November 1998

by Azim Mamanov

Krasnoyarsk Krai is one of Russia's most attractive regions for foreign investment, given the current foreign commercial presence in the area and the natural resources, industrial base, and unique transportation situation of the area. Krasnoyarsk Krai, with a population of 3.5 million, is located in the central part of Siberia. The Krai is rich in natural resources and possesses a range of highly developed industries, which play leading roles in Russia's economy. It is consistently ranked among the 10 regions with the highest gross domestic product (GDP) in Russia.

The capital and largest city, Krasnoyarsk, is located in the southern part of the region and is equidistant (about 2,000 miles) from Moscow to the west and Vladivostok to the southeast. The city of Krasnoyarsk has a population of about 900,000 residents. Other leading cities of the region are Norilsk, Achinsk, and Kansk, all with populations over 100,000.

Natural Resources and Metallurgical Industry
Krasnoyarsk Krai is one of Russia's richest regions in terms of natural resources. The Krai produces 75 percent of Russia's cobalt and 70 percent of the country's copper. It also extracts significant levels of Russia's lead, coal, and gold (24, 15, and 10 percent, respectively). Other available resources include natural gas, oil, hydroelectric power, manganese, mercury, rare earth metals, high-quality marble, and precious and semiprecious stones.

Ferrous and nonferrous metallurgy comprise about half of the industrial output of the Krai. Major enterprises include the Norilsk Mining-Metallurgical Plant, which produces 80 percent of all nickel and 98 percent of all platinum in Russia, the Krasnoyarsk Aluminum Smelter, which produces 27 percent of aluminum in Russia, the Krasnoyarsk Nonferrous Metals Plant, and Sibstal, a joint-stock company. The Krai's natural resources and strong industrial foundation contribute to a strong budgetary base not only for the region, but for the country as well.

Chemicals and Pharmaceuticals
Krasnoyarsk chemical and pharmaceutical enterprises produce numerous products prime for export, including petroleum products, synthetic rubber products, varnishes and paints, and medicines. Over 17.3 percent of Russia's chemical fiber and thread is produced here. Chemical industry products are ranked third in the Krai's exports.

Wood Processing Industry
Krasnoyarsk Krai has one of the largest timber reserves in Russia. Woodlands occupy 45 percent of the Krai's territory. Logging, wood processing, and pulp-and-paper activities are carried out by more than 200 enterprises in the Krai. Nine of the 26 Russian-American joint ventures registered in the Krai are engaged in wood processing. Enterprises engaged in wood production and in protection and recovery of forests are granted special tax privileges by the Krai, since the development of the wood industry and its export capabilities is a priority.

River Transportation
The world's third largest river by volume, the Yenisey, flows from the south of the Krai to the Arctic Ocean, making water transportation one of the most attractive features of the region. Krasnoyarsk and Lesosibirsk are two large ports locatedon the Yenisey that can accommodate sea and river operation vessels with carrying capacities of up to 5,000 tons. Two other major Siberian river/seaports Igarka and Dudinka are located on the northern delta of Yenisey and have year-round access to the Arctic Ocean.

Foreign Trade and Investment
Krasnoyarsk Krai reports that more than 200 joint ventures with foreign companies have been established locally. One of the largest projects with direct investment is the construction of a Coca-Cola plant in Krasnoyarsk, estimated to be worth roughly US$20 million. In 1997, the United States ranked third among providers of imports to the Krai. Leading imports from the United States were industrial equipment, inorganic chemistry products, and mineral fuel.

The new governor of Krasnoyarsk, Alexander Lebed, is still in the process of establishing his team and policy, so it is hard to predict any changes to the regional commercial climate for foreign investment. Nevertheless, Krasnoyark Krai presents an attractive commercial opportunity for U.S. businesses.

For more information on doing business in Siberia, visit BISNIS OnLine at http://www.iep.doc.gov/bisnis/country/regions.html#Siberia

Azim Mamanov represents BISNIS in Novosibirsk.

This report is provided courtesy of the Business Information Service for the Newly Independent States (BISNIS)