Investment Strategy

Chukotka Autonomous Region Socio-Economic Development Strategy till 2030

In recent years, the development of Chukotka Autonomous Region was carried out in accordance with the Development Strategy for the period till 2020 developed in 2006. The development of extractive industries in order to extensively and effectively explore mineral resources concentrated in two industrial priority development areas: Anadyr and Chaun-Bilibinskaya was set out as the basic direction of the economic development in the region.

As the result, a powerful boost was given to the region development. It can be said that the region economy growth driver is industrial production. Now, this is the basis for the region industry. The benchmarks of the 2006 strategy were significantly exceeded. The contribution of industry to the Gross Regional Product (GRP) almost reached 50 %, which exceeds the performance of the most of the Russian regions and the northern areas of the USA and Canada. It is appropriate to recall that recently the share of industry in the GRP was only 10 %, and this did not allow the region to have a stable base for economy and social sphere development.

Such result is provided by development of precious metal deposits in the Chaun-Bilibinskaya industrial zone and the start of mining at the largest deposits of Kupol and Mayskoye. The Government of the region got large national and foreign mining companies involved in development of the most promising deposits on the public and private partnership principles, which lead to establishment of the gold mining industry.

As compared to 2005, the expenses of consolidated regional budget for financing of the social sphere quadrupled. This allowed solving a number of major problems in the sphere of education and health care. In particular, the problems of availability of vacant places in nurseries have been solved, capital repair and construction of educational institutions have been carried out, health care material and technical base have been updated, and the personnel situation has been improved.

This progress was mainly caused by the accepted general approach towards economy development on the basis of the region potential, the possibilities of its implementation with regard to midterm and long-term competitive advantages.

Significant funds were directed primarily to improve the living conditions of the population and develop infrastructure (transport, communication and utilities) and to recover traditional occupation sectors of the indigenous population in agriculture, and social security.

As the result, Chukotka Autonomous Region exceeded the average Russian index of income growth. Within a period of five years, average income tripled, and by many parameters determining the life quality Chukotka entered the group of the leading regions of the Russian Federation.

According to the results of region development strategy update, specification of parameters and main indicators of long-term development in 2014, the region Government approved the Chukotka Autonomous Region Socio-Economic Development Strategy till 2030.

Pursuant to the strategic planning documents, the Far East and Baikal Region Socio-Economic Development Strategy for the period till 2025 and the Strategy of Development the Arctic Zone of the Russian Federation and Provision of National Security till 2020, the Chukotka Autonomous Region Socio-Economic Development Strategy till 2030 is aimed to ensure achievement of the key objective which is an increase in the income level and life quality of the population with systematic move towards balance of the regional budget. This requires:

  • Elimination of infrastructure restrictions, especially in the sphere of transport and energy for complex industrial development of Chukotka Autonomous Region;
  • Attraction of investments to the sphere of mining and initial processing of natural resources;
  • Increase of the level and quality of service in the social sphere.

The Chukotka Autonomous Region strategic development is determined by development of mineral deposits concentrated in two priority development areas:

Anadyr industrial zone includes development of hard coal deposits of the Bering Coal Basin, oil and gas of the Anadyr and Khatyr oil and gas basins. Currently, the Zapadno-Ozernoye gas deposit has been put into operation to meet the internal demands of the region. A capital investment project is prepared for development of Amaam and Upper Alkatvaam areas of the Bering Coal Basin focused on export of high quality coal to the Asia Pacific Countries.

Chaun-Bilibinskaya industrial zone includes the development of the largest gold, silver, tin and copper deposits. By now, Mayskoye, Kupol, Karalveem and Dvoinoye gold deposits have been brought into production. Kekura and Klen gold deposits are being prepared for bringing into production in the short term. Long-term strategic plans include the development of tin deposits (Pyrkakayskie stockworks) and the development of the Baim ore zone deposits, primarily the gold-bearing porphyry copper Peschanka deposit, which is the largest copper deposit in the northeast of Russia.

The main drives of the region economy development will be nonferrous-metals industry and coal industry. The most prospective are the projects of the Baim ore zone and Bering Coal Basin development, the industrial operation of which will ensure diversification of mining industries and substantial profit growth.

Mining of high quality coal on the Bering Coal Basin is promising in view of large reserves. Total reserves of the basin are estimated to be more than 1 billion tons. The deposits are located near the coastal zone, which will provide substantial saving in the coal transportation to end-users. The design capacity of the Amaam deposit, which is the largest deposit in this basin, reaches 7 MIO tons of soldering coal per year, and the design capacity of the Alkatvaam deposit, which is the second largest deposit in this basin, reaches 5 MIO tons of commercial coal per year.

Development of the Baim ore zone may become one of the major projects on mining of natural resources in Russia. The deposit is rich not only in gold and silver but in copper and molybdenum, the reserves of which are among the largest in the world. The geological exploration in the Peschanka deposit and greenfields exploration in the Baim ore zone allowed to estimate the deposit resource potential at 27 MIO tons of copper and 1600 tons of gold. The implementation of the project stipulates that copper mining volume by 2027 may reach 200 thousand tons, gold mining — 9 tons per year.

To implement the basic capital investment projects, it is necessary to overcome a number of infrastructure restrictions mostly caused by insufficient development of energy industry and transport network required for the development of new deposits. Extremely high cost of energy and extensive transport expenses are the main obstacles to be overcome through the development and implementation of active industrial development policy.

The Region Socio-Economic Development Strategy till 2030 provides for measures to consistently and systematically implement the declared priorities:

  • Accelerated development of transport and energy infrastructure with attraction of the federal center funds and carrying out of large scale geological exploration which will require more than RUB 200 billion in total;
  • Attraction of private investments to the development of the Baim ore zone, the Bering Coal Basin for the amount up to RUB 150 billion;
  • Significant increase of the volume of natural resources mining by private companies (increase of mining industry turnover by 5–6 times);
  • Implementation of the decrees of the President of Russia regarding the social sphere and the corresponding security of regional budget expense items;
  • Preservation of national distinctness, natural and cultural environment and traditional occupation of Chukotka indigenous people.

Thus, in 2030 perspective, the main investments will be directed to development of the Bering Coal Basin and energy and transport infrastructure of Chaun-Bilibinskaya industrial zone. The total volume of investments till 2030 is estimated at more than RUB 400 billion of which 53% are private investments to the region economy. With that, state investments to the infrastructure will ensure start of the Baim ore zone development project, and governmental support of private investors will ensure inflow of investments and start of the Bering Coal Basin development project.

The implementation of the Strategy will allow:

  • increasing GDP per head by 3.3 times, average income by 2 times and achieve the level of Alaska and northern Canadian territories by these parameters by 2030;
  • forming a diversified region economic basis based on powerful foundation of gold, copper and coal mining and processing;
  • achieving backing of regional budged by own incomes up to 100 % by 2025;
  • increasing the level and the life quality of Chukotka population including required support to North native minorities.