OREANDA-NEWS. May 20, 2010. The Investor Day held by OJSC MMC Norilsk Nickel (“MMC Norilsk Nickel” or “the Company”, or “the Group”) took place in London. In the course of this event top managers of MMC Norilsk Nickel made presentations for investors and analysts disclosing their vision of the Company’s future prospects and developments in production, sales and financial activities in the period to 2025, reported the press-centre of Norilsk Nickel.

Production
From the management viewpoint, key medium- and long-term objectives of the Company in the area of metal production include the following:

- Developing the existing resource base by focusing on projects with high return on invested capital.

- Ensure more balanced mix of base and metals PMGs in the Company’s revenue, which means increasing the share of copper to 35% and decreasing nickel proportion to 35%, while maintaining other metals (molybdenum, etc) at 5% and PGM at 25%.

- Maintain the Company’s leadership in terms of quantity and quality of its mineral reserves.

- Keep the positions of highly profitable diversified metal producer with low operational costs.

- Ensure vertical integration of Russia-based and international operations; develop energy supply and transport infrastructure.

Mining operations
MMC Norilsk Nickel owns the world’s largest reserves of nickel-bearing ores. Proven and probable ore reserves of the Group amount to 640 Mt of ore, being sufficient for over 25 years of operation at the current level of metal mining.  Total established mineral resource base of the Company’s Polar Division is large enough to sustain mining for more than 60 years.

Forecast ore production in the Polar Division will grow from 16 Mtpa to 30 Mtpa by 2025. This will be achieved through the expansion of existing mines and commissioning of new ones.  Development and expansion of Skalisty Mine (with estimated LOM of over 30 years just in terms of high-grade ore mining) will allow increasing ore production at this mine to 2.4 Mtpa. Potential expansion of Zapolyarny Mine may increase ore production to 3.6 Mtpa. 

One of the key principles that MMC Norilsk Nickel adheres to in developing its mineral resource base consists in pursuing local opportunities, which means further exploration of areas in the vicinity of currently operating mines. The most promising exploration prospect of the Polar Division is Maslovskoye Deposit with its ore reserves estimated at 215 Mt. The period of construction will be about 12 years, and starting from 2023 ore production may go on at 7.5 Mtpa.

Exploration targets considered by the Polar Division as high priorities include:

- Norilsk high-grade and cupreous ore reserves adjacent to the existing mines (boundaries of Oktyabrskoye Deposit, Maslovskoye Deposit).

- high-grade ore reserves of the prospects located in the Northern part of Kraskoyarsk Territory (Verkhne-Turumakitskaya, Kureisko-Gorbiachinskaya and Kulumbinskaya areas). 

Overall growth of high-grade and cupreous ore reserves is expected to reach 186.7 Mt by 2010 (Ni 2,335 Kt, Cu 4,931 Kt, PGM 1,077 t). 

Kola MMC is planning to maintain mining at 8 Mt of ore per annum through ramp-up of Severny-Gluboky Mine and use of off-balance ores for ensuring optimal loading of its processing capacities.   

There are three high-priority exploration areas in the Kola Peninsula: Allarechenskaya, Solenoozerskaya and Yuzhno-Kovdorskaya. Total high-grade and cupreous ore reserves are expected to be increased by 2017 to 93.8 Mt (Ni 1,100 Kt, Cu 400 Kt, PGM 100 t, Au 50 t).

Ore processing
Further development of MMC Norilsk Nickel production activities envisages modernization of its concentrators, which will allow processing of increasing ROM ore tonnage, concentrate upgrade, reduction of environment pollution and cost-cutting at the smelter stage.

In Polar Division modernization of Talnakh Concentrator is planned. A new concentrator is supposed to be commissioned in 2020, where disseminated ores from Maslovskoye Deposit will be treated. 

The purpose of Pechenganickel Concentrator modernization (Kola MMC) is to reduce MgO content and increase Ni content in the concentrates. Another ongoing project of Kola MMC, a briquetting shop construction, will allow reduction of sulphur emissions in the process of sintering. 

Мetal production
General modernization of production facilities is expected to bring considerable changes in the Company’s smelting and refining operations.

Capacity optimization in the Polar Division suggests:

Increase of pyrometallurgical capacity of Nadezhda plant to 2.4 million tons of concentrate a year to process all nickel concentrate of the Polar Division;

Shut-down of agglomerating and smelting sections of the nickel plant;

Potentially – complete shut-down of the nickel plant, which will become possible after new matte leaching capacities at Nadezhda plant will be implemented;

Implementation of sulfur utilization projects at Copper plant and Nadezhda metallurgy plant.

The metals production at Kola MMC will be modernized by reconstructing the nickel tank house. It will enable to increase production of cathodes to 114 thousand tons a year with the potential to reach 120 thousand tons. Further, the Company plans to perform lab work and full-scale production tests of the chloride leaching technologies and Activox.

ECOLOGY

The program to control sulfur emissions was approved in the Polar Division. It suggests:

- shut-down of pyrometallurgical section at the Nickel plant;

- utilization of sulfur-containing products as backfill in mining operations of the Polar Division;

- reconstruction of the sulfur section at the Copper plant;

- modernization of the currently suspended sulfur production at Nadezhda plant.

CHITA PROJECT (TRANS-BAIKAL)
As part of the state-private partnership, MMC Norilsk Nickel implements exploration and development project at Bystrinskoe and Bugdainskoe deposits in the Trans-Baikal territory. Due to inefficiency of development of Kultuminsk, Lugokansk and Solonechensk deposits, the new railway route will be shortened until Gazimur Plant station.

New project characteristics
The plan for Bystrinskoe and Bugdainskoe deposits envisages annual production of:

- 26 million tons of ore (16 million at Bugdainskoe, 10 million at Bystrinskoe)

- 66 thousand tons of copper in concentrate

- 12 thousand tons of molybdenum in concentrate

- 2136 thousand tons of iron ore (63%)

- 7 tons of gold

The terms for project implementation are: 2015 for Bystrinskoe and 2016 for Bugdainskoe.

INTERNATIONAL ASSETS
The Company plans to integrate production from its assets in South Africa (Nkomati) and Botswana (Tati Nickel) into the Group’s European enterprises. Particularly, it intends to supply concentrate from Nkomati to Harjavalta refinery in Finland. In 2010 the Company plans to conclude the Nkomati expansion project.

Projected Tati Nickel production (2010):

18.5 thousand tons of nickel in concentrate, 20.4 thousand tons of copper in concentrate, 3 tons of PMG in concentrate.

Projected 2010 Nkomati production (NN owns 50%):

8.1 thousand tons of nickel in concentrate, 3.9 thousand tons of copper in concentrate.

Harjavalta refinery will be supplied with own raw material and through market supplies (Talvivaara, Fortaleza, Mirabella and other).

Projected 2010 Harjavalta production:

- Ni - 51.9 Kt

- Cu – 13.5 Kt

A re-launch of temporarily suspended production in Australia is possible if there will be acceptable return on invested capital employed. Exploration works proved that Honeymoon Well development project (Western Australia’s largest deposit of nickel sulfate) has the most potential. It has a total resource base of 1.1 million tons of nickel. The project envisages construction of mine-and-processing facilities with total annual capacity of 50-60 thousand tons of nickel.

Investors and analysts were impressed with the event’s good organization, readiness of the Company’s management for an open and constructive dialogue with Investment Banking community as well as informativeness of the presented reports. Participants of the Investor’s Day of MMC Norilsk nickel expressed interest in holding this event on a regular basis.