Metalloinves denies talks to swap Udokan project for stake in Norilsk Nickel

Metalloinvest, Russia's largest iron ore miner yesterday refuted media reports that it was in official talks to swap the Udokan project, the country's largest untapped copper deposit, for a stake in Norilsk Nickel

Russian newspaper Kommersant had late last week reported that Metalloinvest, partly-owned by Russia's richest man Alisher Usmanov, is in talks to increase its stake in Norilsk Nickel, the world's largest producer of nickel and palladium, in exchange for control of the undeveloped Udokan copper deposit.

The paper added that talks have been going on since December and is not clear how much stake Metalloinvest is going to buy in exchange for the mine. Metalloinvest already holds 4 per cent in Norilsk.

But a metals analyst at Alfa Bank said in report that Metalloinvest may get as much as 2 per cent of Norilsk for Udokan.

Responding to media speculations, Metalloinvest said that it had held unofficial preliminary discussions, and added, "The company believes that an estimate for Udokan copper deposit discussed in media, significantly undervalues the deposit and does not reflect its market value."

Metalloinvest acquired Udokan in 2008 for $499 million in a auction. Norilsk had also bid, but later dropped out over shareholder dispute.

The Udokan mine, located on the Chinese border in far eastern Russia, is one of the largest undeveloped copper deposits in the world, said to contain 14.4 million metric tons of copper and estimated to cost $8 billion to develop.