The Murmansk Region The following article was written by Marina Kamayeva, Commercial Assistant at the U.S. & Foreign Commercial Service at the U.S. Consulate in St. Petersburg, and is available via the United States Department of Commerce Business Information Service for the Newly Independent States (BISNIS) Web Site at www.bisnis.doc.gov/bisnis/country/991201murmansk.htm. Reprinted with permission. Geography The Murmansk Region is located in the northern most territory of Northwest Russia on the Kola Peninsula, above the Polar Circle. However, the climate benefits from the warming influence of the Gulf Stream current. The region covers an area of 144,900 square kilometers and extends 405 km from north to south and 536 km from east to west. The region borders Finland to the west, Norway to the north, and the Republic of Karelia (another region of Northwest Russia) to the south. The total population is 1.6 million people. Sixty-four percent of the population is of working age. The region has 12 cities and 20 small towns. Ninety-two percent (92.2%) of the total population lives in cities and towns. The Kola Saami (Lapps), native aboriginal population of about 2,000 people, live in the Lovozerovo and Kola administrative districts. The city of Murmansk is the region's administrative center. Due to the region's proximity to Norway and Finland, Murmansk Airport conducts international flights to several cities in both countries. Murmansk is also the location of a commercial seaport on the Barents Sea, which operates year-round with the assistance of icebreakers. Natural Resources The Murmansk region is rich in natural resources with over 700 minerals, of which 100 were first discovered in this region. The Oblast has 200 deposits of 40 types of minerals, including: apatite-nepheline ore, titanium, rare metals, copper-nickel ores, feldspar, mica, oil and gas. Forty-five of these deposits are currently operational. The Murmansk region has 35 percent of the phosphate stocks of the entire stocks available in the Newly Independent States (NIS), 30 percent of the non-ferrous metals and 80 percent of the rare metals, 75 percent of phlogopite, 93 percent of kyanite, 37 percent of feldspar and pegmatite, and about 4 percent of iron ores in the NIS. The estimated stock of titanium deposits is about 50 million tons, and the development of these deposits is of special interest and concern to the local government. Although oil and gas resources in the region are extensive, their development will require considerable investment. The large East-Barents and the West-Kara oil reserves are located in the Barents and Kara seas. According to local research estimates, prospective oil fields could potentially yield up to 40 million tons in the next 10-15 years. Natural gas resources, in the unfreezing part of the Barents Sea, are estimated at one billion square meters. The world's largest gas condensate field, Shtokmanovskoye, is located on the Barents Sea shelf, 600 kilometers off the coast of the Kola Peninsula. Its gas resources potential production is estimated to be 3 billion cubic meters. Other large gas fields are still undeveloped, including Ledovoye, Ludlovsk, Severokildinsk, Murmansk, Pomorsk, and Severogulyayevsk fields in the East Barents Seas, as well as Rusanovsk and Leningrad fields in the Kara Sea. International Trade Murmansk is an export-oriented region. In 1998, the region's exports were $933 million. The primary exports of the Region are non-ferrous metals (42.3 percent), mineral raw materials (31.1 percent), and food products and agricultural products (22.2 percent). Imports into Murmansk totaled $202 million and included equipment for the mining and metallurgical industries (26.3 percent), chemicals (22 percent), and agricultural and food products (22.1 percent). Locally produced goods are primarily exported to Norway, Sweden, the Netherlands, Finland, and Switzerland. The majority of imports come from Norway, Finland, Great Britain, Germany, Sweden, and the Netherlands. The peak year for foreign trade for the past seven years in Murmansk was 1997, with total trade turnover of $1.56 billion. After the crisis, in 1998-1999, exports decreased by about 30 percent, while imports decreased by about 20 percent. Industrial Profile The Murmansk economy is dominated by the industrial sector, accounting for 90 percent of the region's revenues. The primary industries in the Murmansk Region are mining and metallurgy, along with fishing and power generation. Local industries' shares of the region's revenues are as follows (according to the 1998 Report of Murmansk Regional Committee for Statistics): Non-ferrous Metals 32.6% Power Generation 22.5% Fishing and Food Processing 17.1% Mining and Chemical Industry 10.9% Ferrous Metals 9.9% Metal-Working and Machine Building 3.9% Construction Materials 1.0% Forestry and Pulp and Paper Industry 0.4% Other Industries 0.3% Major Industrial Companies Ninety percent of the Oblast's total production outcome is supplied by the region's major companies, such as Pechenganickel, Olcon, the Kola Nuclear Power Plant, Murmansk Trawl Fleet, Sevrybkholodflot, Murmanrybprom, and Murmansk Shipping Company. Non-ferrous Metals: The Murmansk Region produces almost 100 percent of Russia's apatite concentrate (3.7 million tons in 1998), 43 percent of nickel, 15 percent of copper, 12 percent of iron ore and iron ore concentrate (17.7 million and 6.4 