tender for siberia gold mine put off again -source
UPDATE 1-Tender for Siberia gold mine put off again -source September 9, 2004 7:34am ET (Reuters)
(Adds industry source, Interfax, details from paragraph 6)
By Yelena Smirnova and Maria Golovnina
MOSCOW, Sept 9 (Reuters) - Russia has put off a tender for the rights to tap Siberia's vast Sukhoi Log gold deposit until after the end of 2004, a natural resources ministry source said on Thursday.
The government has for years debated tender terms in a process marked by bureaucratic hurdles and disagreement over whether to allow foreign firms to bid. Officials had recently pledged to announce the tender date and details in September.
"The government is going to finish the feasibility study first and only then auction the deposit off, which is not going to happen this year," the source told Reuters.
A spokesman for the natural resources ministry refused to comment on the remarks.
Sukhoi Log is Eurasia's biggest untapped gold deposit with over 1,000 tonnes in estimated gold reserves -- as of the last audit conducted in the 1970s. Experts say actual reserves could be a lot higher and see development costs at more than $1 billion.
Interfax news agency also quoted its own source in the natural resources ministry on Thursday as saying the tender would not take place before the second half of 2005.
SHOULD FOREIGNERS TAKE PART?
The last stumbling block delaying the tender is disagreement between liberals and conservatives within the government over whether to allow Western companies to bid.
Russia's Troika Dialog brokerage quoted its industry sources as saying on Thursday that the latest government proposal favoured placing a 25 percent limit on foreign ownership.
Analysts say any restriction on Western participation would undermine President Vladimir Putin's efforts to encourage foreign investment -- especially in light of an ongoing legal attack on oil major YUKOS .
The Sukhoi Log winner is likely to become a dominant force in the sector, globally as well as in Russia.
A number of domestic and foreign companies, including Canada's Barrick Gold and Britain's Highland Gold Mining , have expressed interest in the deposit.
Industry insiders say metals major Norilsk Nickel , with its aggressive gold expansion policy, is the most likely winner.
A source in a non-Russian company which is considering bidding said the government's indecisiveness was causing uncertainty.
"It's been eerily quiet on the Sukhoi Log front recently. And all of a sudden we are getting yet another delay," the source said.
Norilsk -- also the world's top nickel and palladium producer -- is Russia's biggest gold company. It owns 20 percent of the world's No. 4 gold company, Gold Fields Ltd. , after paying $1.16 billion in March.
Last year Norilsk produced about 40 tonnes of gold, and it hopes to gradually boost output through expansion and mining.
(additional reporting by Mikhail Yenukov) End of Story
