Mining World Uzbekistan

MININGWORLD EVENTS

Uzbekistan Mining Facts

Uzbekistan possesses large mineral resources and raw materials, and their extraction and use contributes considerably to the stimulation of economic growth. Over 2700 mineral deposits and a variety of 100 different natural resources have been discovered - over 60 of these are presently being utilized in the national economy.

Uzbekistan is the world's ninth-largest gold producer, also a large world producer of tungsten and molybdenum products, and supplies tungsten-molybdenum wire, molybdenum flat rolled products, refractory metals and monocrystals. The deposits of uranium, gold. silver, tungsten, phosphorites, table salt, marble, manganese and turquoise, finishing decorative stone, quartz sand for production of glass, faience and ceramics were discovered in the region. A complete cycle of producing uranium, gold, silver and other products was set up in the region. Palladium and rhenium are extracted and produced simultaneously with the main metals.

Coal Mining

Uzbekistan has listed commercial coal reserves of approximately 3,000 Mt, including 1,000 Mt of bituminous coal. The Angren field contains a proven 1,900 Mt. Uzbekistan 's current annual coal requirement is 4 Mt. At present, all of Uzbekistan 's coal is produced by JSC Ugol, with over 80% of the production coming from the Angren deposit, situated in the Tashkent oblast. JSC Ugol also has a mining operation at the Shargun mine in the Sukhardaryinskaya oblast. Ugol produced 1.91 Mt of coal, 1.85 Mt of lignite and 61,600 t of bituminous in 2003. The Angren open pit produced 1.63 Mt of coal in 2003, a 33% decrease from 2002. Approximately half of Ugol's production is sourced from underground mines. About 70% of Uzbekistan 's coal reserves are brown coal/lignite with the remainder bituminous. Coal resources are estimated at over 5 000 Mt, of which 3 000Mt are classified as reserves. Reserves at Angren alone are estimated at over 2 000 Mt, of which most is classified as lignite. Completion of a third mining operation at Baisun could ensure that Uzbekistan has a surplus of coal for export in the future.

Coal Mining Company "Ugol" is currently developing two coal deposits, Angren in the Tashkent region and the Shargun pit in Surkhandarya. It is also involved in exploration in the Baisun field in Surkhandarya region. During the period to 2010, Uzbekistan plans to invest US$254 million in the coal. About 90% will be spent on upgrading the Angren mine to raise annual output to 7.8 Mt in 2010. Stripping will increase from 11.2 million m3/y to 62.7 million m3/y. Mine operating costs should fall from US$10.38/t to US$7.85/t. The programme will be financed by Ugol itself, foreign credits and foreign direct investment.

Uzbekistan 's coal industry, like many of the national coal industries of the former Soviet Union , has been on the decline since independence, in large part due to shrinking state subsidies. Uzbek coal production in 1999 stood at 3.2 million short tons (Mmst), a 38% decline from 1992. Domestic coal consumption in 1999 also was 3.2 Mmst, although consumption has declined faster (just over 50%, from 6.44 Mmst in 1992) than production.

Uzbekistan has estimated coal reserves of 4.4 billion short tons, primarily in the Angren, Baisun, and Shargun deposits. The Angren open-cast mine alone, which is the country's largest coal deposit, with about 2 billion short tons of mostly brown coal, supplies about 80% of the country's total coal production. Capacity utilization at Uzbek mines fell throughout the mid-1990s, and existing equipment, which has not been upgraded since 1992, has virtually exhausted its service life.

In response, the government is implementing a program to update the country's coal sector by modernizing production facilities, thereby facilitating an increase in output. Krupp Fordertechnik GmbH recently won a tender to refurbish the Angren coal mine, a project that will be implemented over 10 years in six stages. The refurbishment project stipulates a transition from cyclical coal extraction technology to the flow-line method. The project hopes to raise coal extraction to 5 Mmst/year (from the present 2.5 Mmst/year) and cut production costs at Angren from $23/ton to $12/ton. The cost of the first stage, which may start in late 2001, is approximately $20 million, which will be funded by German bank credit under Uzbek government guarantee.

Uzbekistan plans to upgrade mining operations at its other deposits as well. The Shargun and Baisun deposits are much smaller than the one at Angren. Additional investment at the Shargun deposit is expected to double or triple production of high-quality coal from current levels of over 200,000 short tons/year. Completion of a second mine at Baisun could quintuple the mine's production of over 100,000 short tons/year, and could ensure that Uzbekistan has a surplus of coal for export in the future.

