The vast Krasnoyarsk territory in northern Siberia occupies more than 10% of Russia’s total area and has some of the country’s richest natural resources, including 86.3 billion tons of known coal reserves. The remote northern regions of the territory are thought to have the largest potential reserves in the world, estimated at around 2.3 trillion tons.
We were part of a team commissioned to review the viability of developing a significant coal reserve in this region by Norilsk Nickel, the world’s leading producer of nickel and palladium and one of the world’s top 10 copper producers. Working through our Russian-focused joint venture, IMC Montan, in partnership with KPMG (Moscow), we carried out a detailed analysis of each of the coal reserves. This analysis has now formed the basis of a development strategy covering the potential social impact, as well as the viability, of mining the reserves.
John Bacharach, Project Director, WYG explains: "Russia holds the world’s second-largest recoverable coal reserves and a lot of the thermal coal produced is used to generate around 25% of the country’s domestic energy. Coking coal is used in the Russian steel industry and is also exported, and mining is often the only source of employment for local people. Setting up a mining operation to extract these reserves could have a substantial impact on the local economy, as well as the financial performance of our client."
Norilsk Nickel could obtain licenses to a number of undeveloped coal deposits with very large reserves of coking and thermal coal in northern Krasnoyarsk. However, despite being a world-class leader in mining and producing base and precious metals, the company had no specific coal experience to help them assess or exploit the reserves.
Igor Pleskunov, Project Manager, WYG adds: "They needed a knowledgeable and trusted third-party who could offer specialist independent advice on the viability of the reserves and the potential impact of mining on both society and the environment. They called on us to advise them on the basis of our reputation and years of experience."
Ranking the different deposits
The joint WYG/IMC Montan team first developed a ranking matrix, which was then used to review the findings of our analysis and rank each area in terms of product quality, mineability, transport, logistics, development time, capital expenditure, operational costs and present value. We also assessed social and environmental impact.
We then presented our findings and recommendations for development to give Norilsk Nickel a clear understanding of the characteristics of each deposit and the priority areas for developing the reserve.
As a result of our work, our client has developed a sound strategy for the future development of the reserve, while taking into account the proper management of both environmental and social issues and predicting the likelihood of job creation in this remote area.
Igor concludes: "Natural resources have been key to the region’s success for hundreds of years and our ability to formulate a viable strategy to develop these resources will not only impact on our clients assets, but also on the working lives of local people, their future prosperity and the environment they live in."