OREANDA-NEWS. November 18, 2010. OJSC MMC Norilsk Nickel (“MMC Norilsk Nickel” or “Company”) moves to the next stage of the investment project, which is implemented by the Company jointly with the state as part of the mineral resources development program for Zabaikalye Territory. The Company plans to begin designing mining and processing plant at Bystrinskoye deposit ahead of the approved schedule, reported the press-centre of Norilsk Nickel.

Currently, MMC Norilsk Nickel completed all necessary exploration work and is busy preparing the development of deposits. In accordance with the Government Act RF No.1872-r of 25.10.2010, the Company and the state through its RF Investfund will invest over 104 billion rubles in the project implementation. MMC Norilsk Nickel will invest over 80 billion rubles of which 72,358 billion will be invested in the development of Bystrinskoye and Bugdainskoye deposits and 8,059 billion in the railway construction: the 223km rail track will connect Naryn-1 (Borzya) with Gazimursky Zavod.   Investfond, will finance railway construction, investing 24,179 billion rubles.

The railway construction shall be finalized by 2012. The construction of mining and processing plants will commence in 2012-2013 and will be completed upon phased commissioning of the production facilities over the period of 2015-2016.

“The project in Zabaikalye is very important to MMC Norilsk Nickel in terms of the Company’s further growth and diversification. The project will enable increasing significantly mid-term and long-term production of copper and add new products – molybdenum and iron in concentrates to our product line. It will also strengthen the Company’s position in Asia. We are glad to participate together with the state in the implementation of such an important project for Russia”, said Vladimir Strzhalkovsky, Chairman of the Management Board of OJSC MMC Norilsk Nickel.

General information on the transport infrastructure project necessary for the development of mineral deposits in the southeast of Zabaikalsky Territory*–

This is a national-scale investment project to be implemented within the framework of public-private partnership by two partners: Investfund of the Russian Federation and MMC Norilsk Nickel. Total investments in the project will amount to RUB 104.597 Bln**.

The scope of the project includes: 1) cooperative construction of a railway line (223 km) from Naryn-1 station (Borzya) to Gazimursky Zavod; 2) development of Bystrinskoye and Bugdainskoye mineral deposit by MMC Norilsk Nickel alone (projected life-of-mine is about 30 years).

The project is expected to produce:
Bystrinsky GOK:

Copper in concentrate – 62 ktpa

Gold in concentrate – 6.3 tpa

Iron in concentrate – 2,113 ktpa

Bugdainsky GOK:
Molybdenum in concentrate – 9.8 ktpa

* “Chita Region” in the previous project name was substituted by” Zabaikalsky Territory”after formation of a new constituent entity of the Russian Federation
** at  the relevant year prices, VAT inclusive

Background:
In June 2007, MMC Norilsk Nickel and Federal Railway Transport Agency of the Russian Transport Ministry (Roszheldor) signed an investment agreement covering the construction of transport infrastructure for the development of mineral deposits in the southeast of Chita Region. The agreement provided for the construction of Naryn – Lugokan railway line and development of five mineral deposits: Bystrinskoye, Kultuminskoye, Lugokanskoye (copper sulphides), Solonechenskoye (antimony – gold) and Bugdainsloye (gold – molybdenum – porphyry). 

It was envisaged that 69% of the railway construction costs would be financed by the Russian Investfund and 31% by MMC Norilsk Nickel. Industrial development of mineral deposits would be carried out solely at Norilsk Nickel’s expense. 

As became evident in the course of on-site exploration that took place along with economic environment deterioration, three mineral deposits out of five initially selected could not ensure a viable rate of return. Having analyzed the situation, the Company suggested that the Russian government revise the project parameters so as to shorten the railway line and exclude three uneconomic mineral deposits from the scope of the project. Coordination of these modifications with interested ministries and agencies was completed in summer of 2010, and on October 25, 2010 a governmental decree was signed confirming the changes in the investment project certificate.