Russia's East Siberian Metals Corp began construction of a new mine on Thursday at the world's sixth-largest zinc and lead deposit, with a view to supplying raw materials to China and Japan.
The mine and concentrating plant at Ozernoye, 250 km (155 miles) north-east of Ulan-Ude, the capital of the South Siberian province of Buryatia, will have capacity to produce 6 million tonnes of ore a year and will be developed jointly with Canada-based Lundin Mining Corp.
"We will commission the first stage of the plant in 2008 to process 1 million tonnes of ore," said Mikhail Slipenchuk, general director of the parent company, Metropol Investment Co, at an opening ceremony. "The nameplate capacity will be reached in 2012, if not earlier." The plant will produce concentrates for processing by Chinese and Japanese smelters as well as Russian zinc producers Chelyabinsk and Elektrotsink. It will produce 300,000 tonnes of zinc in concentrate and 50,000 tonnes of lead in concentrate.
President & CEO of Lundin Mining Karl Axel Waplan told Reuters that the project would require $400 million in investment, with Metropol and Lundin contributing $80 million each and borrowing the remaining $240 million.
Lundin Mining, which has an executive management team in Sweden, said last week it had signed a letter of intent with IFC Metropol investment house, the parent company of East Siberian Metals, to buy a 49 percent stake in Ozernoye for $125 million.
Lundin also has right of first refusal to another, larger zinc project in far eastern Russia owned by Metropol. A study of the Kholodninskoye project - believed to be the world's third-largest zinc and lead field - is under way. Indicated resources at Ozernoye are estimated at 157 million tonnes of ore grading 5.2 percent zinc and 1.0 percent lead, which would permit the project to operate for about 18 years, East Siberian Metals said.
In 2004, Metropol won the rights to develop Ozernoye and Kholodninskoye, which has proven reserves of 324 million tonnes of ore and probable reserves of 185 million tonnes. Metropol co-owns a network of plants producing zinc and lead car batteries.
Lundin Mining explores for minerals and produces base metals, mainly zinc. The company owns three mines - two in Sweden and one in Ireland.
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