Comparison of the Russian and International Approaches to Mining Project Design and Permitting
Requirements of both local permitting and international fundraising are forcing increasing numbers of projects in Russia and CIS to carry out dual technical studies. The principal focus of Russian mining project design is to satisfy local regulatory requirements. However, the technical documents are not generally accepted by international banks for project finance outside Russia. Similarly, international study documents are not accepted for permitting in Russia. The purpose of this paper is to compare and contrast Russian and international approaches to mine technical studies and draw conclusions from this. The Russian design and permitting system is centered around two key statutory technical documents termed the TEO Konditsy and the TEO Project. These documents are subject to regulatory approval and are broadly equivalent to the international prefeasibility study and the feasibility study respectively.
A comparison of study criteria suggests similar approaches are used for the main technical disciplines in project design by the time projects are at the point of construction, but there is divergence on environmental matters where the OVOS (Russian ESIA equivalent) differs from an ESIA in some significant areas. The key differences relate to project footprint, level of technical detailed required for baseline studies, level of public consultation, consideration and disclosure of information, labour, coverage of community and social issues and the preparation of a Social and Environmental Management System (SEMS). It has been noted that the Russian Design Institutes often leave the detailed economic analysis until after the TEO Konditsy. A common problem is design teams tend to look for ‘technological solutions’ without due concern for project economics. The end result of this can be mines that are overcapitalized and hence sub-optimal.
It can be concluded that Design Institutes have the monopoly on Russian permitting reports and this is likely to continue. Similarly, Russian institutes generally do not prepare feasibility studies to international standards and this is likely to continue to be the case. Therefore to achieve the requirement of dual technical studies, the international consultants and Russian Design Institutes will need to cooperate on a joint work program. Key issues will be to ensure the most appropriate option studies are carried out at the right stages, that project economics are considered throughout the study, and that the environmental work program covers the additional studies necessary for the ESIA.