Nordgold to Invest $321 Million in Developing Sardana Zinc Deposit
Russian mining company Nordgold has announced plans to invest over 30 billion rubles (approximately $321 million) in the development of the Sardana zinc deposit, one of Russia's largest zinc fields in terms of reserves. The Sardana deposit is located in the remote Ust-Maisky area of the Yakutia Republic, covering an area of 6.1 square kilometers. It contains balance reserves of 1.9 million tonnes of zinc, with estimated reserves exceeding 2.2 million tonnes.
The project is scheduled for implementation from 2026 to 2030 and includes the construction of a zinc concentrate plant. Nordgold's CEO, Georgy Smirnov, highlighted the significant technical challenges associated with developing the deposit, noting its isolation from transport and energy infrastructure. He emphasized that establishing the necessary infrastructure will require substantial support from the government.
The development of the Sardana deposit is an important step for Nordgold, a company owned by Russian billionaire Alexey Mordashov, and for Russia itself, as zinc mining volumes in the country remain relatively low. The Russian Ministry of Industry and Trade has previously highlighted challenges with zinc production in its strategy for the development of Russian metallurgy through 2030.
According to the ministry's strategy, Russia's zinc production in 2024 is expected to reach 200,000 tonnes, with domestic consumption projected at around 232,000 tonnes. This gap is currently filled through imports, with 84,000 tonnes primarily coming from Kazakhstan. The largest zinc producer in Russia is the Ural Mining and Metallurgical Company (UMMC), which controls over 60% of the domestic production. UMMC acquired the Chelyabinsk Zinc Plant in 2016 and previously owned the Electrozinc plant in Vladikavkaz, which closed in 2019 after a fire.
The Sardana deposit is not the only major zinc project in Russia. In September, production began at the Ozerny Mining and Processing Plant in the Republic of Buryatia. The plant, based on the Ozerny deposit, will process up to 6 million tonnes of polymetallic ore annually and produce up to 597,000 tonnes of zinc and 82,000 tonnes of lead concentrate after reaching full capacity in 2025. The project was delayed due to a fire damaging imported equipment, but operations commenced in the third quarter of 2024. The main shareholder is Vladislav Sviblov, the owner of Highland Gold, with estimated investments of 92.7 billion rubles.
Independent analysts believe that Nordgold may face serious challenges in developing the Sardana project, including growing concerns over sanctions that may affect equipment supplies, particularly from China, where companies are wary of participating in such projects. Additionally, the extreme climatic conditions of northeastern Yakutia present significant obstacles, and Nordgold will need to ensure compliance with environmental regulations, which could lead to additional costs and delays. Changes in tax legislation could also impact the project's capital expenditures.
