BHP, Norilsk to mine for coal

Reuters | Fri, 16 Oct 2009 17:02
[miningmx.com] -- Norilsk Nickel plans to start mining coal with BHP Billiton in the Russian Arctic from 2015, the latest project to result from a three-year-old alliance between the mining giants.

BHP Billiton, the world's largest miner, will join Norilsk in developing the Syradasai deposit in a project that could eventually produce as much coking coal for the steel industry as Russian market leader Mechel produced last year.

Nikolai Matyushenko, deputy director for production development in Norilsk's transport department, said on Friday the project envisaged construction of a processing plant and power station at the deposit.

"From 2015, we intend to mine 8 million tonnes and then to increase it to between 12 million and 15 million tonnes," Matyushenko told reporters on the sidelines of an investment conference. He was referring to annual production.

Norilsk, the world's largest nickel and palladium miner, formed an alliance with BHP Billiton in 2006 to focus on exploration. The companies originally identified their main regions of interest as northwest Russia and western Siberia.

This area appears to have widened. In March 2008, after winning the rights to the Iisk-Tagul nickel and copper field in the eastern Siberian region of Irkutsk, Norilsk said it would undertake preparatory work at the field with BHP Billiton.

Officials at BHP Billiton's Moscow office were unavailable for comment.

ARCTIC PORT

The Syradasai coal deposit is about 100 km (63 miles) from the port of Dikson on the Kara Sea, even further north than Norilsk's Arctic nickel, copper and palladium mines.

Matyushenko, who declined to say how much would be invested in the project, said the joint venture partners planned to build a shipping terminal capable of handling vessels with capacity of around 70,000 deadweight tonnes.

He said exploration at the deposit would take about three years.

Mechel produced slightly more than 15 million tonnes of coking coal in 2008, although it also has plans to increase this total significantly by launching the massive Elga deposit in the far eastern republic of Yakutia.

Raspadskaya, Russia's second-largest coking coal miner, produced 9.4 million tonnes last year, although output was severely hampered by the financial crisis. Quarterly output has since returned to pre-crisis levels.

Russia's other main producer of coking coal in the Arctic is Severstal, the country's largest steel maker, which operates mines in the former Gulag city of Vorkuta.