The meeting of the management board of OJSC MMC Norilsk Nickel took place June 26th 2012. The optimization of the company's mining and processing operations in Australia and Finland was discussed at the meeting. Based on the results of the meeting, the management board resolved to include the project capital expenses into 2012-2017 investment program of the company.
The company's strategic goals are to fulfill the cost potential of the assets in Finland and Australia by creating the united vertically integrated system of its mining and processing facilities in these countries.
Achieving these goals will allow stabilizing the load of Norilsk Nickel Harjavalta's refining facilities with its own high grade feed for a long term period and ensuring the independence from third party concentrate suppliers. Furthermore, due to the feed supply optimization, it is expected to reduce the production costs to be generated by the processing facilities at Cawse hydrometallurgical plant in Australia and Harjavalta refining plant in Finland.
These tasks can be completed due to the launching of mining and primary processing operations in Australia. Mining operations will be carried out in one of the world's largest undeveloped nickel deposits, Honeymoon Well, while processing at Cawse plant, which is currently put on care and maintenance. Honeymoon Well is a promising deposit hosting nickel resources of 1.26 million tonnes in sulphides and 2.7 million tonnes in laterites. Pursuant to MMC Norilsk Nickel plans, the first ore may be produced in 2016-2017. Currently, front end engineering and exploration work have been carried out; process pilot testing is being implemented. The company updates the existing materials and mining operations plan, designs previously elaborated solutions in detail, and carries out research and development activities with regard to concentrating hydrometallurgical operations.
Mr Panov director for overseas production assets said that the creation of the united vertically integrated system will allow ensuring a single economic logic for the key existing and future facilities of the Company in Australia and Finland, as well as optimizing the cost, sales and investment management throughout the whole value chain due to using the synergistic effects reached.
Taking into account that it is expected to terminate the construction work and get the first output by 2017, when the non ferrous metals market is forecasted to recover, the project will have a significant positive impact on the company's financial results. Given the construction period of three years, the project discounted payback period is expected to be eight years.
Source - Norilsk Nickel
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