Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr
Issue link: https://emj.epubxp.com/i/872627
RUSSIAN PROJECTS SEPTEMBER 2017 • E&MJ; 45 www.e-mj.com uting the loss to Western sanctions against Rosteh. The Russian state-owned corpora- tion has been subject to U.S. sanctions since 2014, including personal sanctions against top managers and some restrictions for international financial organization. The recent additional sanctions ap- proved by the U.S. Senate will likely im- pact Rosteh's alliance with Polyus and the Sukhoi Log project. Polyus could lose $150 million for the project's license. Russia has very strict rules for the development of the deposits with the so- called priority importance. According to the federal bill "On Subsurface Resourc- es," the government or state-owned enti- ties should have a huge stake in the pro- jects of such type and that was the main reason why Sukhoi Log was not developed for the past 15 years. Technically, Poly- us could put the reserves of Sukhoi Log on its balance sheet, which will nearly double its combined reserves from the current 64 million oz and propel it from the fourth to first place in terms of world leaders of gold reserves, but it is not yet known when the construction will begin. Better Prospects for Non-ferrous Base Metals Almost all of Russia's base metal produc- tion is destined for the foreign markets, so the ties between fluctuations in curren- cy exchange rates and the industry land- scape in this segment are even stronger. For the federal budget, duties from the export of non-ferrous metals is one of the most important income items. According to the Federal Customs Service data, in 2016, Russian miners exported non-fer- rous base metals valued at $9 billion, in- cluding aluminum ($4.98 billion), copper ($2.4 billion) and nickel ($1.7 billion). Last year, Russian miners earned less dollars, and much less Rubles, from their export contracts, on the same amount of volume. For example, in 2016, aluminum exports rose by 0.58% year-over-year, but in monetary terms it fell by 18%, while the Ruble strengthened 20.1%. Currently, the Ruble is still weaker than it was at the end of 2013, by 37%, and in this regard several dozen new pro- jects in the area of non-ferrous base met- als mining are in the pipeline for 2017 and 2018. In particular, it is believed that the weak Ruble was one of the main factors for Russian Copper Co. (RCC) to enhance its efforts to build the Tominsky GOK 30 kilometers (km) away from the city of Chelyabinsk in the Urals. RCC was considering the project for several years and last year acquired the license for the construction. With an investment value of close to $1 billion, Tominsky GOK is expected to be one of the largest Russian copper mines with a production capacity of 28 million mt/y of copper ore and 500,000 mt per year (mt/y) of copper concentrate. The project consists of two open-pit mines that would eventually reach a depth of 540 meters (m) and cover 4,000 hectares and a con- centrator. The project faces stiff resistance from local environmental activists, who claim Tominsky GOK is located too close to Chelyabinsk, where 1.2 million people live. In 2015, a petition to prohibit con- struction of the project due to the ecolog- ical issues was signed by 108,000 citi- zens and submitted to Russian President Vladimir Putin. Tominsky GOK has been included in a federal program for the de- velopment of a state mining complex by 2020, which means that the construction must start in the next two years. Regu- lar protests are taking place before the Chelyabinsk city government offices as well as at the construction site. It's unclear if RCC will be able to overcome this issue. In addition to Tominsky GOK, RCC cur- rently operates several smaller scale pro- jects, such as the Luchistoe mine in Oren- burg Oblast, where the company plans to produce 55,000 mt of copper-sulfide ores through open-pit mining for at least two years, starting from the end of 2017. The company will soon complete a modern- ization program at the Karabash Copper in Chelyabinsk Oblast to boost production performance by 50% to 150,000 mt/y. As for the tin industry, the situation is also complex. The most promising pro- jects remain under price pressures so ex- treme that even the weakest Ruble won't help. Earlier this year, Russia issued a decree that abolished the payment of the mineral extraction tax for the domestic companies extracting tin and rare earth metals until 2022. In this case, how- ever, the government does not want to en- courage an export market. Total domestic demand has reached 7,500 mt and the country imports 90% of its tin. In 2018, Yanolovo will commission the largest Russian tin mine at the Ruchei Tirekhtyakh placer deposit in the Repub- lic of Sakha (also known as Yakutia), with a production capacity of 5,500 mt/y. The $70 million project was originally sched- uled for commissioning in 2017, but was postponed due to funding problems. By lifting the mineral extraction tax, the eco- nomics for the mine should improve. Rare earth minerals production remains as vague here as in other parts of the world. In mid-2016, the Novgorod-based plant Akron presented President Vladimir Putin with a line for extracting rare earth minerals from the wastes from processing mineral fertilizers. Akron said that at the full occu- pancy, the line will be able to produce 200 mt/y of rare earth minerals. The extraction technology has been described as a real breakthrough for the industry. During the opening ceremony, Putin reminded everyone that Russia Akron, one of Russia's largest producers of mineral fertilizers, has recently launched a rare earth metals line. (On the photo: Akron capacities, Photo credit: Akron)