OREANDA-NEWS. December 19, 2011. According to the latest Metals & Mining in Russia and the CIS survey, the recovery of prices and demand for raw materials that started in the second half of 2009 and continued through 2010 and the first half of 2011 helped this sector of the CIS economy become profitable and financially stable again, reported the press-centre of PwC.

The revenue of the 25 CIS metals and mining companies participating in the survey increased by 44% in 2010 compared to 2009 (from USD 83bn to nearly USD 120bn). The revenue increase was due to the higher price of raw materials, and larger production and sales volumes.

In 2010, net assets of CIS metals and mining companies participating in the survey increased by 20%, or by USD 19bn, reflecting a speeding up of recovery in this sector. In 2010, cash flows from these companies' operations increased by USD 5.6bn, or 34%, compared to 2009.

Alexei Smirnov, PwC Russia Partner and Mining Practice Leader commented:

"Revenue and profits of CIS metals and mining companies started growing in the second half of 2009, although the indicators of the 25 major industry players for 2010 were in most cases lower than the same results for the record-breaking years of 2007 and 2008.

"Given the recovery that we saw in the first half of 2011, we can look to the future with some optimism."

The survey suggests that the CIS metals industry is mostly represented by vertically integrated companies, and the majority of major steel producers own coal and iron ore assets, allowing them to provide raw materials to their metal production sites. Over the past three years, steel companies accounted for more than 50% of overall revenue in the CIS metals and mining industry. In 2010, the steel segment accounted for 61% of total revenue among the five leading companies in the industry.

Alexei Smirnov also noted:
"As the experience of the past few years shows, metals companies in Russia and the CIS are more oriented towards vertical diversification into the mining industry and expansion into other geographical markets."

In 2010, there was significant growth in the price of almost all raw materials compared to 2009.

In 2010, copper prices grew consistently due, in particular, to growing demand from the power industry and nonferrous metal processing companies. In the first half of 2010, copper prices ranged from USD 6,500 to 8,000 per tonne. However, in the second half of 2010, the resistance level of USD 8,000 per tonne was surpassed and prices started growing sustainably, exceeding USD 9,100 per tonne at the end of December and reaching the average price for January-July 2011 of USD 9,433. Analysts forecast that copper demand, supported mostly by Asia, will remain at the same level over the long term.

Demand on the nickel market has shown signs of recovery, which resulted in higher global prices. Average monthly nickel prices in 2010 ranged from USD 18,400 to 26,000 per tonne. Nickel prices grew by 29% compared to 2009, to USD 24,111 per tonne, as of the end of 2011. As in previous years, the stainless steel industry remains the largest nickel consumer.

In 2010, aluminium prices saw considerable growth, USD 2,351 per tonne or 40% more at the end of the year compared to 2009. China has been the driver of global growth of aluminium production and consumption for many years.

Among metals included in our analysis, gold remains the only raw material whose value has been growing almost uninterrupted since 2003. Gold has traditionally been considered a relatively stable product, both during economic booms and recessions. During 2009 and 2010, gold prices remained at USD 1,000 - 1,380 per ounce and continued growing in 2011 reaching USD 1,800bn.