By Clement Bigot, for Eurasia Business News – August 29, 2021
The Russian Federation and the Republic of Kazakhstan signed an agreement on the mining activities in the transboundary Tarutinskoye copper ore deposit.
The agreement was signed during the official visit of the Russian Prime Minister Mikhail Mishustin to Kazakhstan on August 18. The Russian Minister of Natural Resources and Environment Alexander Kozlov and his Kazakh counterpart Magzum Mirzagaliev have signed the cooperation treaty.
The Tarutinsky copper field is located in the Chesmensky district of the Chelyabinsk region of the Russian Federation. The eastern border of the mining site runs along the state border with Kazakhstan. The user of the subsoil license is the company Vostochny Basis LLC (owned by RMK Group, the Russian leader in the copper mining industry). The total area of the Russian license zone is 1.81 sq. km, and the production capacity of the open-pit mine is 750 thousand tons of ore per year. The approved balance reserves of copper ore are 4.583 million tons and copper – 63.7 thousand tons.
The license for the Tarutinsky subsoil block was issued by the Russian Federal Agency for Subsoil Use in 2013, the license is valid from November 8, 2013 until November 1st, 2038.
The study of the cooper deposit was carried out in four main stages: prospecting work in 1962, prospecting work in 1988-1990, appraisal work in 2000-2001, appraisal and exploration work in 2014-2015. Core wells were drilled mainly vertically.
Alexander Kozlov, the Russian Minister of Natural Resources and Environment of Russia, stated during the signature ceremony :
“Subsoil use is a foundation of the Russian economy, a powerful base for highly profitable investment projects that create new jobs for citizens. The development of the Tarutinskoye field will provide additional tax revenues to the regional budget in the amount of 2.4 billion rubles. This agreement also expands interregional cooperation between Russia and Kazakhstan. In particular, a geological study of the subsoil area and exploration of minerals will be carried out. As part of the program “Reproduction and use of natural resources” we pay special attention to increasing the volume of geological exploration – which is also a priority for us in our work. “
The Tarutinskoye copper deposit will be developed by open-pit mining with a capacity of 750 thousand tons of ore per year for 9.5 years. The mined ore will be delivered by road to the Mikheevsky GOK enrichment plant (Varnensky district of the Chelyabinsk region, part of RMK Group, the Russian leader of the copper mining industry) for further processing. The implementation of the project for the development of the field will create 350 new jobs.
These are prevention of interference with the maintenance of the state border, territorial integrity and inviolability of the border, rational use and protection of subsoil, work in accordance with permits and design documentation, as well as material liability of field developers for causing harm.
The Chairman of RMK, Vsevolod Levin, commented:
“The development of the Tarutinskoye field is already the second investment project implemented by RMK Group within the framework of agreements on cross-border cooperation between Russia and Kazakhstan. Experience has shown that this format of interaction is effective and benefits the economies of our States. The signature of the agreement will allow RMK to implement a project that will give an additional impetus to the development of the Chelyabinsk region. RMK is investing 1.2 billion rubles in the construction of a mine and infrastructure facilities at the Tarutinskoye deposit.”
The owner of the license for the Tarutinsky block, Vostochny Basis LLC, became part of the RMK Group in 2018 as a result of a deal with Polymetal, reported the daily Kommersant. RMK Group received the Tarutinskoye deposit, which belonged to Polymetal, in exchange for a Kazakh block. Under the terms of the deal, Polymetal received 85% of shares in Tarutinskoye LLP, which owns the license to develop the Vostochno-Tarutinskoye gold-copper deposit.
Under its terms, the Tarutinskoye field in the Chelyabinsk region, owned by Polymetal, was exchanged for the Vostochno-Tarutinskoye field in Kazakhstan, which belonged to the RMK Group. As a result of the transaction, Polymetal received 85% in Tarutinskoye LLP, which owns the license to develop the Vostochno-Tarutinskoye gold-copper deposit in Kazakhstan. In exchange, Polymetal transferred to RMK Group 100% of Vostochny Basis LLC, which holds the license to develop the Tarutinskoye gold-copper deposit in the Chelyabinsk region of Russia.
The transaction was an exchange of assets and did not include additional payments. It provides benefits for both parties by improving the logistic connection of the fields with the existing processing factories. Vostochno-Tarutinskoye is located on the same (Kazakhstan) side of the border as the processing plant of Polymetal’s Varvarinskoye field. Tarutinskoye is located in the Chesmensky district of the Chelyabinsk region, about 30 kilometers from the Mikheevsky GOK, which operates in the Varna district.
In recent decades, the demand for copper in the world has been steadily growing. The red metal is currently trading around $ 9,420 per ton ($ 9,423 on Friday 27 August at official close), against $ 6,788 on September 1st, 2020, and $ 4,684 on March 16, 2020, its annual lowest price.
Copper has good electrical conductivity (the best among non-precious metals) and thermal conductivity. That makes the red metal a critical material in telecommunications, construction, transport and even the energy sector. Integrated circuits and printed circuits use also more and more copper.
Copper should benefit in the medium term from the proliferation of wind turbines and of electric cars, all two very greedy in the red metal.
Russia owns 7% of the copper world reserves while Kazakhstan has 3%. The main reserve of copper is in Chili, which owns 23% of the world reserve. Then comes Peru with 10% and Australia with 10%. The US owns 6% of the world reserves. China is a large importer of the red metal, used in its industry and for energy purposes. The Chinese soil has only 3% of the world reserves.
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© Copyright 2021 – Clement Bigot, legal expert and consultant in international relations.