MMC Norilsk Nickel and Federal Railroad Transport Agency (Roszheldor) entered into the investment agreement onconstruction ofNaryn-Lugokan railroad inChita region. The parties signed the agreement atthe 11th International Economic Forum inSaint Petersburg. The new 375kilometers long railroad will provide access toTrans-Siberian trunk from major mineral deposits located inthe Baikal region including: Bystrinskoye, Kultuminskoye, Lugokanskoye (copper-sulfide deposits), Solonechenskoye (antimony-gold deposit) and Bugdainskoye (gold-molybdenum-porphyrite deposit).
The railroad construction project isadministered onthe terms ofpartnership between the state and private investor. Pursuant toDecree ofthe Russian Government No. 1708dated November 30, 2006, in2007-2011 the Russian Investment Fund isto commit 69% ofthe total cost ofconstruction with the remaining portion ofcosts tobe covered atthe expense ofMMC Norilsk Nickel. The total amount ofestimated railroad construction cost isRUB 51.5billion (estimated asat January 1, 2006).
General Director ofMMC Norilsk Nickel Denis Morozov believes that the joint project Construction ofTransport Infrastructure for Development ofMineral Resources inthe Southeast ofChita Region tobe implemented incooperation with the Investment Fund ofthe Russian Federation will provide aspectacular example ofthe way the state and private businesses benefit from cooperation.
The new railroad track will largely contribute tothe development ofthe entire region through additional tax payments and new workplaces, whereas Norilsk Nickel will beable toadvance the development ofa group ofcopper, gold, silver and iron projects licensed toour Company, Mr. Morozov said.
The mineral deposits ofthe Chita project will provide basis for Norilsk Nickelsplans that involve commissioning ofmining and concentration capacities with total output inexcess of35million tons ofore per year in2012- 2015. Lifetimes ofdeposits, most ofwhich are suitable for open-pit mining, will exceed 30years.
Calculated cost estimates for construction ofmining and concentration facilities include the costs associated with installation ofwater and air treatment units. Design and construction ofall facilities will bebased onstandards and provisions ofthe Russian environmental legislation.