This year, Russian aluminium giant Rusal is expected to close
its Yaroslavsky Mining Works (YMW), a facility that has for
the past few years been responsible for more than 90% of
Russia’s fluorite output. YMW produces around
240,000 tpa fluorite from two deposits in Primorsky Krai in
the far east of Russia.
Rusal’s main aluminium business is under
pressure from weak global prices for the metal, forcing the
company to review its assets, including its fluorite
operations, which have become less competitive in recent
years.
The company uses the fluorite it mines in its own cryolite
plants to produce products for aluminium making, including
aluminium trifluorine, sodium fluoride and hydrofluoric
acid.
According to data from the country’s Ministry
of Surface Resources, Russian demand for fluorite concentrates
is currently around 400,000 tpa. Around 65% of this is
imported, mainly from China, Mongolia and Kazakhstan.
The main reason Rusal decided to halt operations at YMC is
that the cost per tonne to produce fluorite from the project is
50-70% higher than in other countries, making it more
economical for fluorite consumers to rely entirely on
imports.
Russia’s government insists that YMW will be
closed only temporarily for modernisation, allowing Rusal time
to revise its operations, reduce its workforce and attempt to
cut production costs. According to this plan, it is expected
that YMW will be recommissioned within two-to-three years, by
which time Russia is expected to have identified and developed
a number of new fluorite deposits to provide feedstock for the
Rusal plant.
| Main fluorite deposits in
Russia |
|
| Source: Russian Federal Agency for Subsurface
Use |
The future of YMW
Russia has significant fluorite reserves and a history of
mining the mineral, but the industry has been struggling for
the last five years. Most or all Russian fluorite producers are
loss-making and unless competitiveness can be significantly
enhanced, it is likely to be difficult to justify new
investment in fluorite mines.
Although the long-term plan for YMW has been spelled out by
Rusal, what will happen to the facility in the immediate
future remains unclear. The governor of Primorsk Oblast,
Vladimir Miklushevsky, recently pointed out that the local
authorities had an obligation to support the continuation of
the works and have allocated significant sums of public money
for this purpose. As a result, Rusal cannot simply shut the
plant overnight without incurring substantial fines and risks
being stripped of its right to develop the site.
"A possible scenario for resolving the situation prior to
the resumption of YMW’s fluorite operation is
temporarily converting the plant for the production of zinc,"
Miklushevsky said. "The other option is the development and
introduction of new technology for processing mineral ores.
However, so far Rusal has not provided a clear answer on this
issue. If they intend to continue to play for time, I will ask
the Russian government to intervene."
Miklushevsky added that he has discussed the YMW issue with
Rusal’s management several times over the last few
months and that the company has promised operations at the
facility will be halted for no longer than 18 months.
According to Miklushevsky, under current plans,
modernisation of the works should be finished by the end of
2017, when Rusal will at least partially restart mining and
processing, although the company has so far not specified an
exact timeframe.
"Today, products manufactured at the facility cannot be used
by cryolite plants, their main consumers, because of their high
cost and low quality," Rusal stated. "In order to change this
situation, YMW requires full modernisation." YMW is currently
the only Russian manufacturer and supplier of fluorite
concentrate required for the production of aluminum fluoride,
which in turn is used for production of primary aluminum. The
plant covers more than 60% of Rusal’s demand in
this type of raw material, according to Rusal.
In 2010, Rusal considered producing zinc concentrate at YMW,
since zinc can be mined at the Primorsk deposit as a
by-product. Netherlands-based commodity trader Trafigura
expressed an interest in participating in this scheme, but
after a year of deliberation Rusal decided not to proceed with
the project. In 2011, the company announced plans to launch
production of fluorite pellets for metallurgical plants, in
addition to the fluoride powder already being manufactured at
YMW, but this scheme was also subsequently abandoned.
Approximate estimates indicate that modernising YMW to allow
for the production of zinc and fluorite pellets alongside
fluorite powder would require investment of at least $1bn, a
tall order for a company whose profitability is already under
significant strain.
