Basic Element Eyes Udokan Copper

12.05.2008 (14:53) | Kommersant

Basic Element will compete with Russkaya Med (Russian Copper) consortium and GMK Norilsk Nickel in the tender for development of world’s third Udokan cooper deposit.

But the chance is that the copper price will sink in the nearest term and successful bidder will need a decade to pay back the investments of $1.6 billion, the analysts speculate.
A new bidder for Udokan emerged less than a week before the application deadline (May 14). Basic Element Holding of Oleg Deripaska voiced readiness to bid at the tender in late past week.

“The company is interested in widening resource base and is still interested in bidding at the tender,” PR Director of Basic Element Resource Department Elena Rollins told Interfax. In Basic Element, they didn’t specify which of divisions will finally apply, but the source said it could be Strikeforce Mining and Resources Ltd (SMR, the subsidiary of Soyuzmetallresource). Basic Element doesn’t negotiate any joint participation in the tender, according to the sources.

Deripaska’s holding is the third potential bidder at the tender slated for July 17. Russkaya Med consortium of Ural Mining and Metal Co. (UGMK) and RZD is its first rival, and GMK Norilsk Nickel is the second one.

Norilsk Nickel will independently apply for participation but counts on support of two powerful partners, the government-controlled Rostekhnologii and Metalloinvest of Alisher Usmanov. In addition to the application, potential bidders are to provide feasibility studies for Udokan development by June 16.

Udokan (Transbaikalia region of Russia) is the world third deposit in copper reserves. As of January 1, 2008, its balance stockpile of B+C1 category equaled 14.4 million tons of copper (copper content of 1.56 percent), 7,300 tons of silver and 1.9 tons of gold.

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