company's overall result. Codelco and Southern Copper were the hardest hit, with revenues down 15.5% and 13%, respectively.

Dynamics net profit follows the dynamics of revenue, so all companies except Southern Copper received a significant loss in 2015. The reason is a decrease in the company's revenue and profitability of sales due to low copper prices. The smallest company, Southern Copper, seems to be the most resistant to market fluctuations among the leaders of the world industry today.

Consider companies from a market point of view. Since Codelco is a national corporation and is not publicly traded, let's take only Freeport-McMoRan, Glencore, and Southern Copper.

The most valuable company is Glencore, which is not surprising given its scale and diversification of assets and products. Second place goes to Southern Copper and third to Freeport-McMoRan. The dynamics shows that the fall had a negative impact on the market capitalization of all companies. Glencore showed the biggest drop.

Based on market multiples, the Freeport-McMoRan looks the most attractive in this comparison given the lowest P/S ratio. However, it is the only one among those presented that has not received a profit for the second year. From this point of view, Southern Copper behaves most confidently. If we approach the issue from the point of view of the dynamics of indicators, we can see that for all manufacturers, the P/S and P/E ratios are quite high and change for the worse.

Russian manufacturers

The largest players in the Russian copper market are PJSC MMC Norilsk Nickel, the holding Ural Mining and Metallurgical Company (UMMC) and the Russian Copper Company. UMMC and Russian Copper Company are not public companies, so let's consider Norilsk Nickel against the backdrop of world copper production leaders.

Norilsk Nickel is the largest copper producer in the country, but the company's scale of production is much lower than that of world leaders. In 2015, Norilsk Nickel produced 369,967 thousand tons of copper, which is in line with the previous period. The company's revenue from the sale of copper decreased from $2,536 million in 2014 to $1,916 million in 2015. This indicates a direct dependence of the products sold on world prices.

The total revenue of the company compared to 2014, like that of the companies considered earlier, showed a negative trend. Norilsk Nickel's net profit did not react strongly to the decrease in revenue, primarily due to the decrease in losses from exchange rate differences.

The strengthening of the US dollar against the ruble also played a role, which contributed to the growth of the company's sales profitability, while this indicator was getting worse for world leaders.

As for the market capitalization, in dollar terms it decreased in 2015, similar to the companies reviewed earlier. But the ruble capitalization increased due to the impact of the depreciation of the domestic currency on the company's activities.

Market coefficients show negative dynamics. P/S and P/E are rising while revenue and net income are declining. However, in the case of Norilsk Nickel, the situation looks more favorable than that of the largest copper producers.

Prospects for the development of the industry

The sharp decline in the growth rate of demand for copper in China was reflected in global producers. As a result, copper companies' forecasts of demand for their products are expected to be more pessimistic and production growth rates will gradually slow down. In the long term, a decline in the number of new projects and a deterioration in ore quality are expected, which will contribute to a significant slowdown in production growth. According to the forecasts of the largest banks and agencies for the analysis of the copper market, the growth rate of demand for the metal, both in the short and long term, will remain at the same level. As a result, the oversupply of metal in the market is expected to be depleted, and from 2016 metal prices are predicted to rise.

Image: photospilka.com

Over the past two decades, the geography of mining and production of copper has changed significantly. To replace traditional mining sites, the so-called "old copper mining areas" (Zaire,

Zambia, Papua New Guinea), where industrial reserves are severely depleted and their further development is relatively expensive and overall production is experiencing a significant decline, new regional producers have arrived, primarily from the South American continent, Oceania and Australia. In addition, the discovery of new large deposits led to an investment boom in the industry and spurred its intensive development. A number of major investment projects in new open pit mines in Chile and Indonesia have made these countries the leading producers of copper ore. In the past few years, Chile has overtaken and gone far ahead of the United States, which previously held the first place in the production of copper ore. Indonesia broke into the top ten producers of copper ore thanks to investments in the development of only one Grasberg deposit in the province of Irian Jaya.

Since the content of copper in the ore is low and ranges from 0.3 to 1% on average, the transportation of copper ore is not economically efficient. This is the reason why copper processing cycles from ore extraction to concentrate production are usually territorially connected and localized in the areas of occurrence of copper ores. At the same time, concentrate and blister copper may well be transported. In addition, to obtain refined copper, significant costs of electricity are required. The consequence of this was that only in the last decades the largest countries producing copper ore began to increase the share of refined copper in the total output. However, this process is still extremely slow. For example, Chile refines only 60% of copper. In a similar position are Mexico, Indonesia and Peru, which cannot refine all the copper they produce.

For use in various industries, copper is one of the most common metals. Due to its unique properties, it has found its application at the dawn of human civilization and has been helping humanity to develop for more than a millennium. At the same time, being a non-renewable natural resource, copper can become one of the scarce materials in the coming decades. According to its prevalence in the earth's crust, copper is in 25th place. As of today, the explored recoverable reserves of copper, i.e. reserves, the development of which is possible with the current level of development of technology and technology, and taking into account the economic profitability of mining, amount to only 340 million tons. In the absence of an increase in reserves and an improvement in the technology of mining and production of copper, recoverable reserves will only last until 2040.