The YMW project’s chief geologist, Valery
Saenko, believes that Rusal needs to learn from Chinese
fluorite producers. "I have visited Chinese fluorite deposits
and seen how they manage to manufacture products at lower cost
than in Russia, even at smaller and lower grade deposits," he
said. "They are exploiting more than 1,000 small deposits
with a similar total resource base to Russia, but unlike
Russia, China currently accounts for 37% of world fluorite
production."
Table 1: On-balance reserves of
fluorite
in Russia |
|
Source: Russian Federal Agency for
Subsurface Use |
Other Russian fluorite projects
Russia has around 40 identified fluorite deposits, mostly in
Siberia and the Far East, containing a total of 29m tonnes
fluorite. To date, only a handful of these with high grade
mineralisation have been developed since around 90% of deposits
have fluorite contents of less than 30% and half of these
contain less than 15% fluorite, rendering them uneconomical to
exploit. Many also have poor infrastructure and logistical
links.
In addition to the YMW site, Rusal also owns licences for
the Pogranichnoe and Voznesenskoe deposits in
Russia’s far east, which have combined resources
of 22m tonnes ore with a fluorite content of 35.16% and 42.17%
respectively.
"Most of the country’s fluorite industry is not
ready for commercialisation," said Alexei Skrinnik, chief
geologist at the Russian Institute of Geology and Mineralogy
at the Russian Academy of Science. "With fluorite contents of
15-25%, there is no sense in developing such deposits at
current global prices."
"They might become interesting for investors in 20 or 30
years’ time, when the major deposits have been
exhausted, while the development of the global economy will
boost the demand for this type of mineral," he added.
Such assessments have not deterred some developers, however.
Preparations for mining fluorite are currently underway at the
Ermakovsky fluorite-beryllium deposit in the Republic of
Buryatia in eastern Siberia by local company, Yaruuna Invest.
In the Republic of Bashkortostan in southern Siberia, Suran Co.
is exploring the Suransky fluorite deposit, while at the
Shahmatnoe deposit in Trans-Baikal Krai, on the border with
Mongolia and China, a group of local investors have nearly
finished drawing up a funding plan for a fluorite mine.
Collectively, these projects are slated to have a capacity
of 60,000-80,000 tpa fluorite pellets and powder. The average
fluorite content of the deposits’ ores is about
35% and their backers have the opportunity to install the most
modern technology to extract and process the mineral.
Denis Sokolov, a representative of the Russian Ministry of
Surface Resources, said that Russian researchers are working to
enhance the country’s fluorite expertise.
"Scientists at the Siberian Institute of Mineralogy have
developed a unique system for complex processing of
fluorite-beryllium ores to produce both elements at very low
cost," he said. "Having a strong technological base is the most
important part of a fluorite project, because the aim is not
simply to launch production, but to make it profitable."
According to a spokesperson for the local government of
Trans-Baikal Krai, the development of the Shahmatnoe deposit
has official backing. "This part of the country has no
metallurgical plants, but borders China and is within reach
of the ocean ports at Vladivostok, so can export its raw
fluorite," they said. "Given the recent devaluation of the
Russian rouble, this could be quite an attractive supply
source for some importers".
Russia’s second largest producer of fluorite,
Ros-Shpat Co., based in the Republic of Pervomaisky, recently
disclosed plans to fund a large expansion of its mining
operations until 2020. However, the company is believed to have
significant debts and its management has been embroiled in a
fraud investigation and therefore Ros-Shpat’s
future is uncertain.
Much depends on whether Rusal proceeds with the modernisation
of YMW, since a large, state-of-the-art plant could sustain
other fluorite mines in Siberia and the Far East with its
feedstock requirements. If the company fails to reopen YMW,
it is possible that the entire industry could collapse,
unless other developers successfully reduce production costs
to make Russian fluorite competitive with Chinese and
Mongolian sources, or prices for fluorite rise significantly
in the
next few years.