Copper Mining

The majority of Uzbekistan 's copper production is sourced from three regions, viz. Kalmakyr, Sari Cheku and Dalnie. Total reserves are estimated at 1.5 Mt copper.

Almalyk Mining and Metallurgical (Almalyk) is Uzbekistan 's sole producer and exports all of its products. Almalyk mines and processes about 25 Mt/y of ore and its annual metal output is estimated to be worth more than US$220 million. It comprises two mining divisions, two concentrating divisions and two smelters. An estimated 68% of production is exported, including 5% to other CIS nations. Refined copper output from concentrates from its own mines was estimated at 85,000 t in 2003. Concentrates from the Kalmakyr and Sari Cheku deposits provide Almalyk with 70% of its requirements with the rest being imported from Russia and Mongolia . Almalyk also processes lead and zinc ores; although copper remains the majority of its output (90%). The government retains its 97.5% with employees retaining the ba;lance of the shareholding in Almalyk.

In July 2003, an international syndicate of banks headed by ABN Amro signed a pre-export financing agreement for Almalyk worth US$35 million. The loan is secured by a three-year commercial contract for the delivery of copper cathodes to Glencore International AG of Switzerland and is being extended without guarantees from the Uzbek Government. Almalyk plans to spend the money on new mining equipment and technology, including excavators, rail transport to take ore from mine to the mill, equipment for gold mining and other machinery. The equipment updates should boost production of copper, gold and silver, and output of cathode copper in 2004 is expected to rise by about 5,000 t.

Gold Mining

Uzbekistan is the world's ninth-largest gold producer. Gold is the primary metal produced in Uzbekistan , which boasts the CIS's largest gold reserves (estimated at 5300 t) as well as the world's fifth largest gold reserves. Most of these reserves are located in Central Kyzylkum , which accounts for 3200 t of reserves. The Muruntau Mine produces enough gold to make the Republic of Uzbekistan the world's seventh largest gold producing country with over 70 t/y.

The largest gold producer in Uzbekistan is the Kyzylkumredmetzoloto or Navoi Mining and Metallurgical Combinant. It owns and operates the Muruntau deposit, which hosts one of the world's largest open pit gold mines. The mine produces around 70% of Uzbekistan 's total gold output. It also operates the Kokpatas deposit located in central Kyzylkum. Due to the high sulphide content of the orebody at Koktapas, Navoi is using BIOX technology to extract gold. Navoi plans to complete the first phase of an overhaul of the Muruntau open-pit mine in 2005 at a cost of about US$15 million. The project will involve building transport systems using steeply inclined conveyors that can carry ore at an angle of 45 degrees, which would allow Navoi to increase the pit depth to 1,000 m from the current 460 m. Navoi plans to increase gold output by 20% by 2010.

Under a 50:50 joint venture agreement with Uzbek Government entities, Newmont Mining Corp of the US , through the Zarafshan-Newmont JV, processes low-grade stockpiles at the Muruntau gold deposit. In 2003, it produced 13.6 t, 15% less than in 2003 because of depleting reserves but the production was still higher than the targeted 12.8 t.

Amantaytau Goldfields, a joint venture set up in 1993, is developing the Amantaytau field. Amantaytau Goldfields' current shareholders are Oxus Mining with 50%, the State Geology Committee with 40%, and Kyzylkumredmetzoloto with 10%. The company has a charter capital of US$11.63 million. Initial recoverable gold reserves at Amantaytau were estimated at 3.2 Moz and additional reserves at more than 3.0 Moz. Amantaytau Goldfields later doubled gold and silver reserves at the field through geological exploration from 3.44 Moz to 6.4 Moz gold equivalent.

Oxus Gold plc is one of many foreign investors who have investigated the Amantaytau gold deposits. Cameco and Lonmin have been involved, but have pulled out at several stages of the procedure. Total resources for the Amantaytau field have been estimated at containing resources of up to 6Moz gold. Oxus maintains that production can occur in two stages, with an initial output from oxidised ores (opencast) estimated at 61 000 oz for the initial 16 months, followed by underground mining producing an estimated 190 000 oz per year from sulphide ores. Oxus currently has a 50% interest in the project, with the Uzbekistan State Committee for Geology and Mineral Resources 40% and Navoi the remaining 10%. The JV introduced phase one of a US$45 million gold recovery plant at Amantaytau at the end of 2003. The first stage of the plant will process up to 1 Mt/y of oxide ore.