Due to its properties, including ductility, corrosion resistance, electrical conductivity, high aesthetic properties and the relatively low cost of production and extraction of copper, it can be used in various industries, from medicine to electronics.

The intensity of use of most metals - i.e. the consumption of metal depending on the rate of economic growth of the economy is an individual indicator for each particular country.

For several decades, growth in copper consumption in the countries of the Organization for Economic Co-operation and Development (OECD) has been consistent with this pattern. over a thirty year period from 1960 to 1990. the estimated growth rate of copper consumption was in line with the average annual value of 1.5% and somewhat lagged behind the growth rates of the economies. Cyclical fluctuations in the markets have been consistent with current energy consumption, energy costs and GDP growth within a given country, and by now, by most experts, the growth in metal use in most countries has reached saturation point. Minor exceptions are the developing countries of the Pacific region, China, some countries of South America and Africa, i.e. those countries whose economies are undergoing significant changes and are developing.

As noted above, the world's largest copper producers are concentrated, as a rule, in the areas of occurrence of copper ores. In addition, following the latest trends in the markets, all the largest copper producers during the late 1990s and early 2000 carried out active processes of consolidation and consolidation. This trend did not bypass the representatives of Russia. So, after a series of mergers in the copper market in the country, a stable balance has formed, supported by two major players - the Ural Mining and Metallurgical Company (UMMC), which unites mainly European enterprises for the production and extraction of copper in Russia, and MMC Norilsk Nickel, which consolidated in mainly northern industry enterprises. Both of these companies are the largest and occupy high positions among the world's copper producers.

The leaders in the industry are enterprises controlled by the Chilean state concern CODELCO. Its total output, taking into account joint projects, at the beginning of 2000 exceeded 1,500 million tons. CODELCO's closest competitor is the American company Phelps Dodge, which, thanks to the purchase of its main competitor, Cyprus Atah in 1998, has practically caught up with the Chilean manufacturer.

Russia is one of the main producers of copper, with more than 70% of refined copper supplied by domestic

enterprises for export. For this reason, copper, along with the main energy carriers, aluminum, nickel and ferrous metals, is one of the main export commodities of the Russian Federation, accounting for about 4-7% of the total incoming export earnings.

The main deposits of copper ores in Russia are located in the Krasnoyarsk Territory and the Urals. In addition, Russian enterprises receive significant volumes of ore from Kazakhstan and Mongolia. However, unlike the northern deposits, the deposits of copper ores in these regions have been substantially depleted by now, which, together with the development of their own production base by these states, reduces the attractiveness of Kazakh and Mongolian raw materials for domestic processors.

The main copper production in the Russian Federation, as well as deposits, are concentrated in the Urals and the Arctic. More than 70% of the total production is produced by the enterprises of the vertically integrated MMC Norilsk Nickel. This joint-stock company includes Norilsk Mining and Metallurgical Company, Severonickel and Pechenganickel. In addition, the structure of the company includes a number of mining and processing enterprises. The rest of the output is provided by enterprises of the Ural region, such as JSC "Uralelectromed" or JSC "Kyshtymsky Electrolytic Plant".

Consolidation processes have also affected Russian enterprises. Over the past years, three stable vertically integrated groups have formed on the Russian market. The largest of them is MMC Norilsk Nickel. The structure of the enterprise was formed by the end of 1989, and in subsequent periods the company has undergone numerous transformations aimed at improving the management structure and ensuring greater flexibility in production. At present, the company is actively expanding in the Russian market of copper processing (the Tuimsk OCM plant and St. Petersburg Krasny Vyborzhets have already been acquired), which allows Norilsk Nickel to be called a diversified vertically integrated holding company with a full cycle of copper processing. In addition to copper, the company is the world's largest producer of nickel and platinum group metals.

The second largest copper holding in Russia is OJSC Ural Mining and Metallurgical Company. It was formed at the end of 1999 by merging into a vertically integrated company the following enterprises: the Uralelectromed plant, the Gaisky GOK, Safyanovskaya copper, the Tomsk Sibkabel plant, the Kirovograd Metallurgical Company, the Sredneuralsk copper smelter, JSC Svyatogor. In addition to this, the owners

GM K received shares in the Kirov Non-Ferrous Metals Processing Plant for management.

Separately, in the industry there is an enterprise formed around another Ural manufacturer - the Kyshtym medical electro-casting plant. The enterprise actively cooperates with the Karabakh copper smelter.

The current situation is characterized by a fairly stable position of the players and a significant concentration of the industry. A favorable factor is that almost all the leading processing enterprises are either included in one of these groups or are long-term strategic partners, which excludes price wars and redistribution of property. In addition, the dominance of domestic copper producers in the world market can significantly affect prices in the copper industry.