IRC to receive $19.5-mln settlement for delay in K&S enrichment plant construction
MOSCOW. Sept 17 (Interfax) - IRC Limited (IRC), the Petropavlovsk plc spin-off that is developing iron ore projects in Russia's Far East, has agreed with the contractor - China's CNEEC - on compensation in connection with the delay in the construction of the Kimkan-Sutara enrichment plant in the Jewish Autonomous Region.
IRC will receive a discount from the cost of work amounting to $19.5 million, IRC said in a statement said.
The plant was supposed to go into production in June, but it became clear in May that this would not happen.
"Due to various reasons, including last year's flooding, the Chinese builders [CNEEC] were unable to carry out all the planned work on time. Therefore, in the worst calculations and forecasts we concede that the completion of construction might be delayed until next year. They have an incentive to complete construction as soon as possible. The contract provides for penalties for each late month," the head of LLC Kimkano-Sutarsky GOK, Yury Makarov said at the time.
According to the latest information, processing complex is supposed to open by December 31, 2014. If there are new delays, CNEEC will have to provide additional compensation.
There are already 4.7 million tonnes of mined ore with 31% iron content waiting for processing at the site. Mining has been suspended for the time being.
The Kimkan-Sutara operation has design capacity to mine 10.5 million tonnes of ore annually. The first phase of the plant will produce 3 million tonnes of iron ore concentrate annually. In future, annual production of concentrate will expand to 8.3 million tonnes and production of hot briquetted iron will total 3.75 million tonnes.