million tons in 1998), and 40 percent of cobalt. The region is the sole supplier of nepheline concentrate in Russia and the largest producer of alumina, vermiculite, muscovite, and several other types of mining elements and minerals. The metallurgical and mining industry is represented by such large companies as Severonickel in Monchegorsk (nickel and other non-ferrous metals); Pechenganickel in Pechenga (nickel; non-ferrous metals); Kandalaksha Aluminum Plant in Kandalaksha; Apatit in Apatity; Olenegorsk Mining; Lovozerovo Mining Plant; Kovdorin Mining Plant; and Kovdorslyda Plant. In addition, there are large reserves of scrap metal of 800,000 tons, with an estimated annual increase of 100,000 to 150,000 tons. Severonickel and Pechenganickel are owned by the Norilsk Nickel Corporation. These companies export 95 percent of their production. Severonickel, located in the city of Monchegorsk, employs 11,800 people and manufactures nickel, copper, cobalt, and precious metals concentrates. Pechanganickel produces raw materials for the production of nickel, copper, cobalt, precious metals, and sulfur acid. Power Generation: Kolenergo Energy System includes 17 hydro-power plants, two co-generation plants, two energy network operators, an experimental power plant, and some others. Kolenergo is a part of the United Energy System of Northwest Russia. Together with Kola Nuclear Power Plant, Kolenergo fully satisfies the demand for power in the Murmansk Region and provides power to the Republic of Karelia, Finland, and Norway. The Kola Nuclear Power Plant was constructed in 1973. Currently, it produces half of the energy in the Oblast. The fishing industry, according to the managers of the Murmansk Trawl Fleet, is currently the most successful industry operating in the Region. The Murmansk Oblast supplies 16 percent of Russia's fish production. The Murmansk Trawl Fleet owns 86 fishing vessels that fish in the Barents Sea, in the Northwest Atlantic, and in the waters around the African continent. In 1997, the Murmansk Trawl Fleet used 19 percent of the Russian-Norwegian quota for fishing in the Barents Sea. Seventy to eighty percent of the catch of Murmansk fishing companies is exported to Norway, Denmark, Germany, Canada, and Great Britain. Most of the fish processing takes place in these countries. The Apatit Joint Stock Company manufactures phosphorus raw materials for the production of fertilizers. The company's major product is apathite concentrate. Over 80 percent of Russia's exports of this product are manufactured in the Murmansk Region. In 1997, Apatit produced 15.6 million tons of ore, 3.2 million tons of apathite concentrate, and 939,000 tons of nepheline concentrate. The major mining companies are Olkon (iron-containing ores) and Kovdor Mining Company (iron, apathite, and magnetite ores and concentrates). Research and Development The Kola Science Center of the Russian Academy of Sciences is located on the Kola Peninsula. It comprises a number of research institutes, including Geological; Mining; Polar Geophysical; Kola Regional Seismological Center; Chemistry and Technology of Rare Elements and Minerals; and others. The Kola Science Center's primary areas of research are the nature of the Arctic region, the rational use of nature and creation of an environmentally safe technosphere in the north, and information technologies. The Arctic Fishery and Oceanography Research Institute is also located in Murmansk. Investment Projects According to the Murmansk Administration, the priority areas of investment are projects included in Federal programs, such as the construction of the Kola Nuclear Power Plant-2. Also, the largest investment projects in the Region include: - Reconstruction and up-grading of Murmansk Commercial Seaport; - Reconstruction and up-grading of the Pechenganickel Plant; - Construction of an oil and gas terminal in the Pechenga Bay and respective infrastructure development projects; - Reconstruction and up-grading of Murmashi International Airport; - Up-grading of the Kandalaksha Aluminum Plant's facilities; - Production of ferrite and strontium powders and magnets; and - Scrapping of ships and nuclear submarines. Multiplying Organizations The region's major association is the North Chamber of Commerce and Industry, which was established in 1990 as a non-government, non-profit organization. Currently, over 100 major companies in the Murmansk Region are members. The Chamber assists its members in their search for business partners and establishes business links between the member-companies and potential foreign partners. Another non-profit organization that can successfully assist U.S. firms in establishing contacts with Murmansk businesses is Kola Business Development Center (KBDC). KBDC is one of the major organizers of the annual matchmaking event "Kola Partenariat". According to KBDC, in 2000, this event, traditionally focused on Scandinavian-Russian business relations, will welcome participants from other countries. Both the North Chamber of Commerce and KBDC provide detailed information on their activities on the internet. The Russian-American Chamber of Commerce® is a nonprofit, nonpartisan organization acting to promote American business interests in the Russian marketplace. The Russian-American Chamber of Commerce® Last Updated: March 9, 2001. Copyright the Russian-American Chamber of Commerce® 1995-2003. All rights reserved.