Norilsk, Interros not in talks on acquiring Udokan - Potanin
KRASNOYARSK. Feb 15 (Interfax) - MMC Norilsk Nickel and Interros are not in talks on acquiring the Udokan copper deposit, the General Director of Norilsk Nickel and President of Interros Vladimir Potanin said on the sidelines of the Krasnoyarsk Economic Forum.
"Norilsk is not holding such negotiations. As far as I am aware, nor is Interros," he said.
On Thursday, the business daily Kommersant cited sources in reporting that the main shareholders in Norilsk Nickel - Interros and RUSAL - are discussing with Alisher Usmanov's iron ore and steel holding OJSC Metalloinvest the possibility of transferring the Udokan deposit to the mining giant.
Earlier, interest at Norilsk Nickel, which in mid-December was headed by Interros owner Potanin, in negotiations with Metalloinvest over Udokan was reported to Interfax by a source in banking circles. This source said Metalloinvest had ordered a valuation of Udokan, as did RUSAL, which retained Morgan Stanley to do it.
Norilsk Nickel had wanted to take part in a 2008 tender for the Udokan license, but then decided against. The winner of the tender was Mikhailovsky GOK (part of Metalloinvest), the operator of the project being subsidiary LLC Baikal Mining Company (BMC). Russian Technologies (now Rostec) was a partner with Mikhailovsky GOK, and in 2011 Metalloinvest and Russian Technologies applied to VEB (Vnesheconombank) for a credit of $6 billion , but VEB decided to proved only $300 million for the first phase of the deposit's development. Russian Technologies could get a stake in Udokan, joining the project on a costs basis, Usmanov said a while ago.
The Industry and Trade Ministry at the end of last year estimated the total volume of investment in the Udokan deposit's development at $10.5 billion. BMC took a dim view of that valuation, reckoning that investment in the project - with infrastructure factored in - was $6-$8 billion.
The Udokan deposit is located in the Kalarsky district of the Trans-Baikal territory. Its copper reserves are the biggest in Russia and one of the biggest in the world. Developing the deposit is complicated by a lack of infrastructure and extreme climatic conditions in the mountainous locality, permafrost, a ten-point seismic rating, and frequent landslides in the high-altitude parts of the deposit.
BMC started developing an international feasibility study for the project in September. International engineering company Fluor was selected as the general contractor. During the definition phase of the project, Fluor will develop and perform a metallurgical testwork program and will carry out the trade-off studies required to prepare design criteria and scopes of work for the subsequent stages of the international feasibility study for the Udokan copper deposit. This stage should finish up by the end of 2012, and the international feasibility study should be ready by the end of 2013.
Udokan's probable ore reserves to JORC standards for open production, according to geological survey work performed in 2010, are estimated at 795 million tonnes, with average metal content of 1.24%, which corresponds to 9.88 million tonnes of copper. Measured, indicated and inferred mineral resources to JORC are estimated at 2.7 billion tonnes, with average copper content of 0.95%, or a total of 25.7 million tonnes. Metalloinvest secured the license to develop Udokan in 2009.