Engineering & Mining Journal

SEP 2017

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

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Page 47 of 99

RUSSIAN PROJECTS 46 E&MJ • SEPTEMBER 2017 occupies the second place in the world in terms of known reserves of rare earth minerals, yet still only accounts for 0.2% of the global output. With this technolo- gy widely introduced, the situation could change. It's still unknown if the technolo- gy is viable, as Akron has not offered any details on the operational and financial performance of the technology. Additionally, there are nearly a dozen various projects for the mining of polyme- tallic ores in Russia, primarily copper, zinc and lead, and in most cases, they are lo- cated either in the Far East or in Siberia. In particular, Baikalrud plans to build two mines for the production of 1 million mt/y of ore that contains copper and zinc. The company also plans to build a plant near- by to produce copper and zinc concentrate targeting to export some quantities. In general, Russian production of non- ferrous metals is predicted to grow from 10% to 30% in coming years. This rise will depend mostly on exports. Most of Russia's industrial facilities are located in Europe, while most of the non-ferrous metal de- posits are in Siberia and the Far East. The transport leg for the supply of product to the foreign markets, including China, is much shorter than to the domestic customers. Other Mining Segments Invest in More Capacity In the 2016 annual report, Russian dia- mond miner Alrosa revealed the company's net profit last year jumped four times to Rub133.5 billion ($2.2 billion). As much as Rub72.87 billion ($1.2 billion) was provided by currency fluctuations. The company was able to boost the volume of sales by nearly 25%, actively promoting Russian diamonds in foreign markets. The positive financial performance allowed the company to continue to invest. Last year, it pumped Rub16.5 billion ($260 million) into the modernization of existing facilities and the construction of new ones. In particular, last year Alrosa started constructing the Zaria pipe of the Aikhal division and signed the special investment contract with the Russian Ministry for Far East Development for the diamond mining at the Verkhne-Munskoe deposit. The Zaria pipe should be commissioned in 2021 with production volumes at 1 million mt/y of ore. Speaking of the project, the com- pany's executives described Zaria pipe as one of the most important milestones for Alrosa. With the total amount of invest- ment of Rub9.8 billion ($160 million), it will provide the company with diamonds of the total weight of about 3.6 million carats until 2034. With the several new pipes at the Verkhne-Munskoe, the company will pro- duce much more. Here the investment cost, according to Sergey Ivanov, general director of Alrosa, will be close to Rub65 billion ($1.05 billion) and, due to the high social importance for the region, the project will be able to claim some support from the federal budget. The estimated ore reserves on the deposit of Verkhne- Munskoe kimberlite field are 65 million mt with the average grade of 0.6 carat/ mt or 38 million ct. The development pe- riod is until 2043. Launch of the mining plant and start of mining operations at the open-pit mine are planned for 2018. Once the design capacity is reached in 2019, the division will produce nearly 3 million mt/y of ore, according to Alrosa. A similar situation can be observed in mineral fertilizers. According to the data from the Russian Federal Customs Service, from January-June 2016, Russia exported more than 10 million mt of mineral fertil- izers with a value of $2.17 billion, which seems to be one of the highest levels for the country ever. In an interview, Andrey Guriev, the chairman of the All-Russian As- sociation of Mineral Fertilizers Producers, estimated that the volume of production of fertilizers in Russia doubled over the past six years, and exports nowadays are also surging. Guriev complained that the extremely high-interest rates of the coun- try's Central Bank and the consequent inflow of the carry trade investors makes the Russian Ruble overestimated, which jeopardizes the development program of the Russian fertilizers producers. Guriev, chairman of the Management Board of PhosAgro, one of the world's leading producers of mineral fertilizers, said that due to the launch of the new capacities, his company will be increasing sales by 8% - 10% per year in the next several years. In general, the growth rates in the entire Russian industry will be also quite significant, he predicted. An indirectly weak Ruble also supports Russian uranium mining, although the country's largest uranium holdings com- pany, ARMZ ,amid extremely low global prices this year, plans to keep production at 2,984 mt, slightly lower than in 2016. ARMZ is a part of Russian state-owned nuclear corporation Rosatom, which is not exporting raw uranium, but targeting to export enriched uranium instead. It signed up to build several dozens of new nuclear units all over the world by 2030, supplying them with reactors, and thus fuel assemblies, of Russian design. Rosatom basically tends to be self-suffi- cient in uranium, so given these plans, the corporation will need a lot of urani- um to fabricate the fuel in the future. The global prices for uranium are falling since the accident at Fukusima plant, but, ac- cording to the ARMZ forecast, they will start rising again in 2020, and there are several new projects ready to be launched shortly after that. Russian production of mineral fertilizers doubled in recent six years. (On the photo Uralkali mine, Photo credit: Uralkali)

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