Severe shocks in global financial markets have had a direct impact on global resource investment and development. Russia's mining development is also facing severe challenges. Mineral product prices have plummeted, the construction of new mining development projects has been stopped, acquisition offers have been delayed, overseas listings have slowed down, and economic growth has also slowed down significantly. Russia began to adjust its mining policy in response to the challenges of the global financial crisis.

1. Mineral product prices plummeted and economic growth slowed down

Affected by the global financial crisis, mineral product prices plummeted. In October 2008 alone, the price of oil in the Russian domestic market dropped by 42.5% %, the price of petroleum products fell by 13.5%, the price in the mineral mining field fell by 20.8%, the price in the production and processing field fell by 2.1%, the price of metal alloy fell by 8.4%, and the price of cement fell by 3.1%. The general decline in raw material prices caused the wholesale price of industrial products to drop by 6.6%, a record-breaking decline. At the same time, the engine driving Russia's economic growth is running weak. From January to October, fixed asset investment fell by 50% year-on-year, and economic growth slowed down significantly. GDP growth rate fell to 5.9% in October, and the Russian Ministry of Economic Development and Trade lowered its 2008 GDP growth forecast from 7.8% to 7.3%. The World Bank predicts that Russia's GDP growth rate will be 6% in 2008 and 3% in 2009. The OECD predicts that the GDP growth rate in 2009 will be 2.3%. While economic growth is declining, inflation remains high. From the beginning of the year to the beginning of December, the inflation rate was 12.3%, which has exceeded the full-year forecast of 11.8%. According to Russian Federation Customs data, Russia exported 182.1 million tons of oil in the first three quarters of 2008, a decrease of 5.6% from the same period last year. Among them, 19.3 million tons of oil were exported in September, a decrease of 4.2% from the same period last year. Despite the decrease in export volume, as the average price of "Ural" brand oil in the international market increased by 10.1% in the first three quarters, the export value continued to increase. The proportion of oil exports in Russia's foreign trade rose to 36%, compared with the same period last year. is 34.5%. 49.9% of the oil produced in Russia is exported. In September 2008, the actual average price of Russian oil exports was US$702.8 per ton, down 13.8% from August. The monthly average prices of Russian oil exports from January to August are: January 613 US dollars; February 617 US dollars; March 663 US dollars; April 697.5 US dollars; May 764.6 US dollars; June 833.8 US dollars; July 887.4 US dollars; August $815.7.

In fact, Russia has a clear assessment of the risk of falling oil prices: when the price of "Ural" oil falls to US$70 per barrel, a reserve fund needs to be activated to supplement budget revenue; when the price of "Ural" brand oil falls to US$70 per barrel, the current account appears Deficit, the budget is in deficit; at 50 US dollars, the budget deficit exceeds 1% of GDP; at 40 US dollars, the capital account surplus cannot make up for the current account deficit, and the balance of payments is in deficit. If 40 US dollars per barrel lasts for two years, the Russian economy will face decline. The Russian government believes that the reasonable level of "Urals" should be US$65 per barrel, and the current oil price is obviously low. Oil is Russia's main mineral export. The price of "Ural" brand oil is the basis for Russia's forecast of economic growth and budget revenue. On November 14, 2008, the "Ural" futures price of the Russian trading system fell below 50 US dollars for the first time, and once fell to nearly 40 US dollars per barrel. Bottom line, falling oil prices are taking a heavy toll on the Russian economy.

The plummeting price of mineral products has put Russian mining companies facing debt difficulties. According to statistics from the Russian Central Bank, as of July 1, 2008, the foreign debt of enterprises and banks reached US$489.2 billion, of which only US$33.9 billion was foreign long-term investment that did not need to be repaid. The Russian Central Bank conservatively predicts that it will need to repay US$163 billion by the end of 2009. The Russian Independent reported on October 14 that by the end of 2009, companies and banks had to repay US$295 billion in foreign debt and US$39 billion in interest. In 2008, Russia had spent US$50 billion from its foreign exchange reserves to lend specifically to enterprises and commercial banks to repay US$47.5 billion in foreign debt due before the end of the year. Russian energy companies are major debtors, including Gazprom with debts of US$61 billion, Rosneft with US$21 billion, and Rosneft with US$7.7 billion.

2. Suspend the construction of new projects and delay acquisition offers

The global financial crisis has made it difficult for many Russian mining companies to obtain loans. Coupled with the decline in mineral product prices, companies have suffered losses and must not Do not give up on the new projects originally planned to be built. Ural Mining Metals, Russia's second largest copper and zinc producer, will suspend the construction of new projects, but projects currently under construction will continue. UMMC stated in 2007 that it would invest US$130 million from 2007 to 2010 to increase the production capacity of its Ural electromed copper smelter by 37% to 500,000 tons. Russia's third largest copper producer, Russian Copper, said it would terminate its joint venture with UMMC to build a zinc plant with an annual production capacity of 300,000 tons. Russian mining giant Norilsk Nickel also delayed its takeover bid for Leon Mining. Leon Mining's nickel production in 2006 was 34,090 tons, making it the world's tenth largest nickel producer.

The company's nickel production in 2007 rose to 43,000 tons. Norilsk Nickel produces 240,000 tons of nickel annually and is the world's second largest nickel producer, second only to Brazil's Vale, which produces about 250,000 tons of nickel annually.

3. Slow down the pace of overseas listings and adjust the direction of financing

Russian Aluminum Corporation, the world's aluminum giant, originally planned to go public in 2008, and was also considering changing the location of its initial public offering from London transferred to Hong Kong. Rusal United is the world's largest producer of aluminum and alumina. According to 2007 statistics, RUSAL's joint electrolytic aluminum production accounted for 12% of the world's total production, and alumina accounted for 15% of the world's total production. In March 2007, it was formed by the merger of the alumina assets of Rusal, the world's third largest aluminum company, Siberian Ural Aluminum Company, the world's 10th largest aluminum company, and Glencore of Switzerland. It operates in 19 countries on five continents. Employs more than 100,000 people.

Due to China's rapid economic development, Rusal United attaches great importance to cooperation with China, and this cooperation is also reflected in all aspects, including the capital market. Rusal jointly owns bauxite, alumina, electrolytic aluminum refineries and downstream aluminum products businesses. Its annual net profit in the past three years has been US$5 billion to US$7 billion. At present, the company's global investment plans are approximately US$2.5 billion to US$3 billion per year. Rusal United predicts that by 2013, electrolytic aluminum production capacity will increase by more than 2 million tons, and the production capacity in 2007 will be approximately 4.2 million tons. 79% of the electricity energy used by Rusal to jointly produce electrolytic aluminum comes from hydropower, and the price of electricity is approximately US$0.03 per kilowatt hour.