PRESS: Millhouse abandons development of Russia’s largest tin field

MOSCOW, Jan 16 (PRIME) -- Severnoye Olovo, controlled by tycoon Roman Abramovich’s Millhouse, has returned a license for the development of Russia’s largest tin deposit Pyrkakai to the government for it had decided not to develop the deposit, Kommersant business daily reported on Monday.

The Pyrkakai deposit, located in the Chukotka Autonomous District, is the fourth largest tin deposit in the world with reserves amounting to 228,500 tonnes of tin and 23,000 tonnes of tungsten. Severnoye Olovo planned to launch the development in 2017 with a processing capacity of 6 million tonnes per year and an annual production capacity of 11,100 tonnes of tin and 814 tonnes of tungsten.

The company was to hold the license until 2028, but it returned it to the Federal Mineral Resources Agency in November.

Millhouse estimated capital expenditures for the deposit at U.S. $300 million, and had been looking for partners or buyers of the project since 2012. The company even planned to attract foreigners to the field, including China’s Yunnan Tin Group, but it decided that tin content of 0.25% is too low. In 2012, London Metal Exchange’s prices for tin made production at the field unprofitable.

But even current metal prices do not make the field’s development profitable, a source familiar with the matter told Kommersant.

Market participants told the business daily that investors may be interested in the field only after re-estimation of reserves. A representative of the Natural Resources and Environment Ministry told Kommersant that a new auction of the field may be done only if several contenders are seriously interested in it. Millhouse declined to comment.

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