Nonferrous Metals

Nonferrous metals are called “colored metals” in Russia, as opposed to iron, which is “black metal.” These metals can be divided into a few groups: heavy (copper, lead, zinc, tin, nickel), light (aluminum, magnesium, titanium, sodium, potassium), noble (gold, silver, platinum), rare (zirconium, indium, germanium, gallium), and high-temperature (tungsten, molybdenum). Many of these metals are found in mixed polymetallic ores and are mined together. For example, it is common to produce copper and molybdenum from one mine, or zinc and lead from another. This facilitates the use of large, diversified metal smelters. Most nonferrous ores contain only a small fraction of the useful metal, frequently less than 1%; therefore, much of the mined material has to be discarded. Also, energy consumption is very high, because many of these metals have to be produced with electrolysis. Typically smelters are located close to the cheapest sources of power (usually hydroelectric dams), and also near large deposits of ore.

Copper ores are concentrated in the Urals and eastern Siberia. The Udokan deposits in the latter are among the largest in the world (over 1.5 billion tons, with a copper content of 1.5%). Russia also imports copper ores from Kazakhstan (over 30%). The Urals produce the most copper at a few factories in Krasnouralsk, Revda, Karabash, Mednogorsk, Kyshtym, and others.

Lead and zinc are mined in a few areas in the Caucasus, in the Urals, in Kuzbass, and near Lake Baikal. Chelyabinsk is the leading center of lead and zinc metallurgy in Russia. Kazakhstan supplies additional lead; it accounted for 70% of the total Soviet production in the past, and has the fourth largest reserves of this metal on the planet.

Nickel and cobalt are mined on Kola Peninsula and near Norilsk in Krasnoyarsky Kray. Nornickel is the largest producer of nickel and platinum-group metals in the world. It was the sixth largest company in Russia by capitalization in mid-2007. Recently it purchased assets in Montana's Stillwater complex, and aspires to become another Russian company with a global reach. Norilsk itself is the largest city above the Arctic Circle in the world, with a population of 300,000, about 15% of whom are workers at Nornickel. This combine is also the largest air polluter in Russia, despite the company's recent investments in cleaner technologies.

Aluminum smelting is a big business in Russia. In 2008 the country produced about 6.4 mmt of bauxite ore—well behind Australia (63 mmt), Brazil, China, Guinea, Jamaica, or India, but still among the top 10 in the world. Bauxite ore is found in many areas of Russia: on Kola Peninsula, in the Komi Republic, and in eastern Siberia. Domestic sources, however, only cover about half of what is needed, making Russia a net bauxite importer. Kazakhstan was the biggest supplier of bauxite in the FSU, additional bauxite ore now comes from Ukraine, the Balkans, Venezuela, and other countries.

Russia is the second largest producer of finished aluminum after China. All aluminum smelting in Russia is concentrated in areas with cheap hydropower (Volgograd, Volkhov, Kandalaksha, Bratsk, Krasnoyarsk, and Sayanogorsk). For much of the Yeltsin period, aluminum production in Russia was concentrated in the hands of two competing companies, Rusal and Sual; however, they merged in 2007 to form the largest aluminum producer in the world, edging out the American giant Alcoa. The new Rusal employs 100,000 workers and is present in 19 countries; it produces 12% of the world's aluminum at 14 plants. It also controls four bauxite-producing mines and 10 plants that produce about 15% of the world's alumina (this is the enriched material needed to make pure aluminum). Some of this aluminum is sold to the United States, which produces virtually no domestic aluminum, but is one of the top world consumers.

Russia is one of the oldest producers of gold in the world; in 2008 it produced 165 tons and was in sixth place worldwide. The placer deposits of Siberia were the first to be mined, but are now largely depleted. However, there are still large lodes and complex polymetallic ores left, mainly in the Far Eastern Magadan Oblast (22 tons per year) and in Yakutia (30 tons). The Irkutsk and Krasnoyarsk areas also have substantial gold deposits. Much of the gold production in Russia is controlled by Polyus-Zoloto, a large private company with market capitalization of $8 billion in mid-2007.

The collapse of the Soviet Union hit the nonferrous metal industry hard. The output fell between 20 and 30% from 1990 to 1995 in Russia, and even more in some other republics. However, this sector was also among the first to recover, due to increasing demand from abroad and the relative ease of nonferrous metal production and sales (as compared to product manufacturing). By 2008, nonferrous production for metals was higher in Russia than before the reforms. The sector saw some of the worst criminal takeovers in the mid-1990s, as chaotic gangster wars erupted around aluminum smelters in Krasnoyarsk, for example. Nevertheless, the export orientation of the sector ensured a quick recovery; metal trade is one of the chief sources of foreign revenue. Metal production in Russia today is dominated by a few large, vertically integrated companies (e.g., Rusal and Nornickel are under the control of oligarchs with friendly connections to the Kremlin).

One of the biggest uncertainties at the moment seems to be skyrocketing energy prices. The nonferrous metal industry is particularly sensitive to the costs of electricity, coal, and shipping. Factories are idled when the electricity rates become unaffordable. Sales of scrap metal from idled and stripped factories were common on the black market in the chaotic 1990s. Rusal in particular was hard hit by the global recession of 2008–2009. The company made heavy debts to foreign lenders and was on the brink of default in the fall of 2009. In the first quarter of 2010, Rusal posted a modest profit of $247 million as compared with a loss of $638 million a year earlier. Overall, the company managed to avoid bankruptcy, but its future remains closely tied to the fate of the global metal markets.