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. Last Updated: 07/27/2016

Fierce Battle for Copper Rights Ends

Bidding closes Tuesday in a competition for the rights to Russia's biggest mining project, the Udokan copper deposit in remote Siberia, a crucial test of Russia's new policy on attracting foreign capital to help exploit its resources.


The deposit is huge, with known reserves of 18 million tons of copper hidden in about 1. 2 billion tofts of ore. Located in the Chita region, east of Lake Baikal and exposed to extreme winter conditions, it will cost about $1 billion to exploit the deposit. At the earliest, commercial production will not begin until 1997. The winner will be announced early in 1993.


More than half a dozen foreign firms, including the Australian BHP Ltd. , the British RTZ Group, Canadian firm Placer Dome and Japanese firms Mitsubishi and Marubeni Corp. , are bidding.


A Russian consortium with some U. S. and German participation, the Udokan mining company, will also be in the running. The group includes the Chelyabinsk-based metallurgical giant Uralmash and has been campaigning through the Russian media for the contract to be awarded to a Russian firm.


The cabinet recently gave the first rights on a feasibility study for the $8-billion Shtockman natural gas project to a Russian submarine-building and gas industry consortium, excluding a Western consortium.


Under the procedure set by the State Geology Committee with advice from merchant bank Goldman Sachs, preference will be given to firms which make most use of Russian industry.


Peter Worthington, Moscow representative for BHP, said he was sure whichever consortium won the auction would take on Russian partners. "We understand that a project of this significance could not be developed without significant Russian participation in every aspect", he said.


RTZ has taken out image-building advertisements in Russian newspapers, telling readers, "RTZ aims to involve the local population as much as possible in the process of production and raise their standard of living".


On Nov. 19, the State Geology Committee organized a presentation of the project at which a dozen Russian firms made pitches for sub-contracts.


Yury Nazorov, president of Rosvostockstroy, which wants to build homes for the 40, 000 workers, said his company would accept either a Western or a Russian bidder providing sufficient work was handed out to Russian firms. "We just want a firm that can guarantee the capital to get the job done", he said.