Russia's federal agency for natural resource use, Rosnedra, plans to sell three large coal deposits, with total coking coal reserves of 1.65 billion mt, in the Ulug-Khem basin in Russia's Tuva Republic, Russian newspaper Kommersant has reported, adding that the Russian government wants to create the country's largest coal mining complex in the area, to be operated by several private companies.
In this connection, on Friday, April 9 Russian Prime Minister Vladimir Putin said that his government is preparing a tender for the development of the coal deposits in Tuva, which will be attended by many large companies. According to Kommersant, the tender will include the western, central and eastern deposits with total reserves of about 1.65 billion mt of coking coal of Zh grade. This volume is comparable to the country's largest coal deposit, the Elga deposit, owned by Russian mining and steel group Mechel, with reserves totaling two billion mt.
The development of the coal deposits in the region is dependent on the construction of a 418 km railway between Kyzyl and Kuragino, carried out on a government-private sector partnership base, and which is planned to be finished in 2014. According to Mr. Putin, the common use infrastructure development at the Ulug-Khem basin will be carried out by the companies which receive licenses, which will unite into a consortium.
The coal reserves of the Ulug-Khem basin, among the largest in Russia, amount to about 20 billion mt, including 13.7 billion mt of coking coal.
The Russian steelmaker Severstal is likely to participate in the tender for one of the deposits. On Friday, Severstal CEO Alexei Mordashov presented his company's concept of the development of the Ulug-Khem basin at an exhibition for innovative projects held in Russia's Novosibirsk city, which was attended by Mr. Putin.
In addition, according to market players, interested parties in the Ulug-Khem basin may also include Russian steelmakers Novolipetsk Steel (NLMK), which does not have its own coal reserves, and Magnitogorsk Iron and Steel Works (MMK), which currently obtains around half the coal it needs from its own supplies. Meanwhile, due to its proximity to China, the project will be also interesting for exporters, such as Russian coal mining company Kuzbassrazrezugol and Mechel.