Norilsk to Spend $1.1 Billion by 2016 to Boost Copper Output 16%
Stock Chart for MMC Norilsk Nickel OJSC (GMKN)
OAO GMK Norilsk Nickel (GMKN), Russia’s largest mining company, plans to spend $1.1 billion by 2016 to develop an eastern Siberian copper field and boost output of the highly conductive metal by 16 percent.
The Bystrinsky deposit is expected to yield 62,000 metric tons of copper and 6.3 tons of gold in concentrate a year, First Deputy Chief Executive Officer Yury Filippov said in an e-mailed response to questions. Norilsk plans to complete a feasibility study this quarter and build a processing plant at the site by the end of 2016, he said.
Norilsk, whose copper output above the Arctic Circle in Russia has been declining for the past six years, seeks to expand production of the metal to diversify away from nickel, where it controls about a quarter of global output. Bystrinsky lies near Lake Baikal in eastern Siberia, about 2,300 kilometers (1,450 miles) southeast of the city of Norilsk.
Norilsk will mine as much 2.16 million tons of iron ore concentrate a year as a by-product at Bystrinsky.
“These volumes are insignificant for steel-related mining; still they will allow us to taste this business and be able to consider further expansion,” Filippov said.
The second stage of the eastern Siberian project is the development of the neighboring Bugdainsky deposit. The ore contains molybdenum, which like nickel is used to make steel alloys. “We can sell it to our existing clients,” Filippov said. Molybdenum began trading on the London Metals Exchange in 2010.
Norilsk also plans to build a processing plant at Bugdainsky by the end of 2016 and produce 9,000 tons of molybdenum a year there starting from 2017, Filippov said. He declined to provide capital spending estimates for the project. Molybdenum trades at $31,000 per ton in London, according to data compiled by Bloomberg.
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