31 Oct 2017 10:13

Nornickel could expand Bystrinsky operation to 11 mln-12 mln tonnes

MOSCOW. Oct 31 (Interfax) - The capacity of the processing plant at Norilsk Nickel's (Nornickel) Bystrinsky mine and processing plant (Bystrinsky GOK), which was launched on Tuesday, could be expanded in future from 10 million tonnes to 11 million-12 million tonnes, the Russian mining giant's senior vice president and COO, Sergey Dyachenko told reporters.

The first phase of the plant will receive the first ore on Tuesday as part of its hot commissioning, and the second phase will be launched by November 30.

The plant will be brought up to design capacity in the course of 2018-2019 so that it reaches design capacity of 10 million tonnes by the end of 2019, Dyachenko said.

"There is reserve in the system and the plant's capacity can be increased to 11 million-12 million tonnes. Of course, investors will be interested in this," Dyachenko said.

The plant is expected to process 50% of design capacity in 2018, 75% in 2019 and 100% in 2020. It is expected to produce about 28,000-30,000 tonnes of copper in concentrate, about 140,000 ounces of gold and about 1 million tonnes of magnetite concentrate in 2018. Bystrinsky has complex ore, containing gold, copper and iron.

Following the completion of a deal with CIS Natural Resources, a fund formed by Vladimir Potanin's Interros and Grigory Berezkin's ESN Group, Nornickel controls 50.01% of Bystrinsky and has operational control, Dyachenko said. The shareholder structure will not change in the near future, he said.

"The shareholder structure is stable. New shareholders are not planned at the moment," he said. CIS Natural Resources owns 36.66% of Bystrinsky and China's Highland Fund holds 13.33%.

A listing for Bystrinsky is still being considered, but a decision has not been made yet, Dyachenko said. "Our primary objective now is to get the first concentrate, show it to consumers and make sure that the project is reaching its economic targets," he said.

Nornickel values Bystrinsky at $1.5 billion and estimates the project's profitability at about 30% from when design capacity is reached.

"The project is stable at prices that formed on the market in 2016-2017. At a 20% discount to consensus prices, the market shows stable NPV and IRR," Dyachenko said.

Asked about the market forecast for copper, Bystrinsky's main product, he said the company does not expect a significant increase in prices. "We are taking a very cautious approach to current trends on the market, realizing that the copper market is currently balanced," Dyachenko said.