Presentation on theme: "Business opportunities and challenges in Northern Russia. Andrey Kletrov 24.11.2014."— Presentation transcript:
Business opportunities and challenges in Northern Russia. Andrey Kletrov 24.11.2014
Russia’s current economic situation -Russia’s economy has been steadily slowing during 2014 -geopolitical risks and sanctions had an additional negative impact on economic activities and hit the economy in 4 ways: 1. volatility on the exchange market (ruble dropped almost 20% against euro) 2. oil price drop ( Russia’s budget for 2014 rests on 93 $ per barrel) 3. restricted access to international financial markets 4. shaken confidence of business and customers
Russia’s current economic situation. Assumptions on Russian market in 2015 What will Russian market look like in 2015? Exept a few things though
Russia’s current economic situation. Assumptions on Russian market in 2015 As Russian economy is heavily reliant on natural recources revenues, investments very likely to continue into traditional sectors such as: oil and gas infrastructure logistics solutions to Asia mineral deposits development At this point Arctic remains the very important investment area.
Arctic remains the important investment field even if the situation gets worse
Proposed investments in Arctic In the time frame between 2014 and 2020, according Arctic Financial program of Russian Government, proposed investments are declared at the amount of 4,1 bln euros. Government’s support fields: - main industries such as mining, timber, metallurgy - developing of national transport infrastructure ( ice-breakers, as an example) - development and supply of residential areas of Arctic area Private businesses, proposed investments into: - development of supply fleet - development of port terminals, auxiliary infrastructure
Arctic mining as the promising market for Finnish SME’s One of the most important Arctic mining sectors can be found at Kola Peninsula. Five Russia’s largest companies develop, process and produce mineral materials in Murmansk area
Investments into mining in 2014 Total amount of investments in 2014 into mining infrastructure in Murmansk region is approximately 145 MEUR: -replacement of outdated equipment and machinery -production and processing capacities upgrade -ecology solutions ( industrial waters control systems, as an example) -processes automation -energy-saving solutions
Business opportunities The most perspective business leads can be found in service and maintenance. Equipment and machinery at Kola mines are primarely of foreign origin ( Comatsu, Terex, Sandvik, Metso, Catepillar..) Mines express a strong interest in meeting service providers from Finland when it comes to heavy machinery: -hydraulics -wearable parts -pumps -preventive diagnostic Must be added that service and maintenance is not a highly-competitive branch.
Challenges Mining companies expect a supplier to be withing a short distance from the mine and be reachable most of the time. Mining companies expect a supplier to deliver spare parts in a short time. They do not care for logistic and customs problems. That means one thing – a local office with Russian speaking service people.
Recommendations Good alternative is a Russian local partner. Trustful and motivated. To be persistent makes the game in a medium-term run Registering a legal body in Russia gives an extra value (payments, participating in tenders..) Finpro assistance in contacting, approaching with a Russian side is time and resource-saving in many situations