"It seems that we should learn from our neighbors about import substitution. Now all you can see are Chinese products and Belarusian...... We had the need to replace Western equipment, but they got the upper hand." Valery Yazev, the chairman of the Russian Mining Association, made such an opening at the Mining Future conference held concurrently with the CTT EXPO Construction, Road and Mining Machinery exhibition in Moscow.
In fact, the advantages of Chinese equipment at this exhibition are more prominent than in previous years. The reporter of Pro Metalla even gave up counting the number of Chinese enterprises participating in the exhibition - a large number of companies with Russian names and registered locations were actually Chinese distributors. How to reverse this trend?
The participants engaged in a heated discussion around the theme of Technological Independence of Russia's Solid Mineral Industry. Several representatives proposed that long-term strategic planning must be restored.This mechanism not only exists in China, but to some extent, the United States is also practicing it. But immediately, someone countered: Over the past two decades, Russia has formulated countless strategies covering various fields such as mechanical manufacturing, transportation equipment, and energy engineering. The problem is that there is neither supervision over their implementation nor anyone to take responsibility for their failures. The painful lesson of domestically produced light aircraft is a clear proof.
It is worth noting that the conference brought together manufacturing enterprises and research institutions, but was lacking representatives from government departments. The organizers plan to submit the documents after the meeting, but will the officials read them? Even if it is read, will it be implemented? The answer is clearly questionable.
Nowadays, Russia needs to formulate a national development plan for mining machinery, with the goal of achieving mass production of world-class equipment based on new technologies. A representative of the technology center Geotekhnologiya said. But even if the plan is approved, what will happen next?
Two years ago, many participants were still pinning their hopes on state support. However, Dr. Konstantin Anistlatov, the chief scientist of the Institute of Mining of the Russian Academy of Sciences and the host of this meeting, pointed out that large enterprises are now cautious about government funding instead, because experience shows that after financial support, "there will always be people coming to investigate with guns." To avoid endless scrutiny, many manufacturers would rather give up concessional loans. There are almost no other financing channels in the market......
Victor Zegarin, the business director of the Metal Workers factory in Kachkanar, admitted that they are fully capable of increasing the monthly output from 800 to 1,000 tons to 3,500 tons (the factory mainly produces mining equipment and also manufactures over 3,500 types of metal products). But the current loan interest rate of 26% has dashed the promise of expanding production.
Alexander Medvedev, the general manager of the Drilling Equipment Factory in Orenburg, is also in a predicament: Despite investing 1 billion rubles in technological transformation and having the products reach international standards, the assembly cycle of the equipment is as long as 42 to 44 weeks due to delays in the delivery of hydraulic components and other accessories. However, customers (including giants such as Alrosa, Eurochem, and Gazprom) all demand cash on delivery, which has led to extremely tight capital turnover.
After Western drilling and blasting equipment manufacturers withdrew in 2022, Russian enterprises completely filled the market gap within two years.
Andrei Ushakov, the development director of Azottekh, gave an example to illustrate the potential of local enterprises, but remained worried about the mining machinery sector: "The price of Chinese equipment is 20-30% lower than that of Russian and Belarusian products (40% cheaper than that of Western products), which is attributed to government subsidies, low tax rates and labor cost advantages." What is more serious is that Chinese competitors can still freely cooperate with Western enterprises such as Volvo and MAN to obtain advanced technologies.
Take a 6-kilogram gear as an example: The price in Russia is 160-190% higher than that in China. Electricity prices, metal prices, tax burdens, and loan interest rates (3% in China / 4% in Canada) are all escalating. How can we compete? At present, Russian enterprises can only rely on after-sales service to temporarily maintain their advantages, but this is probably only a matter of time.
Are high import tariffs feasible? Vladimir Antonov, a senior executive of Chetra Company, disclosed that after the increase in scrapping and recycling fees, the share of domestic excavators soared from 1% to 15%. However, protective tariffs will eventually be passed on as costs for mining enterprises, which is clearly not a fundamental solution.
The development of the mining industry has cyclical characteristics. The curve graph presented by Dr. Anistlatov clearly indicates that only enterprises with strong financial resources and globally renowned brands can survive the industry's trough.
Although the meeting mentioned breakthroughs such as ARMZ's new technology for lean ore leaching, RIVS's highly domestic flotation machine, and the 12-meter diameter mill of Urals Machinery, 50% (nearly 100% in some fields) of the entire industry still relies on imports. Development requires orders and large demands. Dr. Anistlatov emphasized. In the current environment, who will provide these demands? This issue remained unresolved in the end.