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Russia Lawmaker Seeks China Partner for $1 Billion Zinc Mine

Russian lawmaker Mikhail Slipenchuk is seeking a Chinese investor for the $1 billion Siberian zinc deposit owned by his company IFC Metropol after Lundin Mining Corp. quit the project following the 2008 financial crisis.

“China will be the main consumer of our metal, that’s why we prefer to get a Chinese partner,” Slipenchuk said in an interview in Moscow. Talks are being held with Metallurgical Corp. of China and China Nonferrous Metal Industry’s Foreign Engineering and Construction Co., he said.

Slipenchuk is ready to sell as much as 49 percent of MBC Resources Ltd., owner of the rights to the Ozernoye zinc and lead deposit near the world’s deepest lake at Baikal in East Siberia. IFC Metropol plans to retain a controlling stake.

China became Russia’s largest trading partner last year after helping fund a 3,700 kilometer (2,300 mile) pipeline to ship oil from Taishet in Siberia to Daqing in northeast China. Russia plans to ship Siberian natural gas to China and boost trade turnover between the two countries to $200 billion in 2020, Prime Minister Vladimir Putin said in October.

China is a natural customer for Siberian metals because of its location and need for industrial metals, MBC Resources said in e-mailed reply to questions. Zinc is used to make galvanized or corrosion-protected steel for construction and automaking.

Ozernoye holds about 157 million metric tons of ore, with 5 percent zinc and 1 percent lead, based on Joint Ore Reserves Committee international standards, according to MBC. The mine is profitable with zinc prices as low as $1,200 a ton, it said. Prices fell 24 percent in London this year to $1,875 a ton.

Test Plant

Metropol has invested $200 million through MBC to develop Ozernoye, mining ore at the deposit since 2010 and planning to set up a pilot processing plant in 2012, Slipenchuk said. $1 billion needs to be invested to reach target capacity of 130,000 tons of zinc and 45,000 tons of lead a year, he said.

Lundin Mining, chaired by Swedish investor Lukas H. Lundin and based in London, agreed to buy 49 percent of Ozernoye in 2006 for $125 million and left the investment in September 2009, reshuffling its assets following world financial turmoil.

MBC is also seeking financing from VEB, Russia’s state-run development bank chaired by Vladimir Putin, Slipenchuk said. In 2009, the businessman brought a submarine to Baikal lake and dived with Putin. Slipenchuk became a lawmaker in the lower house of Russian parliament in Dec. 4 elections and may sit on the committee for natural resources.

Repeated calls to the mobile phone of Kang Chengye, board secretary of Metallurgical Corp. of China, and the offices of Du Bin from China Nonferrous went unanswered today.

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