Yury Trutnev: The first step has been taken
Deputy Prime Minister and Presidential Plenipotentiary Envoy to the Far Eastern Federal District Yury Trutnev held an online meeting of the Presidium of the State Commission for Arctic Development. The participants discussed providing infrastructure support for investment projects, supporting businesses via development institutions, ensuring navigation along the Northern Sea Route, and creating an international Arctic station.
In particular, Yury Trutnev noted that a package of federal laws on state support for entrepreneurial activities in the Arctic came into force on August 28, and a system of incentives was put in place. “The entire Russian Arctic has, in fact, become one large economic area,” he said. “Any entrepreneur willing to invest at least 1 million rubles in a new project can obtain the status of an Arctic zone resident. We did our best to make the application process as transparent, straightforward and hassle-free for businesses as possible. To this end, the processes underlying interaction between the investor and the management company and the Ministry for the Development of the Russian Far East and Arctic were made part of a dedicated electronic office, and all documents are submitted in electronic form.”
To date, 133 applications from investors for a total amount of 198 billion rubles are being reviewed. Five entrepreneurs have obtained the status of an Arctic zone resident, and they have signed binding agreements for the total of 15.3 billion rubles.
According to the deputy prime minister, a reduction in insurance premiums is one of the key incentives anticipated by Arctic businesses. In early September, the Russian Government adopted a resolution to subsidize insurance premiums paid by the Arctic zone residents for the newly created jobs. The final rate will be 7.5 percent, and 3.25 percent for small and medium-sized businesses. According to Yury Trutnev, “these are the best terms available in Russia.”
He also noted that the Arctic regions continue to work on the incentive system’s regional component. Tax breaks on revenue, property and land, as well as a simplified taxation system are being adopted. “I would like the governors to speed up this work and adopt the laws by the end of the month,” the deputy prime minister said.
For his part, Minister for the Development of the Russian Far East and Arctic Alexander Kozlov added that the ministry is about to complete drafting a revised version of the state programme for developing the Arctic zone. The Russian Government resolved to finance it in the amount of 17 billion rubles in the next three years, which is 50 times more than the amount provided in the current three-year budget.
Also, as part of the national economic recovery plan, it is planned to create an Arctic Development Fund. According to Yury Trutnev, this is not a new development institution, but a mechanism that will be used to redirect 50 percent of the federal tax revenue from new investment projects in the Arctic to the socioeconomic development of the Arctic regions.
The meeting participants also reviewed investment projects that are seeking government support for building infrastructure. Deputy Minister for the Development of the Russian Far East and Arctic Alexander Krutikov noted that on March 18, the Russian Government approved the requirements that investment projects have to meet to be entitled to government support to build infrastructure. The requirements include:
- the project cost must exceed 300 million rubles;
- the project must provide for creating new jobs by building new industrial facilities or upgrading existing ones;
- the project must be registered and located in Russia’s Arctic zone;
- the tax proceeds of the investment project must compensate for the subsidy within a maximum of 10 years from the date of selecting the project.
The Ministry for the Development of the Russian Far East and Arctic has already publicly reviewed investment project bids and selected projects that are eligible for government support. At its meeting, the Presidium of the State Commission for Arctic Development chose six investment projects with overall investment to top 206 billion rubles.
In particular, the project for the development of the platinum group metals deposit Fyodorova Tundra provides for building two opencast mines to dig ore and an ore mill to produce ore concentrate, as well as the electrification of the western part of the Lovozyorsky District. Private investment in the project is expected to reach 82.8 billion rubles while the Government will allocate 6.13 billion rubles in infrastructure support.
The Pavlovskoye investment project aims to ensure that the development of the Pavlovskoye lead and zinc deposit located in the north of Yuzhny Island of the Novaya Zemlya Archipelago is economically effective. It is planned to build a lead-and-zinc ore mining and processing facility with a capacity of 3.5 million metric tons of ore a year. Mooring facilities will be built to ship finished products to final customers. Private investment will total 71.6 billion rubles while government support will amount to 7 billion rubles.
The Government approved infrastructure support for the project to develop the Syradasaisky coal deposit; the estimated area of the deposit ranks among Russia’s largest coal deposits in terms of scale and coal quality. A marine coal terminal will be built to facilitate the shipment of coal concentrate produced in the area on sea vessels. This project will help to ship nine million metric tons of cargo along the Northern Sea Route, beginning in 2025. Private investment will reach 41.4 billion rubles while government support will amount to 4.55 billion rubles.
