Russia declares mines as Strategic Resources

RUSSIAN Minister of Natural Resources, Yury Trutnev announced the government�s intention to declare some diamond deposits as strategic resources, on November 2, 2005. This step would bar foreign companies like De Beers and BHP Billiton from developing these mines. The criteria that Trutnev has mentioned are so many and contradictory that they give a free rein to the Russian government to rule any diamond deposit and it would be off limit to foreigners.

This could be done for deposits which are too large and expensive for Russian companies like Alrosa to develop or which are too small and cheap to develop that foreign firms would compete unjustly. If these mines are located too close to the borders, are very large in relation to Russia�s total reserves or are of those minerals generally in short supply then foreign miners are to stay away from such mines. The same criteria is being applied to other resources, and that two deposits of oil and one each of natural gas, gold and cooper have already been declared strategic.

The mineweb report asserts that �Trutnev was deceptive about his aims in a recent meeting with South African Minister of Minerals and Energy Lindiwe Hendricks and that he was lying when he said following a meeting with De Beers representatives that there was an agreement to work together on mining inside and outside of Russia.� Russia has not auctioned off any significant new mining licenses in seven years and the existing law in Russia limits foreign companies to 49% ownership of any diamond mining venture.