Untitled - PRIME Gold

62 2005 NORILSK NICKEL • ANNUAL REPORT •NORILSK NICKEL • ANNUAL REPORT •200563USD 24 million was invested in the Oktyabrsky mine, in thereconstruction of the existing facilities of the –650m horizonused for the mining solid sulfide ores in the western flank ofthe deposit (expected completion date of project – 2014), aswell as facilities for the stripping, preparation and mining ofcuprous ores (expected completion date of project – 2007).USD 22 million was invested in the Taimyrsky mine in 2005 forthe reconstruction of the existing facilities and developing newhorizons: –1100m, –1300m, –1400m and to replace decommissionedfacilities for copper and nickel ore production.USD 16 million was invested in the Komsomolsky mine in2005 in the construction of the following facilities:• development of rich and cuprous ore reserves at the flanks.Project started in 2000 and expected completion date of projectis 2008. Project objective – extraction of flank reservesof rich and cuprous ores aimed at sustaining the mine'soutput. Capital investment in 2005 – USD 5 million;• mining of disseminated ore. Start-up facilities. Project startedin 1992 and expected completion date of project – 2008.Project objective – extraction of disseminated ores due tothe decommissioning of rich and cuprous ore extractionfacilities. Capital investment in 2005 – USD 10 million;• modernization of skip winding facilities. Project objective –comprehensive technical re-equipment of the winding facilitiesof the skip shaft. Capital investment in 2005 – USD1 million.USD 6 million were invested in the Anhydrite mine producinganhydrite (raw materials for production of consolidatingstowing on the Talnakh ore field) and USD 4 million wasinvested in the Zapolyarny mine.Kola PeninsulaIn 2005, the principal investment in the ore facilities on the KolaPeninsula (USD 33 million) went to construct the Severny-Gluboky underground mine, to replace the decommissionedfacilities of the Tsentralny mine and to ensure the optimum loadof the processing facilities on the Kola Peninsula. Project startedin 2000 and expected completion date of project is 2010.Capital investment in 2005 amounted to USD 28 million.Capital investment of USD 4 million was used to develop orereserves on –620m and –740m horizons of the Severny mine.The objective of the project initiated in 2001 is to developthe remaining ore reserves of the Zapolyarnoye deposit.Approximately USD 1 million was invested in capital miningwork at the Kaula-Kotselvaara mine. The expected completiondate of the project is scheduled for 2008.EnrichmentTaimyr PeninsulaIn 2005, investment in the enrichment facilities in the TaimyrPeninsula amounted to USD 40 million, including USD 27 millioninvested in the construction of the Norilsk EnrichmentPlant facilities.At the Norilsk Enrichment Plant most investments were madein the construction of a set of projects:• addressing the issues of enrichment tailings storage in theTaimyr Peninsula;• preservation of production output; and• compliance with environmental legislation.Reconstruction of the Lebyazhye tailings pit will provide thenecessary tailings storage capacities for the Taimyr Peninsulaenrichment plants in view of the potential ore mining andprocessing volumes. Project started in 2002, expected completiondate of the project is 2007.Kola PeninsulaUSD 2 million was spent on additional and start-up work to completethe Pechenganickel Enrichment Plant No. 1 modernizationproject on the Kola Peninsula. The facility was put intooperation in 2005. The project's main objective was to replacedepleted equipment on the floatation and grinding sections inorder to improve the extraction of nickel into collective concentrateby 9%-10%. This will increase production efficiencyon account of the reduction of costs in the smelting process.Metallurgical productionTaimyr PeninsulaDuring 2005, investment in the development of the metallurgicproduction of the Taimyr Peninsula amounted to USD111 million.At the Nadezhda Metallurgical Plant:• USD 82 million was spent to reconstruct the productionline of flash smelter No. 2 to increase its productivity to850,000 tonnes per year and facilitate a possible furtherincrease to 1,200,000 tonnes per year;• capital expenditures in 2005 amounted to USD 22 milliondue to ongoing project of oxygen block replacement aimedat developing oxygen production on the Taimyr Peninsula.The project is scheduled for completion in 2006; and• USD 2 million was spent for the completion of constructionand installation work in the reconstruction of the productionline of flash smelter No. 1 in order to increase the capacity ofthe nickel ore processing line to one million tonnes per year.At the Copper Plant, USD 5 million was invested in the completionof the construction and installation work involved inthe reconstruction project of the production and suction