A specialized bulk cargo terminal is to be built in the sea port of Murmansk. The terminal is designed for unloading mineral fertilizers and apatite concentrate from railway cars, their short-term storage and loading on sea vessels. Rosmorflot has included the project in its long-term development program. Under the Government’s directive, the terminal construction became a part of the roadmap for territorial planning in federal transportation and federal highways. Private investment in the project will amount to 13.36 billion rubles along with 1.19 billion rubles of state support.
There are plans to build a modern industrial facility to produce salmon and trout seed material using a recirculation aquaculture system in Retinskoye, Kola District in the Murmansk Region. Private investment in it will make up 2.69 billion rubles coupled with 540 million rubles of state support.
Also under consideration was a technical upgrading project of the Vitino sea port and the Belomorskaya oil delivery terminal, which will become the major employer in the town of Beloye More and will provide fuel for its social infrastructure. The volume of private investment will amount to 2.63 billion rubles whereas state support will total 300 million rubles.
The meeting’s agenda also included the issue of investor support from development institutions. CEO of the Far East Development Fund (FEDF) Alexei Chekunkov reported that the fund will make its first investments in Arctic projects before the year’s end. Thus, up to 10 billion rubles may go to the Kovdor ore deposit development in the Murmansk Region. The project was proposed by EuroChem Group’s Kovdorsky mining complex. The fund’s involvement in the project will help retain the backbone enterprise, which provides jobs for a half of the residents in Kovdor, a one-company town, and ensure its efficient performance. FEDF is also set to support the expansion of the Kirov subsidiary of Apatit JSC, the major employer of the town of Kirovsk, Murmansk Region. The fund will invest up to 7 billion rubles in expanding the production of the operating pit and building a new adit level and a new underground mine. The project was launched by the PhosAgro Group. The upgrading and construction of new production facilities aim at boosting the extraction of apatite-nepheline ore to be processed into high-quality apatite concentrate used in mineral fertilizer production. The implementation of the projects in the Murmansk Region is expected to have a significant socioeconomic impact for the Arctic region. The FEDF-assisted enterprises to be built will create 1,134 new jobs.
The development of Russian Arctic National Park was also discussed. The first comprehensive program for its development has been drafted for three years (2021–2024) and will receive 2.3 billion rubles from the federal budget. The park’s director, Alexander Kirilov, noted that this is the northernmost and Russia’s largest specially protected area, covering 8.8 million hectares. The park is located on two polar archipelagos in the Arkhangelsk Region — Novaya Zemlya and Franz Josef Land. Upgrading the tourist infrastructure is an important task for developing this territory.
Deputy General Director of the Roscosmos State Corporation Mikhail Khailov reported on ensuring navigation along the Northern Sea Route (NSR) with remote sensing of the Earth’s surface (radiolocation) in 2021–2022. He noted that Roscosmos intends to develop Kondor-FKA and Obzor-Radar observation satellites, ground-based receivers and facilities for processing targeted information and bringing it to consumers under the plan for the development of the NSR infrastructure until 2025 and the national federal space program. “Starting in 2022, this will make it possible to provide interested consumers with the latest domestic radiolocation information, products and services on its basis along the NSR regardless of the observation conditions — nebulosity or brightness,” he explained.
Rector of the Moscow Institute of Physics and Technology (MIPT state university) Nikolai Kudryavtsev reported on a plan to build and open the Snezhinka (Snowflake) international Arctic station during Russia’s chairmanship of the Arctic Council in 2021-2023. He said that its construction was unanimously supported by all Arctic countries at a meeting of the Arctic Council’s working group last June. This will be the world’s first zero-carbon Arctic complex that is expected to use only hydrogen energy technology and renewable energy sources. Nikolai Kudryavtsev said MIPT is carrying out a program of applied research and new technology development for the Arctic. Its results will lay the foundation for research at the future international Arctic station. “We focus our agenda not on the problems of climate change but on the practical introduction of green energy technology. We emphasize the synergy of technology under one roof. I’m referring to energy, communications, transportation, medicine, agriculture, hydrometeorology, climate and environmental protection, to name a few,” specified the rector.
Yury Trutnev instructed the Ministry of Science and Higher Education to study the project and submit in one week its proposals on funding the beginning of the design work and the construction of the Snezhinka international Arctic station.
“We just started our work on the socioeconomic development of the Russian Arctic. We have spent time drafting laws that allow us to help business, support new investment projects and move forward. We have taken the first step. Now we must find investment projects, create the conditions for their implementation, build new plants, strengthen the economy of the Arctic, and develop its infrastructure. We must continue this work with intensive efforts,” said Yury Trutnev, summing up the results of the meeting.