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Alrosa obtains license to mine ore in northeast Russia - paper

MOSCOW, April 23 (RIA Novosti) - Russia's top diamond producer Alrosa [RTS: ALRS] has obtained a $225 million license to develop four iron ore deposits in the country's northeast, business daily Kommersant said on Wednesday.

Russia's Federal Mineral Resource Agency, Rosnedra, offered the Tayezhnoye, Desovskoye, Tarynnakhskoye and Gorkitskoye iron ore deposits in the Republic of Yakutia for a tender at a starting price of 5.4 billion rubles ($225 million). Under the terms of the tender, the prospective winner was expected to obtain the right to develop deposits for 20 years.

However on March 18, the second bidder, Sibmining, failed to make a $225 mln deposit and was barred from the tender, which was declared invalid. As a result, the license went to Alrosa in accordance with existing legislation, Kommersant said.

Alrosa, which has been seeking to diversify its operations lately, intends to participate in other tenders to develop mineral resources other than diamonds, Kommersant wrote.

According to Kommersant, Alrosa is willing to develop the iron ore deposits with total reserves of more than 4.5 billion metric tons and required investment of at least $10 billion, using its own resources.

However, analysts say the deposits have low concentrations of iron ore meaning that Alrosa will probably not be able to implement the project independently, given the low profit margin.

Under the terms of the tender, the winner must draft and present within six months after the title registration a project to build two ore mining and processing enterprises and a metals enterprise at the deposits.

The company must also start mining at the deposits no later than seven years after the tender and implement the entire project in not less than 12 years. Also, one of the deposits will require additional prospecting, Kommersant said.

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