gasevacuation system in the smelter and elemental sulfur productionsection.Kola PeninsulaIn 2005, investment in metallurgic production of the KolaPeninsula amounted to USD 5 million, of which USD 3 millionwas invested in the development of metallurgic productionsupport on the Kola Peninsula.At the Severonickel combine, an investment of USD 2 millionwas made to complete the construction and commission thetesting block for copper and nickel concentrate smelting ofthe two zones Vanukov furnace. The main objective of the projectinitiated in 2004 was to create an experimental pyrometallurgicalsite for all the companies of MMC Norilsk Nickel aspart of the Program of metallurgic production modernization.Energy facilitiesTaimyr PeninsulaUSD 25 million was spent to ensure reliable production andreserve capacity for the production of thermal power, ofwhich USD 24 million was invested in the following maincapital construction projects:• implementation of the TPP-1 reconstruction project"Replacement of medium pressure turbine units. The replacementof TA-20 with the generator (start-up complex)" willprovide the required quantity of thermal and electric powerto the production facilities, reduce the number of turbineunits while preserving the necessary capacity, and createreserve capacities for the generation of thermal and electricpower in accordance with the Development Concept ofthe Energy Complex in the Norilsk Industrial District.Investments in 2005 amounted to USD 11 million. The projectis scheduled to be completed in 2006;• the project for the technical water supply reconstruction"Water conduit 2D = 900 from KP-5 to NadezhdaMetallurgical Plant" initiated in 1999 is continuing at theCopper Plant. As a result of the project, it is planned that reliableand continuous technological water supplies in therequired quantities will be ensured for consumers and costsrelated to technological water losses as a result of water conduitholes, as well as respective repair costs, will be eliminated.Capital investments in 2005 amounted to USD 11 millionand the project is scheduled for completion in 2006;• replacement of water boiler No. 1. Main project objectiveis to ensure the production of the required quantity of thermalpower to meet consumers' needs and to provide reservecapacities for thermal energy production in accordance withthe Development Concept of the Energy Complex in theNorilsk Industrial District. Capital investment in 2005 amountedto USD 3 million.OJSC TaimyrgazIn 2005, the Group continued construction of the Pelyatka gascondensate deposit in the Taimyr Peninsula, with an investmentof USD 52 million. In 2005, 3 wells were commissioned.Thus, the Group had 14 drilled wells by the end of the year(of which 11 are operating).The pilot-industrial operation of the Pelyatka gas condensatedeposit, which was started in 2003, will continue until 2008when commercial operation will start. The commissioning ofthe overall gas condensate deposit will allow the Group to meetthe demand for gas supplies for the entities in the NorilskIndustrial District for at least 50 years.Kola PeninsulaAn investment of USD 1 million was made in the energy facilitiesof the Kola Peninsula to ensure reliable operation of theexisting facilities.Auxiliary facilities and equipment notbudgeted in construction projects andin replacement of obsolete equipmentInvestments in auxiliary facilities amounted to USD 48 million.They were mainly spent on the production process supportand for the improvement of the Group's employees'working conditions.In 2005, USD 125 million was invested in equipment not budgetedin construction projects and in replacement of obsoleteequipment.An investment of USD 26 million was made in the acquisitionof equipment necessary to support the current operations ofbranches (excluding the Taimyr Peninsula), subsidiaries andassociates of the Group.Taimyr PeninsulaIn 2005, investments in equipment not budgeted in constructionprojects and in replacement of obsolete equipmentamounted to USD 84 million, meant for the acquisition ofthe following:• mining equipment – USD 41 million;• surveyor's instruments, control and analytical equipmentand other equipment – USD 20 million;• lifting and transportation equipment – USD 9 million;• general plant equipment – USD 8 million;• power equipment – USD 4 million; and• drilling equipment – USD 2 million.Kola PeninsulaOf the total investment in equipment not budgeted in constructionprojects and in replacement of obsolete equipment,which amounts to USD 15 million, investments in:• heavy and transport equipment amounted to USD 8 million;• auxiliary and technological equipment, as well as communicationequipment and control and measurementdevices – USD 3 million;• power equipment – USD 2 million; and• general plant and chemical equipment – USD 2 million.MMC NORILSK NICKEL NOT INCLUDINGGOLD MINING ASSETS (POLUS)8