To extend the benefits of multimillion mining investments in Russia’s remote far northeast to local communities, IFC works with small and medium-sized companies to link them to mining supply chains.
Andrey Maltsev is the director of Dragmet-Snab Ltd., which supplies steel products and provides transportation services to the mining industry of the Magadan region. Founded in 2002, the company today is a leading steel supplier in the regional market.
Maltsev attributes much of his company’s success to the advice and support he received from IFC's Russia Far-East Business Development Project.
Maltsev’s relationship with IFC dates to 2003, when he attended an IFC seminar for local companies that had potential to become suppliers to the mines. The workshop provided local suppliers with a unique opportunity for face-to-face discussions with the mining companies, which currently rely on suppliers from outside the Magadan region. Seventeen representatives of local small businesses participated in the event, along with purchasing managers of several large gold mines in the Magadan region, which are majority-owned by foreign companies. At that seminar, Andrey Maltsev met with the Bema Purchasing Group, which supplies Julietta mine, a joint investment of IFC and the Bema Gold Corporation. Andrei’s company subsequently concluded a long-term contract with Bema for steel supply. After concluding the supply contract with Bema and setting up an inventory of structural steel, as IFC had advised, the company’s sales to the mining companies increased by 50 percent.
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 Andrey Maltsev (right) is one of the 60 entrepreneurs in the Magadan region working with IFC on ways to overcome basic barriers to conducting business efficiently. |
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IFC is now assisting Dragmet-Snab in assessing the market viability of setting up a warehouse and one-stop shopping facility to meet the demand of Magadan mining companies for spare parts and consumables. If successful, this facility would allow the mining companies to source more equipment, supplies, and materials locally instead of flying or shipping them from other parts of Russia or abroad. This would significantly reduce transportation costs, which are extremely high because the region is so remote and depends completely on air and sea for trade.
Since IFC started working in Magadan in April 2002, 23 local companies have received previously unavailable market information for 603 product lines within the mining supply chain. Local SMEs in the mining supply chain have concluded 14 mining supply chain contracts, totaling over $ 3 million dollars.
