Mineral extraction and the manufacturing industry are the most important branches of the Russian economy. In fact, due to their share of income in the Russian GDP, they provide for the majority of the other branches. In particular, export income from the sale of mineral products, oil and gas, as well as from manufacturing production(exclusive of food and light industry), exceeds 70% of the total export volume.

Oil, oil products and natural gas in themselves provided for 350 billion dollars of export revenue in 2012. Ferrous and non-ferrous metals, in their turn, account for approximately 35 billion dollars. Exports of coal, various ores, precious stones and other natural resources also made their contributions.

Historical Background

The manufacturing industry in Russia was represented only by handicrafts up to approximately the fifteenth through sixteenth centuries. There were many separate workshops in which agricultural implements, household goods and weapons were produced. Mineral extraction was limited to easily accessible metal ores and certain mineral resources.

The situation started to change when a centralized state was created that needed a great number of uniformly made weapons, including artillery. Furthermore, the countries neighbouring Russia, with which it was constantly involved in war, were its main source of non-ferrous metals, and this produced a negative impact upon the volume and stability of supplies. As early as the end of the fifteenth century, the first official state expeditions set out to search for metal ores. At the same time, the first manufactories emerged.

Mining gained even more momentum during the sixteenth through seventeenth centuries, when the foundations for state-controlled mineral extraction were laid. A special administrative office called the Stoneworks Prikaz, which was responsible for only mining, was established. At the same time, blast-furnace iron making emerged, making it possible to increase the quantity of metal smelted and decrease its cost, thus creating a revolution in the metal industry. Nevertheless, a significant share of metal products was still imported from abroad. The first descriptions of Russian oil also date back to the seventeenth century. In particular, oil was discovered near the Irkutsk Ostrog and described in 1684.

Just like in other branches of industry, the eighteenth century reforms introduced by Peter the Great became a turning point for mining and manufacturing. The emerging empire needed its own well-developed industry, all the more so as a result of the twenty-year war with Sweden, one of the main importers to Russia, the importation of metal products decreased dramatically. It was during the reign of Peter the Great that reclamation of the Ural region, with its rich deposits of raw materials (accounting for 75% of all metals produced in Russia by 1725), and the volume of production in the manufacturing industry, increased rapidly. The first attempt to establish an oil refinery also dates back to the eighteenth century. The refining of oil extracted in the Ukhta River Valley started in 1745, but this didn’t last long due to the low demand for its products.

The second important stage was during the second half of the nineteenth century, when the rapid growth of the Russian economy resulted in a growth in natural resource extraction, as well as in the production volume of the manufacturing industry. Railways became one of the major consumers of metals, and also required a great amount of coal (the latter was also consumed by the manufacturing industry and was used as the basic type of fuel in urban areas). The development of new agricultural techniques increased the demand for mineral fertilizers, and consequently, for the extraction of the relevant raw materials. The first large-scale oilfields emerged as well. The first development well was drilled in 1864, and the first refinery processing cropped-out oil (not requiring drilling) was founded in 1863. By the time World War I began, the Russian Empire was among the leaders in natural resource extraction in terms of the volume of its manufacturing industry. Despite the fact that the country ranked below others in terms of absolute indicators, it demonstrated the world’s second highest growth dynamics in these branches (after the USA).

During World War I and the Civil War, the manufacturing industry suffered greatly, and production ties, including raw material supplies, were lost. In addition, major problems with transportation emerged. As a result, Soviet mining and manufacturing industries were for a long time engaged in restoring what had been destroyed. Real production growth started only from the early 1920s, and the exportation of natural resources became one of the main sources for financing large-scale industrialization, along with the exportation of agricultural products.

Numerous new manufacturing enterprises emerged during the 1920s to1930s, including true industrial giants such as the Magnitogorsk Iron and Steel Works, as well as the metallurgical enterprises of Zaporozhye. The main emphasis was placed upon the ferrous and non-ferrous metal industries producing those articles that were most required for manufacturing both civil and various military products. New oil refining enterprises were built as well, although still concentrated in the comparatively small region of the Caucasus.

After World War II and the post-war reconstruction of industry, a new stage began in the history of the mining and manufacturing branches, related to oil and gas field development in Western Siberia during the 1960s to 1970s. Development of these fields and the establishment of enterprises connected with them allowed the USSR to be ranked among the top three oil and gas exporters.


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