New funding scheme for Russia’s ailing uranium mine

22 February 2017

Atomredmetzoloto (ARMZ), the uranium mining arm of Russia state nuclear corporation Rosatom, is exploring options for attracting foreign investors and debt financing to support the construction of  mine No 6 at the Priargunsky Industrial Mining and Chemical Union (Pimcu) in Krasnokamensk in the Transbaikal.  

ARMZ is suggesting banks may consider financing mine No 6 directly as a separate subsidiary, rather than through ARMZ or Rosatom holding company Atomenergoprom, as before. Kommersant reported that state corporation Bank for Development and Foreign Economic Affairs (Vnesheconombank -VEB) is considering a possible contribution of around RUB16bn ($274m). The total project cost is RUB19.3bn including RUB742m already spent.  Other possible investment includes RUB1.46bn from the company’s own funds and RUB2.46bn in state subsidies for infrastructure.

Pimcu began mining uranium in Krasnokamensk in 1968, and has mines No 1, No 2 and No 8 in operation. Production for 2016 is expected to be 1.87t and the company is expecting to make a small profit of around RUB4bn for the first time after a long period of losses. Mining costs are high but uranium prices slumped after Fukushima.

For Rosatom, Pimcu is not just a commercial consideration but also represents a social challenge, sources told Kommersant. Ending production at the older mines will lead to the closure of company towns. Until now, the main way to support the Pimcu was direct funding from Rosatom or Atomenergoprom but to develop Mine No 6 Rosatom has given the company permission to  seek external funding.

Pimcu CEO Sergei Shuryginym explained that in 2014, when Rosatom began to implement a programme to improve efficiency, “we clearly understand that the union stood at crossroads: either to reduce costs or to stop work. But stopping production at Pimcu meant with death of Krasnokamensk town, where our families live.”  The efficiency drive has been a success and Shuryginym says the main task for 2017 is to ensure the start of construction of mine ? 6. The mine holds 35% of Pimcu’s total reserves, which can be exploited for several decades. “The average uranium content is higher than at existing mines, which helps ensure a competitive production cost,” he noted.

 



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