Australian original equipment manufacturers and suppliers are attracting interest from the Russian mining industry as it ramps up its coal production under the lure of record coal prices and high energy demands.

The Russian mining sector is looking to cooperate with foreign partners in direct investment, mining equipment, spare parts supply, safety and consulting, Australian trade facilitator Austrade’s Russian bureau told ILN.

“Advanced modern production, management methods and technologies based on the longstanding experience of Australian companies are in great demand in the Russian market,” Austrade Russian business development manager Tatyana Semchishina told ILN.

“Many aspects of Australian companies’ unique expertise in such areas as engineering, project management, consulting, software and safety could be successfully applied by the Russian coal industry.”

Two years on from Russia’s 2006 Coal Expo, to which Australian mining technology companies travelled to flaunt their wares, Semchishina said Russian–Australian partnerships had grown.

However, trade relations recently became strained between the two countries.

Last year’s signing of the Australian–Russian civil nuclear cooperation agreement, which would see Australia supply uranium for Russian power supplies, came under close scrutiny when Russia invaded neighbouring Georgia last month.

The uranium deal has not been given the final go-ahead by the Australian government and Foreign Affairs Minister Stephen Smith said he would take into account Russia’s hostile actions when finalising the deal.

Russia has been harshly criticised by the international community over the invasion.

However, despite the coolness, Austrade still sees an opening for Australian suppliers, as the bear ramps up its coal export volumes.

Russian finance giant Uralsib predicts the country’s coal exports will continue to grow and forecasts that by 2011 the country’s coking coal exports will be one-third of domestic consumption.

In the first six months of 2008 Russian coal exports increased by 8% when compared with the same period in 2007, a federal customs service reported.

Coal production has also been on the up in the past three years, increasing from 299.8 million tonnes in 2005 to 308.8Mt in 2006 and 315Mt in 2007.

Russian industrial safety regulator Rostekhnadzor reports there are 180 underground mines currently operating in the country with 65% of Russia’s coal produced from open cut mines.

The major issues which hinder the country’s coal industry are safety, the remoteness of coal reserves to infrastructure and port capacity.

In June this year Russian authorities cracked down on safety standards in Siberian coal mines, exposing 6566 violations of legislation and closing 52 mines for safety breaches. Accidents in Siberian mines have killed more than 150 miners in the past 16 months.

Capacity in Russian coal ports is falling short by 25Mt per annum, but projects in the pipeline hope to boost capacity by 70Mtpa by 2010.

Areas and services of interest to the Russian coal market include:

• Mining consulting services
• Mining equipment and technologies
• Mining engineering services
• Mining consumables
• Underground mining contracting services
• Project management specialists
• Maintenance and repair services for mining equipment
• Research and development services
• Mine safety and environmental services

Semchishina outlined the best ways Australian coal-related companies could enter the market:

• To develop on-the-ground capacity in Russian organisations to ensure the interests of both Russian and international participants are aligned;
• Form a joint venture with a local company which could be effective in bringing local Russian knowledge and experience to the table;
• Participate in mining expos – a number of large mining exhibitions and forums are held annually in Russia, the Ukraine and Kazakhstan; and
• Use local distributive channels.

Although the Russian mining market represents potential for Australian equipment and technology suppliers it can also bring some challenges to foreign companies.

Outside of Russia’s capital, Moscow, language could be a barrier for companies working in regional centres.

Also, since 1993, the majority of imported goods must be inspected to comply with Russian safety standards, and without the appropriate certificate the use of any non-compliant product is prohibited.

For a supplier to get its imported equipment certified it needs to satisfy local mandatory criteria as well as provide an international quality certificate, a power of attorney from the manufacturer or a copy of the contract for the supply of the equipment in Russia.

All documentation for imported products should be in Russian and additional documents may also be needed such as fire safety and sanitary-epidemiological (hygiene) certificates.