Other major gold deposits are found in the Zarmitan gold field in Samarkand . Here the Zarmitan and Guzhumusai gold deposits have reserves containing 200t gold. Foreign companies have expressed interest, with Australian WMC evaluating the Zarmitan deposit. However, WMC has pulled out of the joint venture it held with the Uzbekistan government. Zarmitan has reserves estimated at 20 Mt grading at an average 10 g/t gold.

The Chadak gold mine in the Mangan region and the Marjanbulak gold mine in the Jizak region are controlled by the state-owned Uzalmazzoloto Company. The government is privatising the company, offering a 51% share in Uzalmazzoloto. Both deposits have total reserves of nearly 30 t of gold. Dore production will be sent to Almalyk Mining and Metallurgical, one of Central Asia 's largest metallurgical complexes.

Tungsten Mining

Uzbekistan contains the largest tungsten reserves in the CIS. Production is centred on two mining concerns, the Ingitchke and Koytash mines whose current mine reserves are nearly exhausted. These two mines used to provide 40% of the country demand, with the remainder being imported from Russia (Lermontov and Primorsky Mining). Imports have increased as a result of the depleted reserves base at the two mines. The Sautbay deposit, undergoing development has estimated reserves of 17 000 t tungsten.

Israel 's Metek Metalls has reached agreement with the Navoi combine, Spetssplav and Goskomgeo to develop the tungsten deposits at Sautbai where there is an estimated 4 Mt of ore containing 19,900 t of tungsten trioxide. Goskomgeo estimates that the total tungsten resource in Central Kyzyl Kum could be 30-40 times greater than at the Sautbai deposits. The project has a capital cost of US$80 million and calls for building a mining and milling complex at the Sautbai tungsten deposit in the Kyzyl Kum.

Uzbek Refractory and Heat-resistant Metals Plant (UzKTZhM) in Chirchik is among the world leading producers of tungsten and molybdenum products, and the leading supplier of tungsten-molybdenum wire, molybdenum roll, refractory metals and monocrystals. The plant derives its raw material for molybdenum production from the Almalyk Mining and Metals Combine in the Tashkent region of Uzbekistan , and tungsten from Russia . The Chirchik plant is running at less than a third of its capacity owing to reduced markets and a shortage of working capital.

Uranium Mining

Uzbekistan has reserves estimated at containing 55 000t of uranium. Uranium mining and beneficiation is controlled by Navoi Integrated Mining and Metallurgical (Navoi). The development of the Surgaly deposit began in 2000, with the project having the potential to produce 1000t per year. Reserves at Surgaly are estimated at 38 000t (70% of Uzbekistan 's reserves) with the ores being amenable to in situ leaching. A feasibility study has been completed by joint venture partners Cogema - however the two partners could not agree on the resource parameters used in calculating the reserves at Surgaly. As a result, Cogema have withdrawn from the development. Navoi were determined to develop the mine with first production expected in 2001. The Uzbekistan State Geology and Mineral Resources Committee opened up several potential urnaium deposits for foreign investment in the Kyzl Kum region. The five known deposits include the Koscheka, Jantuar, Alendy, Aulbek and Aktau deposits.

Zinc and Lead Mining

Most reserves hosted by the Khandiza deposit located in the Sukhardaryinskaya oblast. The government has signed an agreement with Oxus Gold of the UK for the exclusive right to develop the Khandiza metals field in the Surkhandarya region. Oxus has been exploring the Khandiza site for several years and has drafted a prefeasibility study. Khandiza contains 10 Mt of ore with an average content of 9% Zn, 3.6% Pb, 1% Cu and 161 g/t Ag. Oxus is considering the construction of a beneficiation plant to process 1.0 Mt/y of ore and produce zinc, copper and lead concentrates containing 45,000 t of zinc, 20,000 t of lead, 6,000 t of copper and 40 t of silver. Pre-production capital is estimated at US$71.2 million for a mechanised cut-and-fill underground operation with ramp access, producing 650,000 t/y of ore. Operating costs are estimated at US$35/t of mined ore.

Last update: March 7, 2005