Russian rare earth producer plans to invest $320M into tantalum and niobium production
Technoinvest Alliance, one of Russia’s largest producers of rare earths is considering investing up to 13 billion rubles (US$320 million) in the development of Zashihinskoe rare earth metals field, one of Russia’s largest field in terms of rare earth reserves, located in the Nizhneudinsk area of the Irkutsk region, a Russian region in southeastern Siberia.
As part of the project, the company plans to build a mining and metallurgical complex, which has the capacity to process of about 1 million tonnes of ore per year.
Building of the complex is scheduled for the beginning of 2016, while its official commissioning by 2018.
The new complex will specialize on the production and enrichment of tantalum-niobium ores. It will be comprised of a quarry, a processing plant and other objects of infrastructure.
The project involves the production of a concentrate with 44% content of niobium and 4.4% tantalum content.
All the future production will be supplied to the Angarsk Electrolysis Chemical Complex with the aim of further production of pure compounds of tantalum pentoxide (up to 200 tonnes per year) and niobium pentoxide (up to 2,000 tonnes per year).
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At the same time there is a possibility that the cost of the project may significantly increased during the next several years, due to unfavorable location of the Zashihinskoe field in a remote area of the Eastern Sayan, a mountain system with the length of over 1,000 km in Southern Siberia
As part of the project, the investor plans to build a 171 km-long road and a power line. The cost of the road itself is estimated at 2.75 billion.
Due to this, Technoinvest Alliance hopes that part of the funds for the project may be provided by the Russian government.
According to estimates of Technoinvest Alliance, payback period of the project will be 10 years, in the case of the average price for niobium pentoxide of US$50 per kg and US$280 in the case of tantalum pentoxide.. It is expected that gross proceeds of the project from 2018 to 2042 years will be 235.3 billion rubles (US$5,5 billion) (excluding VAT), while gross profit – 186.3 billion rubles.
There is a possibility that this will not be a single project, that involves the production of tantalum and niobium in Russia during the next several years.
Several days ago Rosnedra, a Russian federal subsurface resource use agency, announced its plans to organize a tender for the sale of the rights for the use of Afrikandovskoy tantalum and niobium field in the Murmansk region.
The contract will be signed for 25 years. The project involves the production of titanium, tantalum, niobium, as well as rare earth metals.
The volume of rare earth reserves of the field is estimated at 863,000 tonnes, while tantalum and niobium reserves of about 303,000 tonnes.
At present the majority of Russia’s needs in tantalum and niobium is almost entirely met by imports. However successful implementation of both projects will allow the country to significantly reduce the volume of supplies from abroad.
At present the majority of niobium is supplied for the needs of the Russian metals and pipe industry.
According to analysts of the Russian Ministry of Industry and Trade, during the Soviet times, the production of pure tantalum and niobium compounds mostly took place in Latvia. In Russia, the production of niobium and tantalum oxides is currently carried out at the capacities of the Solikamsk Magnesium Plant, on the basis of Lovozersky field, located in the Murmansk region. At the same time, so far, Russia has experienced a shortage of the projects for the production of pure compounds of niobium and tantalum.
According to an official spokesman of Denis Manturov, Russia’s Minister of Industry and Trade, at present global market for tantalum and niobium is controlled by China, where a significant part of these metals is produced illegally. This puts a pressure on legal producers and results and leads to the decline of their profitability. The Chinese authorities have tried to crack down on illegal production in recent years, however, despite their efforts, it continues to grow.
The cost of Russian production of both metals will be higher than in China, which means that they may face with fierce competition with imported raw materials from China. Moreover, the US, Malaysia and some other countries have also not ruled out the possibility of the launch of new tantalum and niobium productions.
Eugene Gerden is an international free-lance writer, based in St. Petersburg, who specializes on writing in the field of mining, metals and rare earth metals. ... <Read more about Eugene Gerden>