First rock samples taken from deep underground trigger elation among anxious investors. Zinc content exceeds five percent, and points to a dollar fortune of billions. Russia's oil and gas wealth may hog the limelight these days, but for those in the know - and with access to Soviet-era prospecting maps - the country sits on a hoard of other treasures now ripe for the harvest.
Soaring demand and prices for metals and minerals make it worth reviving old, stalled projects in remote and barely accessible regions and hooking them up to the transport infrastructure.
A case in point is Ozernoye in Siberia's Buddhist republic of Buryatia, where an estimated 157 million tons of zinc ore will be extracted in Russia's largest mining project in four decades.
"Russia has the largest zinc reserves in the world but holds only 40th place in production - I think that's wrong," says Mikhail Slipenchuk, head of the Moscow-based Metropol group that owns the mining rights for the Ozernoye deposit, which was first detected by Soviet geologists in the late 1960s. He's being savaged by angry clouds of gadflies and mosquitoes but the burly 41-year-old can barely contain his glee, and little wonder.
With the price of zinc rising 70 percent this year alone, the deposit - the sixth largest in the world - is currently valued at more than 23 billion US dollars. Not to mention a large accompanying yield of lead and possible deposits of silver and gold.
Costing between 400 and 600 million dollars, depending on whether a railway line will be built, the 20-year project entails the excavation of a pit 350 metres deep and 1.5 kilometres long and the removal of hundreds of millions of tons of waste. As for the end destination of the zinc, which is used to make everything from frying pans to water purification systems, China is the obvious customer due to its proximity to Buryatia.
Slipenchuk's Swedish partners are hearted by the rock samples as they near the September deadline to commit funds to the project or relinquish their option of a 49 percent stake. "The drilling so far confirms what we believed but before we pay 100 million dollars we have to be a bit more certain," said Karl-Axel Waplan, CEO of the Lundin Mining Corporation, modestly understating the pledged investment of 125 million dollars.
While Russia bristles at being seen as a mere source of raw materials for the world economy, the government in Moscow knows that the driving force of its economic and political resurgence lies in the bowels of Siberia.
This sprawling territory between the Ural Mountains and the Far East is estimated to hold some 80 percent of Russia's oil resources, 85 per cent of its natural gas, 80 percent of its coal, similar amounts of precious metals and diamonds and about 40 percent of its timber resources.
As the great Russian scholar Mikhail Lomonosov predicted in the 18th century, "Russia's power will grow with Siberia." One gets the impression that here and in the Far Eastern wilds you only have to dig deep enough and you'll find something of value. "It almost seems true - just on theKamchatka Peninsula there are more than 200 gold mining sites," said Mike Struthers of AMC consultants, an Australian mining company working in Russia.
"Capital investments required to develop many of the larger projects has until now been the major stumbling block. The changed economic climate within Russia and for that matter globally allows some of the larger capital-intensive projects to be advanced," he said.
But being jealously guarded by huge forests, mountains, swamps, hungry insects and ferocious winter temperatures, the bulk of the country's wealth has yet to see the light of day, as in Buryatia.
"Most of what was prospected in Soviet times in Buryatia hasn't been touched. And they found plenty," said Oleg Mikhailenko, CEO of East Siberian Metals, the mining subsidiary of Metropol.
As the Ozernoye project gets underway, investor muscle and mining know-how alone is still deemed insufficient for a smooth outcome, hence the arrival of a robed Othodox priest at the founding ceremony. "I consecrated a gold mine last week so I'm getting used to this," said Father Oleg. "If you mine here with God at your side you can't go wrong," he tells the Swedes.
DPA
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