It has become increasingly difficult for mining companies from the West to invest in new resources in Russia. But Tigers Realm Coal (TIG) are breaking the mould and leading the way, after securing their funding for the Amaam coking coal development in Russia’s far eastern province of Chukotka.
We had the chance to catch up with Craig Parry, Director and CEO of Tigers Realm Coal recently, to find out more about TIG’s project in Russia.
Why is Russia a keen interest for Tigers Realm Coal?
Craig: A key advantage in bulk commodities, be it coal or iron ore, is proximity to port infrastructure. At Amaam and Amaam North the deposits are located within 35km of the Pacific Coast, and then a relatively short shipping distance to huge North Asian markets. This is almost unheard of for other coking coal deposits in the world, where typically, most coal deposits of this size are located hundreds of kilometres inland. In addition, both deposits are large and high quality, so they were very attractive when TIG acquired them.
We have been very pleased with the business environment in Russia and particularly Chukotka province. The province has a history of successful investment by Western mining companies, the most notable being Kinross Gold, the world’s fifth largest gold miner, which operates two gold mines, Kupol and Dvoinoye. The permitting process is well defined and prescriptive and if followed correctly, we can achieve quicker timelines than is demonstrated in many Western countries, which we have found to be the case.
As our mines will be large scale employers for the local region, we have received excellent support from the Chukotka Government and the province’s Governor, Mr Roman Kopin.
What’s your view on the Crimean crisis? Did the Crimean situation affect Tigers Realm Coal’s project planning?
Craig: We believe the differences between Russia and Ukraine in respect of Crimea are to be resolved between the two countries and we are agnostic on the outcome. In respect of our project planning there has been no impact, with our recent A$61 M capital raising completed while the uncertainty of the situation was in progress. I am pleased to see that the international investors whilst cautious, don’t appear to have been put off by the situation – our share price has performed well despite the issue arising.
Where do you think the Russian coking coal market is heading in the next 5 years? How will this affect the Australian mining companies?
Craig: We see the Russian coking coal market as being driven by the dynamics of the Russian domestic steel industry – most coking coal production, which occurs in central and western Russia, is destined for domestic steel producers. For Australian coking coal producers, whose production is mostly exported due to the small size of the Australian steel industry, their target markets are the North Asian countries – China, Korea and Japan in the main – so we don’t see the main Russian coking coal market having significant interaction with the Australian coking coal market. The exception will be TIG’s Amaam projects as our coal, given the close proximity of Amaam to North Asia, only 8 days shipping, will be destined for those markets.
You will be speaking at IMM’s Russia & CIS Coal Conference in Moscow this May. Are there any key messages you would like to deliver to the stakeholders at the event? What are you most looking forward to at this 9th annual gathering?
Craig: We would be delighted to share the following with the audience at the Russia & CIS Coal Conference:
TIG is very excited to have two of the best undeveloped coking coal deposits in the world, extremely well located 35km from the Pacific Coast and only 8 days shipping to the North Asian markets.
We are well funded to progress our starter 1Mtpa project from the Amaam North deposit into production by H2 2015 and be shipping coal by H1 2016.
We are fortunate to have two large deposits which will underpin TIG becoming a large scale global coking coal producer, potentially of over 10Mtpa, after we progress the development of Amaam and integration options of the two in the Bering Coal basin.
We have found, and continue to find, Russia an excellent environment in which to do business, with the Chukotka province pro development of its mineral resources in co-operation with Western mining expertise and investment capital. We are also well supported by international investors and now very importantly by two new investors with a huge amount of Russian experience and knowledge – The Russian Direct Investment Fund (RDIF) and Baring Vostock Capital Partners.
We very much look forward to explaining the quality and scale of our projects to the gathering. We also look forward to meeting old friends and making new contacts within the Russian business community and particularly within Russia’s large and outstanding coal and steel businesses.