Oleg Deripaska, oligarch and CEO of both Basic Element and RUSAL, has a column in today’s Financial Times about the untapped potential of Siberia which is so great, he says, that it puts Russia’s east ‘at the new centre of the world economy’. Or it does in theory, given that the region needs $220 billion worth of modernising infrastructure to help it reach its full production and export potential, and combat a ‘damaging legacy of lack of interest and investment’. Here are some highlights:
If you consider that 70 per cent of Russia’s copper and nickel reserves and 80 per cent of coal are in eastern Siberia and the Far East, the geographical position ideal for building efficient supply chains. It takes as little as four days to transport goods by sea, for example, from Russia’s Far East to China compared to 14 days from Australia, 23 days from South America and 35 days from Brazil. Siberia can also help address global problems such as water and food shortages in heavily-populated Asian countries by exporting agricultural products and supplying much-needed fresh water.
At the moment, China spends 9 per cent of GDP on infrastructure compared to 2.5 per cent in Russia. This is the future. America’s total spending on infrastructure is steadily falling and now stands at around 2.4 per cent, while Europe invests 5 per cent but is dramatically cutting back. The challenges these economies face should act as a warning and a motivation for Russia to shore-up its infrastructure.
Closing this gap requires the private and public sector to work together in new innovative ways to deliver the funding and expertise. There has to be greater involvement, too, of foreign investment from Asia and beyond including support for cross-border projects.
The full article is here.